Hong Kong, China

Hong Kong, China: Pension system in 2016

The Mandatory Provident Fund (MPF) system is an employment-based retirement protection system. Except for exempt persons, employees and self-employed persons who are at least 18 but under 65 years of age are required to join an MPF scheme. MPF schemes are, privately managed, fully funded defined contribution schemes.

Key indicators: Hong Kong, China

Hong Kong, China


Average earnings


157 800

283 992



20 349

36 622

Public pension spending

% of GDP


Life expectancy

at birth




at age 65



Population over age 65

% of working- age population



 StatLink https://doi.org/10.1787/888933873554

Qualifying conditions

Withdrawal of accrued benefits from the MPF System is allowed when scheme members reach the retirement age of 65.

Benefit calculation

Defined contribution

Employees and employers who are covered by the MPF System are each required to make regular mandatory contributions calculated at 5% of the employee’s relevant income to an MPF scheme, subject to the minimum and maximum relevant income levels. For a monthly paid employee, the minimum and maximum relevant income levels are HKD 7 100 and HKD 30 000 respectively.

Accrued benefits in the MPF System are withdrawn in a lump sum when scheme members reach the retirement age of 65.

For comparison with other economies, for replacement rate purposes the pension is shown as a price-indexed annuity based on sex-specific mortality rates.


The old-age allowance has two levels. Normal old age allowance (NOAA) is means-tested and provided to those between 65 and 69. For a single person, the asset limit is HKD 219 000 and monthly income limit is HKD 7 580 (after which benefits are withdrawn). Limits for married couples are higher (HKD 332 000 and HKD 12 290, respectively). The full benefit is HKD 2 495 per month, which is about 8.3% of average earnings.

Higher older age allowance (HOAA) is for those aged 70 and above. It is a basic plan paying a flat amount of HKD 1 290 per month with no claw-back. Again, there is no formal indexation rule, so the modelling assumes price indexation.

Variant careers

Early retirement

For the MPF System, it is possible to withdraw the benefits from age 60 if ceasing employment permanently. However, the targeted/basic programme does not provide benefits until 65.

Late retirement

It is possible to combine working and receiving pension. For the MPF System, upon reaching age 65, if an individual continues to work, no further mandatory contributions will be required and the individual may withdraw the benefits derived from mandatory contributions.

Personal income tax and social security contributions

Taxation of workers

Employees can claim tax deductions for their mandatory contributions made to an MPF scheme, to a maximum of HKD 18 000.

Any voluntary contributions made by employees are not tax deductible.

Taxation of worker’s income

The lower of the following two tax rules are applied. The first rule is described in the following tax schedule. This is applied to taxable income (after deduction and allowance). The basic allowance for a single person in 2016 is HKD 132 000.

Annual Taxable Income (HKD)

Tax Rate

40 000


40 000 – 80 000


80 000 – 120 000


> 120 000


Social security contributions payable by workers

The information of mandatory contributions made by employees and self-employed persons to the MPF System are provided in the section of “Defined contribution”.

Taxation of pensioners

There is no additional tax relief for pensioners.

Taxation of pension income

MPF benefits derived from mandatory contributions are not subject to tax on withdrawal (only lump sum withdrawal is allowed).

Social security contributions payable by pensioners

Pensioners do not pay any social security contributions.

Pension modelling results: Hong Kong, China in 2061 retirement at age 65

Assumptions: Real rate of return 3%, real earnings growth 1.25%, inflation 2%, and real discount rate 2%. All systems are modelled and indexed according to what is legislated. Transitional rules apply where relevant. DC conversion rate equal 90%. Labour market entry occurs at age 20 in 2016. Tax system latest available: 2016.

 StatLink https://doi.org/10.1787/888933873573

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