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"EasyCal" ~ A Calculating Tool for the Abolition of MPF Offsetting Arrangement

Hello, I'm "EasyCal"！
Would like to know how to calculate the amount of severance payment (SP)/ long service payment (LSP) and the Government subsidy after the abolition of MPF offsetting arrangement? Let me help you!
  • The Legislative Council passed the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022 in June 2022 to abolish the use of the accrued benefits of employers' mandatory contributions under the Mandatory Provident Fund (MPF) System to offset SP and LSP (the offsetting arrangement).
  • The Government has announced that the abolition of offsetting arrangement will be implemented on 1 May 2025. The Secretary for Labour and Welfare will publish the commencement date of the abolition (i.e. the “transition date”) in the Gazette.
  • To assist employers to adapt to the policy change, the Government will introduce a 25-year subsidy scheme to share out their expenses on SP/LSP after the abolition of MPF offsetting arrangement.
Learn more

"EasyCal" ~ A Calculating Tool for the Abolition of MPF Offsetting Arrangement

Notes:
  • This calculating tool operates on the basis of the relevant provisions of the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022, data inputted by users and certain assumptions of circumstances. The computation steps and results generated are for initial reference and demonstration purposes only. Users are required to take into account the employment terms and conditions, as well as the actual employment situation of the employee concerned in order to calculate relevant statutory entitlements of the employee accurately.
  • The Labour Department accepts no liability for any losses, damages, costs or expenses howsoever arising from the use of or inability to use this calculating tool or use of or reliance upon any information or material provided by this calculating tool. The information generated by this calculating tool should neither be used in any legal proceedings nor be regarded as evidence in pursuing any claims.
  • Rounding of figures: figures may not add up to the total due to rounding.
  • The relevant provisions of the laws concerned remain the sole authority for calculation of the statutory entitlements.
Please read the above notes and check the box if you wish to proceed.

"EasyCal" ~ A Calculating Tool for the Abolition of MPF Offsetting Arrangement

Select employer / employee

Employer
Employee

Input employee's information

I want to calculate ：

Eligibility
Please select SP or LSP.

Eligibility
Note:
An employee can only be entitled to either SP or LSP in respect of the same employment period.

Employee's Information:

Please input the commencement date of employment of the employee.
Please input the relevant date in relation to the termination of employment of the employee.
Monthly-rated employee?
$ Larger values can be inputted in the text box directly. According to the Employment Ordinance, in calculation of for non-monthly rated employees, this amount shall not exceed 2/3 of (i.e. ) .
Please input the employee's wage rate immediately preceding the “transition date”.
$ Larger values can be inputted in the text box directly. According to the Employment Ordinance, in calculation of for non-monthly rated employees, this amount shall not exceed 2/3 of (i.e. ) .
Please input the employee's wage rate immediately preceding the termination of employment.
  1. The Government has announced that the abolition of offsetting arrangement will be implemented on 1 May 2025 (i.e. the “transition date”). Please input a date on or after 1 May 2025.
  2. Please input (a) the last month wages immediately preceding the termination of employment; or (b) average wages in the 12 months immediately preceding the termination of employment. Please input (a) the sum of any 18-day wages out of the last 30 normal working days immediately preceding the termination of employment; or (b) average wages in the 12 months immediately preceding the termination of employment.
Fields marked are compulsory.

Calculate the amount of after the abolition of MPF offsetting arrangement

The employee is I am already in employment before employed on or after the “transition date”.

