Voluntary contribution arrangements

Under the MPF system, apart from making mandatory contributions, employers can also arrange to make additional voluntary contributions (AVCs) as part of the employee benefits programme. Same with mandatory contributions, additional voluntary contributions made by employers are also profit tax deductible. For details of tax issues, refer to the latest announcements by the Inland Revenue Department of the Government of the HKSAR.

For employer's AVCs, HSBC MPF offers the below contribution scales for employers' selection:

1. Fixed amount
2. Percentage of the relevant income 
   (i) Designated contribution formula 
   (ii) Designated contribution percentage
   
3. Lump sum contributions

If employers plan to set up additional voluntary contributions for employees after enrolling in HSBC MPF scheme, they may also submit the 'Additional Voluntary Contribution Application Form'. Please give us at least a month's notice when specifying the effective date of additional voluntary contributions for us to process your application.

When employers set up additional voluntary contributions at HSBC MPF, they are required to select the contribution scale of the arrangement.

1. Fixed amount
   Voluntary contribution amounts paid in each contribution period are in fixed amounts and such amounts can be a specified lump sum amount or formulated by years of service.
   
2. Percentage of income
   Voluntary contribution amounts paid in each contribution period are calculated according to a specific contribution formula or percentage.
   
   (i) Designated contribution formula
   Voluntary contribution amounts are calculated by a specific contribution formula which are:
   
   Relevant income x contribution percentage
   Relevant income x contribution percentage - mandatory contribution
   
   (ii) Designated contribution percentage
   Voluntary contribution amounts are calculated by a specific percentage. Either a flat contribution percentage or percentages set by years of services can be chosen.
   
3. Lump sum contributions
   Voluntary contributions are set according to the report from employers which has no fixed formula.
   

Once you have selected either one of the additional voluntary contribution arrangements, you should also set up different voluntary contribution scales for different classes of employees. The contribution percentage or fixed amount for the employer and employee does not need to be the same. You can also allocate the voluntary contribution scale according to years of service. Remember to pick a calculation method of years of service on the application form.

The vesting scale specifics the percentage of employer's balance derived from employer's voluntary contributions and/or employer's ORSO transfer which your employees are entitled to when they cease employment. Employers can set a vesting scale for additional voluntary contributions. The vesting scale is normally determined by an employee's length of service and the reason for termination of employment that employees' years of service can be counted from date of employment or date joined. Employers can either use the standard vesting scale or customise a new one that fits their needs.

Once the additional voluntary contribution arrangement is effective, employers are required to report and submit the voluntary contributions for their employees according to corresponding arrangements. Refer to the 'Ways to report contributions' and 'Payment methods' sections For more information on reporting and submitting contributions.

Any benefits your employees are not entitled upon cessation of employment will be treated as unvested benefits. The arrangements of the unvested benefits are (i) refunded to employers by cheque, (ii) transferred to the reserve account or (iii) transferred to the reserve account and allocated to existing members once a year.

If method (i) is chosen, we will mail a cheque to the employer once the employee ceases employment. If employers choose either method (ii) or (iii), please indicate the investment instructions under 'investment instruction for reserve account' section on the application form and we will make relevant investments according to your instructions.

Employers need to submit a written request to us if they would like to return the unvested benefits in the future. For the change from method (iii) to (i), the consent from your employees and/or other applicable administration procedures or reviews may be required.

Before the implementation of the MPF system in 2000, some employers set up the Occupational Retirement Schemes Ordinance, also known as ORSO schemes, to provide retirement benefits for their employees. After the commencement of the MPF system, if employers opt to terminate ORSO schemes and set up MPF schemes, the contributions made by employers under ORSO schemes will be transferred to MPF schemes, which are called ORSO transfers and regarded as voluntary contributions.

Employers can set the vesting scale for the relevant amounts of ORSO transfers by providing details of the existing ORSO scheme (including both name of scheme service provider and ORSO registration number) and fill in the relevant vesting scale when filling in the 'Additional Voluntary Contribution Application Form'.

1. Employers can set up different voluntary contribution scales for different classes of employees. If you have 3 or more classes of employees, please provide photocopies of Section B. For the relevant forms, please go to the 'Ways to set up additional voluntary contributions' section.
2. When you apply for HSBC MPF scheme and additional voluntary contributions at the same time, please choose 'Add new' under class description and fill in the 'effective date of instruction' as same as the 'HSBC MPF scheme commencement date'.
3. You do not have to fill in the 'Investment instruction for reserve account' section if you choose to be refunded the unvested benefits by cheque.
4. The trustee reserves the right of final decision on any additional voluntary contribution application. For the arrangement of newly added or change of the voluntary contribution and/or ORSO transfer arrangement, including but not limited to, contribution or vesting scale may require employees' consent in order to process the change. Employers please read the 'Declaration and authorisation' section carefully and confirm by authorised signature of employer.