What is the Subsidy Scheme for Abolition of MPF Offsetting Arrangement?

In tandem with the abolition of the offsetting arrangement under the Mandatory Provident Fund (MPF) System on 1 May 2025 (transition date), the Labour Department (LD) launches the Subsidy Scheme for Abolition of MPF Offsetting Arrangement (Subsidy Scheme) on the same day to share out employers’ expenses on the post-transition portion of severance payment (SP)/long service payment (LSP).

The Subsidy Scheme provides 25 years’ subsidies.  The subsidy ratio will be progressively reduced over the subsidy period with a view to helping employers adapt to the policy change. 

Besides, after 1 May 2025, employees who receive less aggregate benefits (aggregate benefits refer to the amount of SP/LSP together with the accrued benefits derived from employers’ mandatory MPF contributions or vested benefits derived from employer’s occupational retirement scheme (ORS) contributions) than they would have received if the MPF offsetting arrangement had not been abolished may also apply for subsidies from the office of the Subsidy Scheme to make up for the shortfall in aggregate benefits.

For the eligibility and application methods of the Subsidy Scheme and subsidy for shortfall in aggregate benefits, please refer to the TransitionEase Portal.
 

This is not a legal document. The Ordinance remains the sole authority for the provisions of the law explained.