Glossary

Common Glossary
Glossary For Insurance Terminology
MPF Common Glossary

Notes

The glossary contained certain terms referred to or used throughout this website. The glossary is compiled by China Life Trustees Limited from sources which are believed to be reliable and for easy reference only. Whilst reasonable care has been taken in the preparation of this glossary, it must not be regarded as a substitute for a review of the Mandatory Provident Fund Schemes Ordinance and/or other relevant legislation. Members should take their own legal advice in relation to the statutory meanings.

Accrued benefits
The amount of each scheme member's beneficial interest in an MPF scheme, including sums derived from the contributions made by or in respect of that scheme member, together with the income or profits arising from any investments of the contributions, but taking into account any losses in respect of the investments and any amounts paid in respect of the scheme member.
Constituent fund
An investment fund that constitutes or forms part of a scheme.
Contribution day
The day by which an employer is required to pay mandatory contributions for their employees (or by which a self-employed person must make his/her mandatory contributions) to the trustee of the relevant MPF scheme. This is:
  1. for regular employees – the 10th day after the last day of a calendar month within which the contribution period ends (or the 10th day after the last day of the month during which the permitted period ends if this is a later date);
  2. for casual employees under Industry Schemes – the 10th day after the last day of the contribution period or the next day after payment of relevant income for the contribution period;
  3. for casual employees under Master Trust Schemes and Employer-sponsored Schemes – the 10th day after the last day of the contribution period (or the 10th day after the last day of the contribution period during which the permitted period ends if this is a later date); and
  4. for self-employed persons – the last day of the contribution period.

If the contribution day falls on a Saturday, a public holiday, or a gale/black rainstorm warning day, then the next day (which is not a Saturday, a public holiday, or a gale/black rainstorm warning day) should be taken as the contribution day.

Contribution period
  1. In relation to an employer, every period for which the employer pays or should pay relevant income to an employee;
  2. In relation to a regular employee, every period for which the employer pays or should pay relevant income to the employee, excluding the period covered by the contribution holiday; and
  3. In relation to a casual employee, every period for which the employer pays or should pay relevant income to the employee.
Employee's relevant income
In relation to a relevant employee, any wages, salary, leave pay, fee, commission, bonus, gratuity, perquisite or allowance, expressed in monetary terms, paid or payable by an employer (directly or indirectly) to that relevant employee in consideration of his employment under that contract, but not including severance payments or long service payments under the Employment Ordinance (Chapter 57, Laws of Hong Kong).
Permitted period
Permitted period in the context of performing enrolment for an employee/a self-employed person into an MPF scheme:
  1. In the case of a regular employee, the first 60 days of employment within which the employer is required to enrol the employee into an MPF scheme;
  2. In the case of a casual employee, the first 10 days of employment within which the employer is required to enrol the employee into an MPF scheme; or
  3. In the case of a self-employed person, the first 60 days after the date on which the person becomes self-employed within which the person is required to enrol himself/herself in an MPF scheme.

If the last day of a permitted period is a Saturday, a public holiday, a gale warning day or a black rainstorm warning day, the permitted period is extended to end on the next following day which is not a Saturday, a public holiday, a gale warning day or a black rainstorm warning day.

Personal account
An account holding a scheme member’s MPF accrued benefits, including contributions and investment returns, in respect of former employment or self-employment. New contributions to this account are generally not accepted, though the accrued benefits will continue to be invested according to the scheme member’s instructions, and thus fees and charges may still be incurred.
Portability
When a member changes job, or a self-employed person ceases to be self-employed and becomes an employee of an employer, benefit can be transferred to:
  1. Another scheme e.g. the new employer's employer sponsored scheme or master trust scheme;
  2. Another account within the same scheme; or
  3. An account in another scheme of his own choice.
Preservation
Accrued benefits of mandatory contributions in the member account(s) will be preserved until payment. Scheme members can only withdraw the accrued benefits of mandatory contributions upon reaching age 65 or on other statutory grounds.
Rebalancing of existing investment allocation portion
To change the investment allocation percentage of existing account balance into different investment allocation percentage.
Self-employed persons
A person whose relevant income is derived from the person’s production of goods or services in Hong Kong, or trade in goods or services in or from Hong Kong.
Self-employed person's relevant income
As an SEP, you may use your assessable profits calculated in accordance with the Inland Revenue Ordinance as your relevant income for calculating mandatory contributions. Therefore, you can submit your most recent notice of assessment as proof of your relevant income. If you cannot present your most recent notice of assessment - if, for example, you have only become self-employed recently and have yet to file your tax return - one of the following can be taken as your relevant income:
  1. the "basic allowance" defined under the Inland Revenue Ordinance if you satisfy your trustee that you are unable to provide evidence of your relevant income;
  2. the income as declared in a written income declaration to your trustee (SEPs are reminded that it is a criminal offence to make a false or misleading declaration to the trustee and offenders may be prosecuted); or
  3. the maximum level of relevant income if you do not produce evidence of relevant income.

If you are a partner in a business, your relevant income for the financial year of the scheme should be calculated by making a proportional adjustment of the profits according to your share of partnership for that year. If you are a partner in more than one business, your relevant income should be the aggregate of your income derived from all those businesses for that year.

Surcharge
A late charge imposed on employers or Self-employed Person who fail to pay mandatory contribution by the contribution day. This surcharge is calculated at 5% of the contribution amount in arrears, and monies received are credited to the MPF account of the employees or self-employed persons concerned.
Vesting
Mandatory contribution paid (including employer's and employee's) and investment earnings derived from the mandatory contribution are fully and immediately vested as accrued benefits. When the employee ceases employment, irrespective of his service with the company, he will be entitled to 100% of the accrued benefits derived from employee and employer mandatory contributions. However, the entitlement of accrued benefits derived from employer voluntary contribution is usually subject to the governing rules set by the employer.