LegCo Subcommittee on MPF System
Information Note
Exemptions

Purpose

This paper describes the proposed provisions regarding exemption of persons entering Hong Kong for the purpose of being employed or self-employed.

Proposals

Persons Entering Hong Kong for the Purpose of Employment

Classes of persons

2. It is stipulated in the MPF Ordinance that persons entering Hong Kong for the purpose of being employed or self-employed for a limited period only or who are members of a retirement scheme in a place outside of Hong Kong shall be exempt. It is necessary to stipulate in the subsidiary legislation the definitions of "persons entering Hong Kong for the purpose of being employed and self-employed" and "limited period".

3. We propose to confine "persons entering Hong Kong for the purpose of being employed and self-employed" to employees or self-employed persons who need permission from the Immigration Department for taking employment or self-employment in Hong Kong and have been granted so. In other words, only persons who need to apply for employment visas in order to work in Hong Kong ("foreign employees or self-employed persons") may be exempt.

Limited period

4. We propose to define "limited period" as one year or shorter, i.e. the permission granted in the employment visas as set out in paragraph 3 above is valid for a period of not more than one year. It will operate as follows :

  1. A foreign employee or self-employed person who has been granted an employment visa for permission to work in Hong Kong for only one year or shorter will be exempt; he will not be exempt if the permission is for a period of more than one year.
  2. He will not be exempt if he renews the employment visa within 30 days after the expiration of the permission, which brings his total continuous period for permission for employment in Hong Kong to over one year.
  3. If he re-applies for his employment visa 30 days after the expiration of his previous visa, the counting of the "limited period" will start afresh from the commencement of the new employment visa.

Member of a Retirement Scheme Outside Hong Kong

5. A foreign employee or self-employed person will be exempt as long as the person is a member of a provident, pension, retirement or superannuation scheme of a place outside Hong Kong.

Automatic Exemption

6. We propose not to require the foreign employees or self-employed persons who are eligible to be exempt to submit any application for exemption. They shall be automatically exempt from the Ordinance.

Justification

7. The Ordinance has specified that certain classes of persons shall be exempt from the Ordinance (please see Annex). However, the exemption provisions regarding persons entering Hong Kong for the purpose of employment need to be refined in order to avoid ambiguity.

Persons Entering Hong Kong for the Purpose of Employment

Classes of persons

8. It is necessary to confine the scope of exemption regarding persons entering into Hong Kong, taking into account the unique circumstances of Hong Kong. Otherwise, certain classes of persons who work in Hong Kong for a considerable period of time may be exempt from the MPF System e.g. emigrants returning to Hong Kong or new immigrants. This will defeat the policy intent of helping the workforce save for the old age.

9. The proposed definition in paragraph 3 will effectively limit the scope of exemption to foreign employees or self-employed persons who do not have right of abode, right to stay or grant of unconditional stay in Hong Kong under the existing immigration regulations. These people generally only stay and work in Hong Kong temporarily and are unlikely to stay in Hong Kong for their retirement. To avoid discrimination, those foreign employees and self-employed persons who stay in Hong Kong for a period exceeding the "limited period"(refer to paragraph 4) will be incorporated into the MPF coverage.

Limited period

10. The proposed definition has taken into consideration the following factors :

  1. Simple definition : Our proposal operates on the basis of the length of employment visas rather than requiring actual counting of days of employment. It is simple to comply and enforce, and easy to understand by all concerned parties.
  2. Benefit withdrawal : The Ordinance allows withdrawal of benefits on the ground of permanent departure from Hong Kong. It is not meaningful to cover foreign employees and self-employed persons who work in Hong Kong temporarily in the MPF System as they are likely to withdraw their MPF benefits on departure. This would create unnecessary administrative and regulatory work for the MPF System.
  3. Avoid discrimination : It is not appropriate to provide for an unduly long exemption period. Otherwise, foreign employees or self-employed persons will be deprived of the right to enjoy retirement benefits for a long period. It could also distort the labour supply and employment market.

Member of a Retirement Scheme Outside Hong Kong

11. We do not propose to specify nor to impose detailed requirements regarding scheme nature, contribution level and withdrawal circumstances of retirement schemes outside of Hong Kong because :

  1. Policy intent : The principal ordinance allows foreign employees or self-employed persons to be exempt from the MPF Ordinance if they have joined any retirement scheme outside Hong Kong. As this already meets the objective of helping the workforce save for the old age, we do not intend to impose strict requirements as to what constitutes membership in a retirement scheme outside Hong Kong.
  2. Practicality : Given the variety of retirement schemes in other countries, it is practically difficult to specify and to enforce what constitutes membership in a retirement scheme outside Hong Kong.

Automatic Exemption

12. In order to avoid unnecessary administrative procedures and to minimise the costs of the MPF System, we do not propose to require foreign employees or self-employed persons to apply for exemptions from the MPFA.

Mandatory Provident Fund Office
Financial Services Branch
16 December 1996

Annex

EXEMPTIONS -- (Provisions in the MPF Ordinance)

SECTION 4(3)

Any person entering Hong Kong for the purpose of being employed or self-employed :

  1. for a limited period only; or
  2. who is a member of a provident, pension, retirement or superannuation scheme (however described) of a place outside Hong Kong,

shall be exempt from the provisions of the Ordinance.

PART I OF SCHEDULE 1

The following persons specified in Part I of Schedule 1 to the Ordinance are exempt from the Ordinance :

  1. Any person who is an officer to which the Pensions Ordinance applies.
  2. Any person who is an officer to which the Pension Benefits Ordinance applies.
  3. Any person who is an officer to which the Pension Benefits (Judicial Officers) Ordinance applies.
  4. Any person who is a teacher to which the Grant Schools Provident Fund Rules apply.
  5. Any person who is a teacher to which the Subsidized Schools Provident Fund Rules apply.
  6. Any relevant employee or self-employed person who, at the date of the exemption provisions come to operation, has attained 64 years of age.
  7. Any relevant employee who has been employed under a contract of employment for a continuous period of less than 60 days.
  8. Any employer of any person (other than a self-employed person) specified in items (a) to (g) above.
  9. Any person employed in the European Union Office of the European Commission (EU) in Hong Kong.

PART II OF SCHEDULE 1

The following persons specified in Part II of Schedule to the Ordinance are exempt from the Ordinance :

  1. Any person who is a domestic employee in respect of a contract of employment as such. The employer of such a person is also exempt.
  2. Any self-employed person who is a hawker.

Last Updated on {{PUBLISH AUTO[[DATE("d mmm, yyyy")]]}}