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Anyhow to opt out of MPF?

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  1. #1

    Anyhow to opt out of MPF?

    Hi,

    I want to opt out of MPF and invest my earnings in low cost index funds using any broker (using IBKR for now).

    I’m including the employer contribution as well since truly it is the employee who is paying the employer contribution in the form of a lower salary.

    I would always opt to have more personal control over my financial decisions.

    Anything using "compulsory/mandatory" to have control over my personal finances to me, is coercion at best and outright theft at worst?

    Safely invested, I believe my investments would provide a better return than the MPF funds combined with their outrageous fees.


  2. #2

    Join Date
    Feb 2009
    Posts
    7,434

    I think a lot of us would prefer to opt out of MPF, but the first letter "M" (mandatory) gives a hint about this. Otherwise it would just be PF.


  3. #3

    Join Date
    Feb 2016
    Location
    Faroe Islands
    Posts
    1,780

    Opt out of HK

    aw451, shri, AsianXpat0 and 1 others like this.

  4. #4

    My understanding is that you can opt out if you have a foreign retirement account such as an IRA in the United States.

    Could someone explain why it's in my financial interest to opt out of the MPF if possible? I've received that advice, I just want to understand why.

    I know one reason is that MPF is a tax nightmare for US citizens, but what are the other reasons?


  5. #5

    Join Date
    Jan 2010
    Location
    Sha Tin, New Territories
    Posts
    461

    no one can opt out of mandatory provident fund unless your employer uses orso or u are not working in hk. They call it mandatory for a reason.

    shri likes this.

  6. #6

    There are various exceptions, as detailed here: https://www.mpfa.org.hk/en/mpf-system/mpf-coverage

    One of them is:



    Employees entering Hong Kong with an employment visa under section 11 of the Immigration Ordinance, with permission to stay, and is participating in one of the following schemes outside Hong Kong:



    provident fund schemes; or
    pension fund schemes; or
    retirement or superannuation schemes


    So it seems like it's mandatory, except if you satisfy one of the exceptions like having a foreign retirement account.

  7. #7
    Quote Originally Posted by hk_hopeful:
    My understanding is that you can opt out if you have a foreign retirement account such as an IRA in the United States.

    Could someone explain why it's in my financial interest to opt out of the MPF if possible? I've received that advice, I just want to understand why.

    I know one reason is that MPF is a tax nightmare for US citizens, but what are the other reasons?

    Better return , lower fees

  8. #8
    Quote Originally Posted by hk_hopeful:
    There are various exceptions, as detailed here: https://www.mpfa.org.hk/en/mpf-system/mpf-coverage

    One of them is:
    Employees entering Hong Kong with an employment visa under section 11 of the Immigration Ordinance, with permission to stay, and is participating in one of the following schemes outside Hong Kong:



    provident fund schemes; or
    pension fund schemes; or
    retirement or superannuation schemes


    So it seems like it's mandatory, except if you satisfy one of the exceptions like having a foreign retirement account.

    is there such thing as an IRA in hong kong ? Like an individual retirement account that allows you to save money in a tax advantaged way.
    Last edited by Jalloner54; 21-06-2022 at 09:36 PM.

  9. #9

    Join Date
    Dec 2013
    Location
    Hong Kong
    Posts
    12,007
    Quote Originally Posted by Jalloner54:
    is there such thing as an IRA in hong kong ? Llike an individual retirement account that allows you to save money in a tax advantaged way.
    no

  10. #10
    Quote Originally Posted by gardabble:
    no one can opt out of mandatory provident fund unless your employer uses orso or u are not working in hk. They call it mandatory for a reason.
    So here what I found :

    ORSO exempted schemes offer further advantages over MPF schemes, including no legal requirement for contribution (ORSO schemes can either be Defined Benefit or Defined Contribution schemes), flexible benefit withdrawal and increased diversification of investment portfolios. The choice of underlying investments is a lot broader than are available under a standard MPF scheme, but the ordinance does offer some protection by limiting the ability to invest into certain, risker assets classes.

    Case scenario: self-employed/Director of a compagny incorporated in HK. Some of the income is generated in Hk and some others outside of Hk.

    So how do I go about setting up this ORSO, I open an account under my name. I dont have to make any monthly conribution . I will have to pay myslef a lump sum once I stop working or close down the compagny ?

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