Retirement
MPF Complete Guide 2026: Contributions, Fund Selection & Tax Savings
Gary Chung（FinKit Editor-in-Chief） · Published：August 6, 2026
Every month you see MPF deducted from your salary — but do you know where that money goes, how much it's earning, and how you can save thousands in tax? This article breaks down MPF contributions, fund selection, TVC tax deductions, and withdrawal rules.
MPF Basic Contribution Mechanism
The Mandatory Provident Fund (MPF) is Hong Kong's statutory retirement savings system. Employer and employee each contribute 5% of the employee's "relevant income", totalling 10%.
| Monthly Income | Employer (5%) | Employee (5%) | Total |
|---|---|---|---|
| Below HK$7,100 | 5% | Not required | 5% |
| HK$7,100–30,000 | 5% | 5% | 10% |
| Above HK$30,000 | HK$1,500 (cap) | HK$1,500 (cap) | HK$3,000 |
Example: HK$25,000 Monthly Salary
How to Choose MPF Funds?
Each MPF scheme offers multiple fund choices from conservative to aggressive. Choosing the right fund has an enormous impact on long-term returns — with the same contribution level, different fund choices can differ by over HK$1 million after 30 years.
Conservative Fund
Risk: LowShort-term deposits & bonds. Returns slightly above time deposits. Suits near-retirees.
~0.5–2% p.a.
Guaranteed Fund
Risk: Low–MedPrincipal/return guarantees with lock-in conditions. Stable but lower returns.
~1–3% p.a.
Bond Fund
Risk: MediumGovernment/corporate bonds. Higher returns than conservative, lower volatility than equities.
~2–5% p.a.
Mixed Asset Fund
Risk: Med–HighStock+bond mix in growth/balanced/stable variants. Most common MPF choice.
~4–8% p.a.
Equity Fund
Risk: High100% stocks — HK, US, Asia-Pacific, Europe. Highest long-term returns, high short-term volatility.
~6–12% p.a. (LT avg)
DIS Default Strategy
Risk: Decreases with ageStatutory default. 60% equities before 50, gradually shifts conservative. Fee cap 0.95%.
Varies by age
💡 Golden Rules for Fund Selection
- • Young → Aggressive — 20–30 years to retirement, can handle short-term volatility, strongest compounding
- • Mid-career → Balanced — 10–20 years, gradually reduce equity allocation, lock in gains
- • Near retirement → Conservative — <10 years, capital preservation is priority
- • Watch fees — Fund Expense Ratio (FER) above 1.5% is concerning; erodes returns significantly over long periods
TVC Voluntary Contributions: The Most Powerful Tax-Saving Weapon
Beyond mandatory contributions, you can make additional Tax-Deductible Voluntary Contributions (TVC), up to HK$60,000/year, fully deductible from salaries tax assessable income.
TVC Tax Savings Calculation
Annual salary HK$480,000, marginal tax rate 17%, maxing out HK$60,000 TVC:
TVC Key Points
- • TVC funds are locked until age 65 (same as mandatory MPF, with specific exceptions)
- • Different MPF schemes have different TVC fund choices and fees — compare before opening
- • Spouses cannot share TVC deduction caps; each has their own HK$60,000 limit
- • Tax year deadline is typically 31 March — contribute before the deadline
When Can You Withdraw MPF?
Age 65
Most common. Can withdraw as lump sum or in instalments.
Permanent Departure from HK
Requires declaration. Can only be used once in a lifetime.
Total Incapacity
Requires medical certification of permanent unfitness for current work.
Early Retirement (60–64)
Must declare permanent cessation of employment.
Death
Claimed by estate executor; paid to designated beneficiaries.
Small Balance
Account <HK$5,000 and no contributions for 12 months.
5 Common MPF Mistakes
❌ Ignoring MPF, leaving it in the default fund
DIS has a fee cap, but its returns may not suit your age and risk tolerance. Review at least once a year.
❌ Only choosing conservative funds
Young people choosing conservative funds — 30 years of inflation can erode most of your purchasing power. Take more risk for higher returns when young.
❌ Forgetting old MPF accounts when changing jobs
Every job change creates a new MPF account, resulting in multiple accounts each charging fees. Consolidate into one account.
❌ Not making TVC contributions
HK$60,000/year TVC is fully tax-deductible. At 17% tax rate, the government effectively contributes HK$10,200 toward your retirement.
❌ Ignoring fund fees
1.5% vs 0.5% management fee can differ by hundreds of thousands over 30 years. Compare Fund Expense Ratios (FER).
Real Numbers: 30-Year MPF Compounding
HK$25,000 monthly salary, employer+employee total HK$2,500/month, different return rates over 30 years:
| Annual Return | 30-Year Value | Total Contributions | Investment Gain |
|---|---|---|---|
| 2% (Conservative) | ~HK$1,230,000 | HK$900,000 | HK$330,000 |
| 5% (Mixed) | ~HK$2,090,000 | HK$900,000 | HK$1,190,000 |
| 8% (Equity) | ~HK$3,730,000 | HK$900,000 | HK$2,830,000 |
The gap between 2% and 8% is HK$2,500,000 — that's the power of fund selection. Add HK$60,000/year TVC on top and you could accumulate an additional HK$2–4 million over 30 years.
MPF FAQ
Can I opt out of MPF?
No. MPF is statutorily mandatory. The only exception is employees earning below HK$7,100/month (employer still contributes 5%).
What happens to MPF when I change jobs?
Three choices: (1) transfer to new employer's scheme, (2) keep in the original scheme, (3) transfer to a personal account of your choice. Consolidation is recommended.
What's the difference between TVC and ordinary voluntary contributions?
TVC is tax-deductible (up to HK$60,000/year) but locked until 65. Ordinary voluntary contributions have no tax benefit but more flexible withdrawal terms.
Are MPF returns guaranteed?
No. Except for 'Guaranteed Funds', most MPF funds have no return guarantee. Values fluctuate with the market.
Must I withdraw all MPF at 65?
No. You can take a lump sum, instalments, or keep it invested in your MPF account. There's no mandatory withdrawal deadline.