Hong Kong Mandatory Provident Fund Schemes Authority supports Budget proposals for two-tier surcharges on MPF contribution defaults and more flexible MPF fund investment management

The Hong Kong Mandatory Provident Fund Schemes Authority (MPFA) welcomed the 2026-27 Budget proposals to enhance the Mandatory Provident Fund (MPF) system, including measures aligned with MPFA recommendations on strengthening the recovery of default MPF contributions and increasing flexibility for trustees and service providers in managing MPF fund investments. The package includes a proposed two-tier surcharge arrangement, comprising the existing level plus a new additional level, intended to prompt non-compliant employers to settle default contributions and surcharges more quickly and to improve the effectiveness of MPFA’s recovery process. On investments, the proposals would broaden flexibility through more adaptable fund structures and expanded arrangements for delegating investment management functions, with the stated aim of improving risk diversification and competition for scheme members. MPFA indicated it will consult stakeholders on the relevant legislative proposals and support the Government’s work plan to introduce an amendment bill, with a view to implementing the proposals as soon as possible. It also highlighted ongoing priorities, including implementing Phase One of MPF “Full Portability”, supporting an amendment bill for Phase Two in the first half of next year, completing the statutory review of the minimum and maximum relevant income levels for mandatory contributions for the 2022-2026 cycle, and completing a holistic review of the default investment strategy.