Abolition of MPF Offsetting (from 1 May 2025)
From 1 May 2025, employers can no longer use MPF benefits from mandatory contributions to offset SP/LSP for service on or after that date; the pre-transition portion can still be offset, and employer voluntary-contribution benefits can still be used.
Last updated: 2026-10-21
Use the MPF offsetting calculator to estimate the pre- and post-transition SP/LSP portions.
What was MPF "offsetting"?
Employers used to be able to use the accrued benefits from their MPF contributions to offset the severance payment (SP) or long service payment (LSP) owed to an employee. Legislation abolished this arrangement with effect from 1 May 2025 (the transition date).
What changed on 1 May 2025?
• Accrued benefits from employer mandatory contributions can no longer offset SP/LSP for service on or after the transition date.
• Service before the transition date (the "pre-transition portion") can still be offset by employer mandatory benefits, calculated on the last month's wages before the transition date.
• Benefits from employer voluntary contributions and length-of-service gratuities can still be used.
• A 25-year government subsidy scheme shares employers' costs for the post-transition portion.
Formula (monthly-rated employees)
SP/LSP = last month's wages × 2/3 × years of service; wages are capped at HK$22,500 (max HK$15,000 per year) and the total at HK$390,000. Pre- and post-transition portions are calculated separately. Use the MPF offsetting calculator to plug in numbers.
MPF offsetting calculator · Labour Department abolition site · MPFA
FAQ
When did the abolition take effect?
1 May 2025.
Does abolition increase an employee's MPF balance?
Contribution rates do not change. Employers can no longer take employer mandatory benefits to pay post-transition SP/LSP, so those benefits stay in the employee's MPF account.
Can pre-transition service still be offset?
Yes. The pre-transition portion can still be offset by employer mandatory benefits.