Employees are the most valuable assets of a company. As a caring employer, you can play a critical role to ensure employees’ retirement protection through committing MPF and Tax Deductible Voluntary Contributions. A comprehensive scheme enhances employees’ focus at work and develops a sense of belonging.
Choosing the right scheme
In terms of selection of MPF trustee, employers usually make their decisions based on the support service provided by the trustee, such as payroll autopay arrangement or insurance policy. From the employer’s point of view, since arranging MPF enrolment and contribution is just another administrative task, picking a service provider that the employer is familiar with or has business connections with does seem to make sense. However, don’t forget the purpose of MPF is to provide retirement benefits to your employees. From this perspective, selecting the trustees with the products, services and fees that best fit your employees’ needs will greatly benefit your employees. You should therefore fully consult employees on their needs and preferences about the choice of MPF trustees and schemes before making your final decision.
Offering more than one scheme
Employers may participate in more than one MPF scheme in order to provide multiple options for employees to choose from according to their personal needs. When shortlisting trustees, be sure to select a combination that offers a wide variety of constituent funds and services with competitive fees. Participating in two similar MPF schemes defeats the purpose of giving more choices to employees. If you are considering registering for more than one scheme and are pondering over your choices, just ask for your employees’ opinion. It never hurts to hear other views, especially when it is for your employees’ own well-being.
Making voluntary contributions
The best thing you can do to enhance your employees’ retirement protection is making additional contributions for them on top of your mandatory 5%. These are known as voluntary contributions. Unlike mandatory contributions, arrangement on making voluntary contribution, such as the minimum amount to be made, vesting, transfer and withdrawal conditions, are all defined in the terms of the scheme rather than the MPF ordinance. Please consult your trustees regarding the details of making voluntary contributions under your chosen schemes. Employers can also provide details on “Tax Deductible Voluntary Contributions” (TVC) for employees and encourage them to take part in the scheme to strengthen their retirement protection.
Both mandatory and voluntary contributions made by an employer to an MPF scheme are tax deductible under Profits Tax to the extent that they do not exceed 15% of the employee’s yearly emolument.
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