Employers in Hong Kong must contribute to the Mandatory Provident Fund (MPF) by withholding a part of each employee’s wage. Through a variety of individual plans, employer-sponsored plans, and industry plans, the Mandatory Provident Fund assists working citizens, residents, and qualified expatriates in the SAR in their efforts to save money for their retirement.
As time passes and the employee retires, they may use the retirement money to help ease the transition out of the workforce. Typically, the funds are dispersed on a monthly basis and used to pay for things like rent, utilities, and medical care. In most cases, you won’t be eligible to receive your MPF payments until you’ve reached the age of 65. Nonetheless, there are a few exceptions that allow you to access your MPF funds early. If you want to know the MPF withdrawal process before 65 or looking for an early withdrawal of MPF in Hong Kong, this article is for you.
MPF Withdrawal in Hong Kong
There may be several reasons why you choose to speed up your MPF withdrawal, but it is important to understand that the approval requires the validation of your request. To understand when you can withdraw your MPF, you must first know how it works. Keep reading to understand what MPF is and how an early withdrawal of it works in Hong Kong.
What is MPF?
The Mandatory Provident Fund (MPF) was introduced in 2000 as an adequately funded contribution scheme for Hong Kong residents who intend to retire there. Private hands run the show here. There are many different types of MPF schemes, but one of the most prominent is called Master Trust Schemes. Anyone, including business owners, workers, freelancers, and individuals who just want to make a personal or optional contribution, may create one of these accounts. Accounts for personal pensions may be established by people who are employed, self-employed, or who contribute money voluntarily.
Different companies and industries provide different types of employee benefit programs. Unlike industry schemes, which are more often geared towards workers in industries like catering and construction, employer-sponsored MPF plans are exclusively for employees of a single firm. Retirement age is often when individuals first begin withdrawing money from their MPF. However, you can process your early withdrawal of MPF in Hong Kong if you were to depart permanently. You must sign a declaration stating that you will not return to Hong Kong for employment or to get permanent residency if you have already left the city or intend to do so soon.
Can You Withdraw Your MPF, and When?
When you reach the age of 65, you will have the opportunity to withdraw money from the MPF plan. If you want to cash out your MPF, you need to submit a declaration form to the trustees of the appropriate MPF scheme(s), together with the required supporting documents. These include authentication papers, like a Hong Kong identity card and an application form to receive income from the MPF upon reaching 65. You may either:
- withdraw money over some time
- take the money out of your account all at once, or
- keep investing regularly via the MPF plan.
Minimum Requirement For Early MPF Withdrawal
Early withdrawals of MPF in Hong Kong before the mandatory retirement age are permitted only under the following circumstances:
- Retiring early (60 years of age).
- Exiting the country or city permanently after tax declarations.
- Total incapacity- means that a person is no longer eligible to receive any benefits if they are unable to undertake any of the activities that they formerly were.
- Lower MPF Balance-If an individual’s MPF account balance is less than HK$5,000, they may withdraw the whole amount from their account and declare that they have no plans to return to work.
When Can You Get Your MPF Back?
You are eligible to withdraw all or a portion of your MPF at reaching age 65 or upon taking voluntary retirement at age 60. You have complete control over the timing and amount of any partial withdrawals. However, you should be aware that your MPF plan trustee may impose fees if you request withdrawals more often than once every four months.
However, you should give serious consideration to how you will spend and handle whatever benefits from the money you get, regardless of the method of MPF withdrawal. You might make a deposit or invest based on your risk management. Keep in mind that the MPF is an asset you may use in your later years. They should be sufficient to cover your expenses in retirement.
How to Withdraw Your MPF in Hong Kong?
The Mandatory Provident Fund Schemes Authority will pursue legal action against anybody making a false or deceptive declaration to get a payment since criminals and organized crime groups often take advantage of payment claims (particularly early MPF withdrawals). The Authority takes the initiative to enforce the law by conducting random inspections and looking into suspected incidents. So there are a few formalities you must follow to prevent getting involved in legal issues.
Required Documents for Withdrawing MPF
Firstly, there are a few required documents for early withdrawal of MPF that you must produce to claim in Hong Kong. After receiving the necessary paperwork, trustees have 30 days to distribute the MPF. The required documents for an early withdrawal are listed below, broken down by category.
Early retirees (those who leave the workforce after reaching 60 but before turning 65) must submit the following documents. It is important to note that you have the option of making a single, large MPF withdrawal or spreading it out across many withdrawal periods.
