The Legislative Council has approved the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill to abolish the offsetting mechanism under the MPF on June 9th. As such, better planning from employers – MPF performance and cost prediction will be the key when employers are forced to pay the whole amount of Long Services Payment / Severence Payment without the offset by MPF.
1% of Designated Saving Account (DSA) on top of the 5% MPF contribution will be the additional overhead cost to employers. Employers may want to include this in the budget planning.
To know more about Abolition of MPF offsetting mechanism (PDF) , please refer to the following:Abolition-of-LSP-SP-Offseting