Offsetting LSP/SP Against MPF Since 1 May 2025
Currently, employers can offset the LSP/SP payable to employees under the Employment Ordinance against the MPF derived from employer mandatory and voluntary contributions (offsetting arrangement).
The Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022 to abolish the offsetting arrangement using MPF derived from employer mandatory contributions was passed by the Legislative Council in June 2022. The abolition of offsetting arrangement will take effect on 1 May 2025.
Starting from 1 May 2025 (the transition date), employers can no longer use MPF derived from employer mandatory contributions to offset LSP/SP of employees for years of service since the transition date. However, MPF derived from employer voluntary contributions can continue to offset LSP/SP of employees (irrespective of whether the years of service are before or after the transition date).
The abolition of the offsetting arrangement has no retrospective effect. If an employee’s employment commenced before the transition date, MPF derived from employer contributions throughout the employee’s whole employment period (irrespective of whether the contributions are mandatory or voluntary; and irrespective of whether the contributions are made before, on or after the transition date) can continue to be used for offsetting LSP/SP of the employee in respect of the years of service before the transition date.
For details, please refer to Labour Department’s Thematic Webpage on the Abolition of MPF Offsetting Arrangement.
