Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022 gazetted today
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The Amendment Ordinance seeks to abolish the use of the accrued benefits derived from employers' mandatory contributions under the Mandatory Provident Fund (MPF) System to offset severance payment (SP) and long service payment (LSP) (the offsetting arrangement). Employers may continue to use the accrued benefits of their voluntary contributions and gratuities based on employees' length of service to offset SP/LSP.
A spokesman for the Government said, "Abolishing the offsetting arrangement is a significant milestone in enhancing the retirement protection of employees. After years of extensive and in-depth consultation with all sectors of the community, especially the Labour Advisory Board, employer associations and labour unions, the current-term Government put forth the final proposal for the abolition as enshrined in the law upon passage of the Amendment Bill by the Legislative Council on June 9."
The abolition of the offsetting arrangement has no retrospective effect. If an employee's employment commenced before the effective date of the Amendment Ordinance (the transition date), the employer can continue to use the accrued benefits of the MPF contributions (irrespective of whether the contributions are mandatory or voluntary; and irrespective of whether the contributions are made before, on or after the transition date) to offset the employee's SP/LSP in respect of the employment period before the transition date.
The abolition of the offsetting arrangement will also be applicable to occupational retirement schemes under the Occupational Retirement Schemes Ordinance (Cap. 426), the two school provident funds under the Grant Schools Provident Fund Rules (Cap. 279C) and Subsidized Schools Provident Fund Rules (Cap. 279D) and overseas occupational retirement schemes joined by employees from outside Hong Kong which are exempted from the MPF System.
The spokesman supplemented, "The Government will implement the abolition of the offsetting arrangement in tandem with the full implementation of the eMPF Platform of the Mandatory Provident Fund Schemes Authority. Currently, the eMPF Platform is expected to be in full operation by 2025. Looking forward, the Government will press ahead with the preparatory work for the supporting measures for abolishing the offsetting arrangement, including formulating the operation details of the Government subsidy scheme to provide employers with subsidies over a 25-year period with a total financial commitment of $33.2 billion (in 2021 prices); following up on the Designated Savings Accounts Scheme for employers to cope with future financial needs; and conduct extensive publicity with easy-to-understand information to deepen employers' understanding of the abolition of the offsetting arrangement."
Ends/Friday, June 17, 2022
Issued at HKT 11:00
Issued at HKT 11:00
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