Note:
According to the Employment Ordinance, the maximum payment of is $390,000. Since the employee'syour entitlement exceeds $390,000, the amount in excess will be deducted from the post-transition portion.
The amount of pre-transition portion of
+
The amount of post-transition portion of
=
The employee'sMy entitlement

Pre-transition portion of

Wage rate immediately preceding the “transition date” Average wages in the 12 months immediately Sum of any 18-day wages out of the last 30 normal working days immediately preceding the “transition date”
According to the Employment Ordinance, in calculation of for non-monthly rated employees, this amount shall not exceed 2/3 of (i.e. )
x
2/3
x
Years of service before the “transition date”
year
=
(a)

Post-transition portion of

Wage rate immediately preceding the termination of employment Average wages in the 12 months immediately Sum of any 18-day wages out of the last 30 normal working days immediately preceding the termination of employment
According to the Employment Ordinance, in calculation of for non-monthly rated employees, this amount shall not exceed 2/3 of (i.e. ) .
x
2/3
x
Years of service starting from the “transition date”
year
=
(b)
According to the Employment Ordinance, the maximum payment of is $390,000.
The employee'sMy entitlement is
= (a) + (b)

According to the Employment Ordinance, the maximum payment of is $390,000. Since the employee'smy entitlement (i.e. (a) + (b)) exceeds $390,000, the amount in excess will be deducted from the post-transition portion.

Pre-transition portion of
Pre-transition portion of remains unchanged
Post-transition portion of
The amount of post-transition portion of will be the remainder of $390,000 after deducting the amount of pre-transition portion
The portion of total exceeding $390,000 will be deducted from the post-transition portion
Pre-transition portion of remains unchanged
The amount of post-transition portion of will be the remainder of $390,000 after deducting the amount of pre-transition portion
The portion of total exceeding $390,000 will be deducted from the post-transition portion
The employee'sYour entitlement is
Note:
According to the Employment Ordinance, the maximum payment of is $390,000. Since the employee'syour entitlement exceeds $390,000, the amount in excess will be deducted from the post-transition portion.
轉制前部分
轉制前部分維持不變
轉制後部分
扣減轉制後部分，以使與轉制前部分相加時，總和不超過$390,000
總額超逾$390,000的部分須從轉制後部分扣除
轉制前部分維持不變
扣減轉制後部分，以使與轉制前部分相加時，總和不超過$390,000
總額超逾$390,000的部分須從轉制後部分扣除

Calculate the offsetting amount and the amount of payable Calculate the offsetting amount and the aggregate benefits payable to me

My employee is enrolled in… I am enrolled in…
Mandatory Provident Fund (MPF) Scheme
Please select
Occupational Retirement Scheme (ORS)
Note:
Save for ERMC, the law allows employers and employees to negotiate on how to allocate the offsettable benefits. For the purpose of demonstration, this calculating tool assumes that all the offsettable benefits will first be used for offsetting the pre-transition portion of . The remainder (if any) will be used for offsetting the post-transition portion of . Save for "carved-out benefits", the law allows employers and employees to negotiate on how to allocate the offsettable benefits. For the purpose of demonstration, this calculating tool assumed that all the offsettable benefits will first be used for offsetting the pre-transition portion of . The remainder (if any) will be used for offsetting the post-transition portion of .
Pre-transition portion of
offset
offset
offset
The accrued benefits of employer's MPF mandatory contributions "Carved-out benefits"
The aggregate amount of the accrued benefits of employer's MPF voluntary contributions (ERVC)/ gratuities/ non-MPF exempted ORS benefits
The aggregate amount of remaining benefits/ gratuities
The amount of pre-transition portion of payable ERMC retained in the MPF account "Carved-out benefits" remained after offsetting
(a)
The aggregate amount of ERVC/ gratuities/ non-MPF exempted ORS benefits remained
The aggregate amount of remaining benefits/ gratuities remained
Post-transition portion of
offset
The aggregate amount of ERVC/ gratuities/ non-MPF exempted ORS benefits remained after offsetting the pre-transition portion of The aggregate amount of remaining benefits/ gratuities remained after offsetting the pre-transition portion of
ERMC retained in the MPF account Carved-out benefits
(a)
The amount of post-transition portion of payable
ERVC retained in the MPF account/ gratuities or non-MPF exempted ORS benefits remained after offsetting "Carved-out benefits" remained after offsetting
(b) (b)
The amount of payable to the employee after offsetting is
= (a) + (b)
The amount of accrued benefits derived from employer's contributions retained in the MPF account/
gratuities or non-MPF exempted ORS benefits remained after offsetting: The amount of vested benefits of employer's ORS contributions/ gratuities remained after offsetting is
= (a) + (b)
+
ERMC retained in the MPF account The amount of vested benefits of employer's ORS contributions/ gratuities remained
+
ERVC retained in the MPF account/ gratuities or non-MPF exempted ORS benefits remained after offsetting
The aggregate amount of benefits payable to me is

