In part 2 of our mini-series of your MPF, we look at what you could do when it comes to withdrawing from your MPF. If you aren’t at the stage of withdrawing from your MPF, have a read part 1 on ‘Why is my MPF Performing Badly’.

 

How to check your MPF Balance

As of the 31^st December 2023, there are 24 registered schemes, all with different apps, log in pages and unique member numbers. The bigger schemes such as Manulife, AIA and Sunlife to name a few, have their own app which you can check your balance and see the latest NAV price of each fund within the registered scheme. If you haven’t got access to your MPF, speak to your HR department. Soon, the eMPF platform will commence with more trustees integrating their way onto the platform, meaning you will be able to see if you have any smaller or ‘lost’ MPF portfolios under your name.

 

When you first join your company, your employer will have given you a MPF booklet containing information you would have had to fill out. This would have included a choice to invest into the schemes ‘DIS’ or your own investment choice. With over 6 different fund types ranging geographically with buzzwords such as ‘guaranteed’, it can be hard to remember which one you picked. Which is why it is always good practice to save your username and password for every MPF account you have and perhaps consolidating the accounts.

 

Consolidating your MPF accounts

It’s common to have multiple accounts as people leave and take new jobs which have different MPF providers for their employees. Making sure you keep a record of your MPF accounts can be difficult and even more difficult trying to trace them.

You need to have a record of the scheme name and your account number. If you have forgotten this, you can apply for your records via the e-enquiry on the MPFA website. On your preferred MPF trustee website, you can complete the ‘Scheme Member’s Request for Account Consolidation Form’ and submit it to the trustee. If you are unsure of you preferred MPF trustee, take into consideration the cost of their funds. Read more about this on our previous article here.

 

Is MPF Taxable in Hong Kong and in the UK?

Firstly, when you are in work, both the employer and the employee make mandatory contributions into your MPF account. The employer’s mandatory contribution to your MPF account is not included in the employee’s income tax. Any mandatory contribution as an employee has a maximum deduction on their assessable income up to an amount of HK$18,000.

Any voluntary contributions made into your MPF, as an employee or employer, is classed as an ‘additional contribution’ which should be reported as income of the employee.

Secondly, withdrawing your MPF does not constitute taxable income when in Hong Kong. This applies to UK expats who are withdrawing from their MPF accounts. The MPF is not taxable for UK residents. The double taxation treaty agreement between Hong Kong and the UK advises that ‘pensions and other similar remunerations’ arisen from Hong Kong are only taxable in Hong Kong. As MPF is not taxable income in Hong Kong, this means it is not taxable for residents in the UK.

Our caveat remains, while Private Capital are very much UK tax aware, we are a not a tax advisory firm and if in doubt, you should engage with a tax advisory firm’s service’s.

 

How long does it take to withdraw MPF?

Trustees must typically distribute your proceeds of the MPF within 30 days of obtaining all necessary paperwork. The withdrawal procedure consists of two steps. The fund units must be redeemed first. After that, the trustees have to pay you, which takes the same amount of time whether it is done in instalments or as a lump sum payment.

 

How do I withdraw my MPF when leaving Hong Kong?

There are multiple options when withdrawing your MPF when you leave Hong Kong. These options also apply if you are staying in Hong Kong for your retirement. Your MPF is payable when you turn 65 but there are other circumstances you can withdraw your MPF early such as early retirement on or after aged 60 and also your permanent departure of Hong Kong. Other circumstances can be found here. Consult your financial planner when withdrawing your MPF as your financial planner can help you when taking the decision to withdraw or perhaps defer your MPF or take in installments or in one lump-sum.

Financial planners in Hong Kong add value as they can consider your overall personal and financial circumstances, making the best, informed decisions for your financial plan which will enable you to reach your financial planning goals.

 

How to be more tax-efficient in Hong Kong

One way to be more tax-efficient is by taking advantage of the Tax Deductible Voluntary Contributions (TVC) account. Don’t get confused with the voluntary contributions you can make into your MPF. The only voluntary contribution eligible for a tax deduction is TVC.

Trustees may also ‘sell’ you a Qualifying Deferred Annuity Policy (QDAP), which they say is a similar concept but be aware of the differences between QDAP vs TVC. A great example of the difference is the minimum payments into QDAP which is a minimum of 5 year contributions compared to the TVC, which has no minimum contribution schedule. If you find yourself agreeing to opening a QDAP, there is a cooling-off period which you can cancel your policy within a 21 calendar day period.

Opening a TVC account is one of the ‘easy wins’ we consider to be greatly beneficial for your financial planning in Hong Kong. To read more on what we think are  ‘easy wins’ which are very easy to accomplish, read our article here, or speak to one of our advisors by getting in touch with us for a consultation by submitting your enquiry here.