MPF Comparison of Pension Funds between HK & Japan

Introduction Before 1.1.2000 --- Occupational Retirement Schemes. After 1.12.2000 --- Mandatory Provident Fund (MPF).

MPF is established by legislation in 1995. MPF is a retirement protection system for the entire working population of Hong Kong. MPF system covers all employees and self-employed people aged between eighteen and sixty-five.

MPF is subject to the Mandatory Provident Fund Schemes Ordinance.

Contributions in Japan appropriate & reasonable financial balance Manner Should be maintained Contributions in Japan A comparison of assets and liabilities Minimum Funding requirement

Contribution of HK’s MPF Scheme: Mandatory contributions Voluntary contributions

Mandatory contributions On the basis of 5% of an employee's relevant income, with the employer matching the employee's contribution Self-employed persons also have to contribute 5% of their relevant income Self-employed persons can opt to make contributions on a monthly basis or a yearly basis

Minimum and maximum levels of income Mandatory contributions are subject to the minimum and maximum levels of income $5,000 and $20,000 per month respectively

Employees income ↓ $5,000 a month : Employees -- do not need to contribute Employers -- contribute 5% of the employees' income Employees income↑$20,000 a month: Employees / Employers -- each party contribute 5% of the employees’ income ($1,000 @).

The above minimum and maximum income levels also apply to self-employed persons

Voluntary contributions Employers, employees and self-employed persons can opt to make extra, voluntary contributions in addition to the mandatory contributions.

Voluntary contributions From employers From employees

From employers Depend on working years or level Fixed percentage of salary

From employees Fixed amount each month Fixed percentage of basic salary Fixed percentage of relevant income

Voluntary contributions Different investment allocation between mandatory contribution and voluntary contribution

Benefits in Japan “appropriate and reasonable” “old age benefits” in annuity form Benefits in Japan no earlier than age 60 and no later than age 65 Under corporate and personal income tax laws, inheritance tax law, and local (prefecture) tax law.

Benefits Withdrawal scheme members can only claim for payment of their accrued benefits when they attain the retirement age of 65 as stipulated in the Ordinance. However, there are circumsctances under which acrued benefits may be paid before the attainment of retirement age:

has retired early and attained age 60; or  permanently departs Hong Kong; or   has become totally incapacitated; or has died (MPF will be regarded as part of the member's estate and can be claimed by the personal representative of estate); or

has a small balance account of less than $5,000, has not made contributions to a scheme for 12 months, and has declared not to become employed or self-employed within the foreseeable future.

~M.C Questions~

What ages are cover by MPF & NPF separately? 18-65 & 20-60 18-60 & 20-65 20-60 & 18-60 20-65 & 18-65

What is the manner of Japan’s NPF contribution? Appropriate and balance Reasonable and balance Appropriate and reasonable Noun of the above

How many percentages the employer and employee should contribute if the employees’ salary is below $5000? 5% and 5% 5% and 10% 10% and 0% 5% and 0%