Calculate the amount of Government subsidy Calculate the aggregate amount of benefits under the current offsetting regime

To assist you to adapt to the policy change, the Government will introduce a 25-year subsidy scheme to share out your expenses on the post-transition portion of SP/LSP after the abolition of MPF offsetting arrangement.
The 25-year Subsidy Scheme for Abolition of MPF Offsetting Arrangement has been expired when the employee concerned leaves employment on .
The Subsidy Scheme for Abolition of MPF Offsetting Arrangement is not applicable as the amount of post-transition portion of payable to the employee concerned is $0.

Calculate my shared amount and the amount of Government subsidy

According to the Employment Ordinance, the maximum payment of is $390,000.
+
The amount of accrued benefits derived from employer's contributions retained in the MPF account/ gratuities or non-MPF exempted ORS benefits remained after offsetting The amount of accrued benefits derived from employer's contributions retained in the MPF account/ gratuities or non-MPF exempted ORS benefits remained after offsetting The amount of vested benefits of employer's ORS contributions/ gratuities remained after offsetting
=
The aggregate amount of benefits payable to me
Under the Subsidy Scheme for Abolition of MPF Offsetting Arrangement, the share ratio/ amount payable by an employer in respect of the post-transition portion of SP/LSP for each year are:
Year after the abolition of MPF offsetting arrangement Employer's share ratio/ amount per employee

(% of post-transition portion of SP/LSP payable)
First $500,000 of all post-transition portion of SP/LSP paid by an employer in a year Beyond the first $500,000 of all post-transition portion of SP/LSP paid by an employer in a year
1-3 50%,capped at $3,000 50%
4 55%,capped at $25,000 55%
5 60%,capped at $25,000 60%
6 65%,capped at $25,000 65%
7 70%,capped at $50,000 70%
8 75%,capped at $50,000 75%
9 80%,capped at $50,000 80%
10 80% 85%
11 80% 90%
12 85% 95%
13 85% 100%
14-19 90% 100%
20-25 95% 100%

Let's look at some examples!

In the first 9 years after the abolition of MPF offsetting arrangement, for cases falling within the $500,000 threshold, an employer only needs to pay the "capped amount" if the shared amount of SP/LSP payable by the employer per employee is higher than the "capped amount".
Example 1: In Year 3 after the abolition of MPF offsetting arrangement
Post-transition portion of
SP/LSP
$36,000
x
Employer's share ratio
50%
=
The amount calculated according to
the share ratio
 $18,000
or
"Capped amount"
$3,000
(whichever is lower)
Employer pays
$3,000
92%
Government subsidises $33,000
8%
Employer pays $3,000
In the first 9 years after the abolition of MPF offsetting arrangement, for cases falling within the $500,000 threshold, an employer needs to pay according to the share ratio if the shared amount of post-transition portion of SP/LSP payable by the employer per employee is lower than the "capped amount".
Example 2: In Year 1 after the abolition of MPF offsetting arrangement
Post-transition portion of
SP/LSP
$5,000
x
Employer's share ratio
50%
=
The amount calculated according to
the share ratio
 $2,500
or
"Capped amount"
$3,000
(whichever is lower)
Employer pays
$2,500
50%
Government subsidises $2,500
50%
Employer pays $2,500
For the initial 12 years after the abolition of MPF offsetting arrangement, for cases falling beyond the $500,000 threshold, the amount of post-transition portion of SP/LSP payable by an employer per employee will be calculated according to the share ratio.
Example 3: In Year 2 after the abolition of MPF offsetting arrangement
Post-transition portion of
SP/LSP
$30,000
x
Employer's share ratio
50%
=
Employer pays
$15,000
50%
Government subsidises $15,000
50%
Employer pays $15,000
When the employee concerned leaves employment, the accumulated amount of post-transition portion of SP/LSP (before deducting the government subsidy) payable to all employees in this year…
Does not exceed $500,000
Please select
Exceeds $500,000

entitlement:

