LCQ5: Enhancing Mandatory Provident Fund Scheme
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Question:
On enhancing the Mandatory Provident Fund (MPF) Scheme, will the Government inform this Council:
(1) as it is learnt that some shipping companies still voluntarily make MPF contributions for their crews although crews (including Hong Kong residents) employed under the Merchant (Seafarers) Ordinance are not covered by the relevant MPF legislation, but some members of the industry have relayed that applications for the Subsidy Scheme for Abolition of MPF Offsetting Arrangement by shipping companies were rejected recently, which might have prompted these companies to continue to use MPF contributions for offsetting their employees' severance payment and long service payment, or even withdraw from the MPF schemes, whether the authorities will adopt measures to ensure that the abolition of the offsetting arrangement and the relevant subsidy scheme apply to the crews and shipping companies concerned;
(2) as it is learnt that default MPF contributions by employers which could not be recovered exceed $10 million each year, whether the authorities will reconsider to include such default contributions within the scope of protection of the Protection of Wages on Insolvency Fund to strengthen safeguards for employees' MPF benefits; if so, of the details; if not, the reasons for that; and
(3) given that the minimum and maximum income levels for MPF contributions have not been adjusted upwards for over a decade, and that the Mandatory Provident Fund Schemes Authority has indicated it will submit the review report and recommendations for the 2022-2026 cycle to the Government in the middle of this year, when the Government will complete its deliberation and implement the recommendations concerned to adjust the relevant income levels in the short term?
Reply:
President,
In consultation with the Mandatory Provident Fund Schemes Authority (MPFA) and the Marine Department, our consolidated reply is set out below:
(1) Owing to the global nature of the shipping industry, the International Labour Organization and the International Maritime Organization protect the rights and welfare of seafarers through the Maritime Labour Convention 2006, which includes the requirement for a written employment agreement between a seafarer and the owner of the ship or a person who has assumed the responsibility for the operation of the concerned vessel from the owner. The Convention is implemented in Hong Kong through the local Merchant Shipping (Seafarers) Ordinance (MSSO) and its subsidiary regulations, which are overseen by the Marine Department. As for personnel working on local vessels, such as ferries operating within Hong Kong waters, they are protected by the Employment Ordinance (EO) in the same way as general employees.
The Government implemented the abolition of the Mandatory Provident Fund (MPF) offsetting arrangement on May 1, 2025. Since then, employers can no longer use the accrued benefits derived from their mandatory contributions to offset an employee's severance payment or long service payment payable under the EO in respect of the employment period from the date of abolition onwards. On the same day, the Government launched the 25-year Subsidy Scheme for Abolition of MPF Offsetting Arrangement (the Subsidy Scheme) to provide financial assistance to the affected employers to help them adapt to the policy change.
Pursuant to section 4(2)(d) of the EO on application of the Ordinance, the EO is not applicable to a person who is serving under a crew agreement within the meaning of MSSO, or to a person who is serving on board a ship which is not registered in Hong Kong. Section 2(1) of the Mandatory Provident Fund Schemes Ordinance (MPFSO) also stipulates that MPFSO does not apply to the aforementioned persons.
As both EO and MPFSO are not applicable to seafarers employed under MSSO, the abolition of the MPF offsetting arrangement has no impact on employers of seafarers. In other words, these employers can, in accordance with the agreements entered into with seafarers, continue to handle matters of employment benefits both before and after the abolition. For the above reasons, the Subsidy Scheme is not applicable to the agreements between these employers and the seafarers.
(2) The Protection of Wages on Insolvency Fund (the Fund) releases payment in the form of ex gratia payment to employees who are owed wages and major sums payable under the EO due to business closures of their insolvent employers. If an employer makes deductions from the wages of an employee but fails to make MPF contributions, such amounts are considered as wages owed and are protected by the Fund.
MPFSO establishes the MPF system to enhance the retirement protection. MPFSO sets out employers' obligations to make MPF contributions and the consequences of defaulting the contributions. If an employer fails to make MPF contributions, MPFSO has already put in place relevant regulations on the recovery of default contributions. The Government has no plan to expand the scope of the Fund to cover employers' MPF contributions.
(3) Under MPFSO, MPFA is required to conduct a review of the minimum and maximum levels of relevant income for MPF contributions not less than once in every four-year review cycle.
In conducting reviews of the minimum and maximum levels of relevant income and preparing review reports and recommendations, MPFA will take into account statutory requirements based on the prevailing employment earnings statistics, and other relevant factors such as socio-economic conditions, labour market conditions, as well as business environment for enterprises, in particular with reference to small and medium enterprises, and financial impacts on employees and self-employed persons. Upon receipt of MPFA's review report, the Government will consider the report in a comprehensive and thorough manner before making a decision.
Ends/Wednesday, March 18, 2026
Issued at HKT 12:52
Issued at HKT 12:52
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