Hong Kong proposes two-tier surcharge for delayed MPF contributions

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The Government also proposes empowering the MPFA to obtain income information from employers in suspected default cases to support civil claims on behalf of affected employees.

To strengthen deterrence against prolonged delays in the settlement of default Mandatory Provident Fund (MPF) contributions, the HKSAR Government has proposed legislative amendments to enhance the recovery process of default contributions.

A key proposal is the introduction of a two-tier surcharge mechanism, adding an additional level of surcharge (second-tier surcharge) on top of the existing surcharge (first-tier surcharge) to drive non-compliant employers to rectify defaults more promptly.

Under the current mechanism, employers who fail to make mandatory contributions on time are subject to a surcharge equivalent to 5% of the defaulted amount of contributions, with the surcharge credited in full to the MPF accounts of the affected employees.

Under the proposed mechanism, employers who fail to settle the overdue mandatory contributions and the first-tier surcharge in full within 120 days from the contribution day, will be subject to a second-tier surcharge equivalent to 10% of the outstanding amount. As with the existing arrangement, all surcharge payments will continue to be credited in full to the MPF accounts of the affected employees.

The Government has also proposed granting the Mandatory Provident Fund Schemes Authority (MPFA) additional powers to obtain information from employers in suspected default cases.

Under the proposal, the MPFA would be empowered to issue a statutory notice (RI Information Demand Notice) requiring relevant employers to provide relevant employee income information within a specified period of no less than 14 days. The measure is intended to enable the authority to verify key information relating to suspected contribution defaults more efficiently and initiate civil claims on behalf of affected employees at an earlier stage.

Employers who fail to comply with a statutory notice may be subject to a financial penalty.

According to official figures, the monthly average of mandatory MPF contributions during the 2025-26 financial year stood at approximately HK$5.5bn as of February 2026.

The MPFA issued an average of 31,000 payment notices for outstanding contributions and surcharges each month. Around 16% of non-compliant employers settled their arrears in full within 14 days of receiving a notice, while approximately 50% cleared their outstanding contributions and surcharges in full within four months of the contribution due date.

Despite these recovery efforts, more than HK$10mn in contributions and surcharges remain unrecovered each year due to circumstances such as employer liquidation or insolvency.

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