Wage rate immediately preceding the termination of employment Average wages in the 12 months immediately Sum of any 18-day wages out of the last 30 normal working days immediately preceding the termination of employment
According to the Employment Ordinance, in calculation of for non-monthly rated employees, this amount shall not exceed 2/3 of (i.e. ).
x
2/3
x
Years of service
year
=
According to the Employment Ordinance, the maximum payment of is $390,000.
Note:
Under the current offsetting regime, the accrued benefits of employer's MPF mandatory contributions (ERMC) can be used for offsetting your . Likewise, the accrued benefits of employer's MPF voluntary contributions (ERVC), non-MPF exempted ORS benefits and gratuities based on years of services can also be used for offsetting your . Under the current offsetting regime, the vested benefits of employer's ORS contributions and gratuities based on length of services can be used for offsetting your .
offset
ERMC The aggregate amount of vested benefits of employer's ORS contributions / gratuities
The aggregate amount of ERVC/ gratuities/ non-MPF exempted ORS benefits
ERMC retained in the MPF account The amount of vested benefits of employer's ORS contributions/ gratuities remained after offsetting
(a)
ERVC retained in the MPF account/ gratuities or non-MPF exempted ORS benefits remained after offsetting
(b)
The amount of accrued benefits derived from employer's contributions retained in the MPF account/
gratuities or non-MPF exempted ORS benefits remained after offsetting: The amount of vested benefits of employer's ORS contributions/ gratuities remained after offsetting is
= (a) + (b)
+
ERMC retained in the MPF account The amount of vested benefits of employer's ORS contributions/ gratuities remained after offsetting
+
ERVC retained in the MPF account/ gratuities or non-MPF exempted ORS benefits remained after offsetting
The aggregate amount of benefits payable to me is
Under the Subsidy Scheme for Abolition of MPF Offsetting Arrangement, the amount of payable is , and the amount of Government subsidy is .
The employment of the employee concerned is terminated on (i.e. in Year after the abolition of MPF offsetting arrangement). After offsetting (if applicable), the amount of payable is .
During the year between 1 May and 30 April , the accumulated amount of post-transition portion of SP/LSP payable to all employees does not exceedexceeds $500,000. Under the Subsidy Scheme for Abolition of MPF Offsetting Arrangement, for cases falling withinoutside the $500,000 threshold, the employer's share ratio in Year after the abolition is , and the "capped amount" is .

Under the Subsidy Scheme for Abolition of MPF Offsetting Arrangement, the amount of payable is . The calculation is:

The amount of after offsetting
x
Employer's share ratio
=
Employer's shared amount
or
(whichever is lower)
"capped amount"

The amount of Government subsidy is . The calculation is:

The amount of after offsetting
-
The amount of payable under the Subsidy Scheme for Abolition of MPF Offsetting Arrangement
=

Summary

The employee's entitlement:
The amount of benefits used for offsetting:
The amount of payable after offsetting:
The amount of Government subsidy:
The amount of payable after netting off the amount of Government subsidy:

Comparing the aggregate amount of benefits payable to you under the current offsetting regime and after the abolition of MPF offsetting arrangement

Under the current offsetting regime After the abolition of MPF offsetting arrangement
The amount of accrued benefits derived from employer's contributions retained in the MPF account/ gratuities or non-MPF exempted ORS benefits remained after offsetting The amount of vested benefits of employer's ORS contributions/gratuities remained after offsetting
The aggregate amount of benefits payable to you
The aggregate amount of benefits payable to you after the abolition of MPF offsetting arrangement is more than less than the same as that under the current offsetting regime. The Government will make up for the shortfall by way of an administrative scheme to ensure that you would not be worse off due to policy change. Details of the administrative scheme will be announced when available.