- A statutory declaration form
- A claim form for MPF benefits for early retirement
- A Hong Kong identity card or passport as proof of their identity
- Purpose to retire permanently.
Permanent Departure from Hong Kong
To be eligible for the scheme, participants must swear under oath that they have left Hong Kong permanently and have no plans to return to work or relocate to Hong Kong again. They must also provide the trustees’ documentation evidence that they are legally able to live elsewhere other than Hong Kong. Note that the participants of the scheme who have previously applied for MPF withdrawals for such reasons will not be paid MPF for any future applications for the same reasons with a later date of departure.
To withdraw your MPF before retirement age on the grounds of absolute incapacity, you must produce a certificate from a licensed medical professional stating that you are unable to return to the same kind of work that you did before. An application form for MPF benefits based on absolute incapacity is also required, along with identity papers such as a Hong Kong ID card.
Participants must have a certificate from a licensed physician or licensed Chinese medicine practitioner declaring that they have been diagnosed with a condition that has a 90% or greater chance of shortening their remaining life span to 12 months or fewer.
Applicants are limited to having no more than a $5,000 balance in a single MPF scheme at any one time. Also, it must have been at least 12 months from their last contribution date before they may apply to join. To join the scheme, participants must also sign a statement affirming they would never work for another company or be self-employed in the future.
Your MPF plan becomes part of your inheritance upon your passing and may be claimed by a personal attorney or an Authorized Trustee. To ease your MPF withdrawal, your beneficiary will need to present identifying papers such as
- Hong Kong ID card
- An MPF withdrawal claim form stating the death
- A Letter of Administration or Probate
How to Withdraw MPF from HSBC?
The MPF withdrawal process at HSBC allows for partial withdrawals to be requested. To put it another way, people may take out a minimum of HK$5,000 for each withdrawal from their accumulated benefits before they retire. According to MPF regulations, workers who satisfy the requirements outlined are eligible to withdraw any earned benefits from MPF contributions.
Applicants are eligible to receive the MPF withdrawal at no cost up to a maximum of twelve times throughout the fiscal year of the program, which runs from July 1 of the current year to June 30 of the following year. To assist save for retirement, people may make extra voluntary contributions and Flexi-contributions, however, this money should not be used for emergency expenses. HSBC suggests applicants save during their golden years before taking this money.
Process of Withdrawing MPF Before 65
If you can produce documents strongly supporting your exit from Hong Kong, your MPF withdrawal can be done easily. However, there still are a few procedures you must follow to ensure there are no legal implications in the future.
Long Term Residence Proof with the Intention of Leaving
You are eligible to register as a foreigner if you are departing Hong Kong indefinitely for another nation. As a result, you may start withdrawing your MPF money 1–2 months prior to the date of your departure. Also, to make a withdrawal request, you must provide evidence that you were no longer residing in Hong Kong.
Notify the Mandatory Provident Fund Scheme Authority
You must submit the following paperwork to the MPFA to inform the authority.
- Authentication of Identity
- Declaration Form MPF(S) – W(SD2)
- On the account of permanent departure, request early MPF withdrawal through Form MPF(S) – W(O)
- Proof that you were granted permission to reside anywhere other than Hong Kong.
Submit Tax Returns
If you are an employee at a firm, you should ask for a copy of Form IR56G. It is also important to inquire more about the tax clearance you need to make MPF withdrawals. Your employer will withhold payments for a month after filing the IR56G form or until the MPFA provides the Letter of Release. A Personal Income Tax Return will be sent to you for filing. Once the MPFA receives your application and tax returns, they will send you the return.
Speed Up the Process if You Want
Sometimes your relocation may require speeding up your MPF withdrawal process. In such cases, you can do so by producing the following documents to the Inland Revenue Department in person.
- IR56G Form
- Tax Deduction Slips
- Tax Filing proof
Get Experts Help With Tax Return Filing With Startupr!
Although the early withdrawal of MPF in Hong Kong may sound relatively simple, the tax filing process may become overwhelming. Professional assistance from an expert becomes inevitable in such scenarios.
We offer various services ranging from accounting to bookkeeping for companies in and around Hong Kong. We also provide prompt annual tax return filings, which are crucial for your MPF withdrawal. We at Startupr Hong Kong Limited have provided our customers with a wide variety of corporate services. We are still expanding our services for the betterment of our clients. If you want to know how we can help your business grow, connect with us on a call!