Understanding MPF Implication for Research Grants | Helen Leung Finance Seminar

1. Welcome to the seminar:MPF Implication on Research Grant Holders Helen Leung Finance Office 15 September 2000

2. Agenda • The MPFO • Current retirement benefits v.s. MPFO era • The impact on your budget • Budget clearance procedures • Commonly asked questions • Hot Lines • Questions & Answers

3. The MPFO - Introduction • Will come into effect on 1.12.2000 • It is an employment-related contribution system • Covers all employees of age 18 to 65 with a few exemptions • Include full-time & part-time employees working for 60 days or more

4. MPFO - Exempted Persons • Employees who, at 1.12.2000, have attained 64 years of age • Members of MPF-exempted ORSO schemes • People from overseas who enter HK for employment for < 1 year, or who are covered by overseas retirement schemes

5. MPFO - Employee Contribution • Mandatory = 5% of relevant income • Starts from 31st day of employment • If relevant income < $4,000 ==> contribution is optional • If relevant income > $20,000 ==> maximum contribution is $1,000 • Any amount > mandatory will be voluntary

6. MPFO - Employer contribution • Mandatory = 5% of relevant income • Starts from 1st day of employment • If relevant income > $0 ==> contribution is required • If relevant income > $20,000 ==> maximum contribution is $1,000 • Any amount > mandatory will be voluntary

7. MPFO - Relevant Income Relevant Income includes: • Basic salary • Cash allowances • Gratuity • Overtime pay Excludes housing benefits

8. MPFO - Withdrawal of Benefits • Attain the age of 65 • Retire between age 60 & 65 • Death or total disability • Depart from HK permanently (once only) • Small balance [<$5,000] and no mandatory contribution for past 12 months

9. HKBU Current retirement benefits • Superannuation benefit => ORSO scheme • Gratuity benefit => 8.5% - 15% of salary payable annually or at end of contract • No superannuation benefit or gratuity for part-time, short-term or temporary staff • Salary, superannuation contribution & gratuity are charged to your staff cost budget

10. The MPFO era - HKBU Policy - 1 of 3 • Superannuation Fund member • continue or join the MPF scheme • Gratuity term staff • join the ORSO scheme or MPF scheme • U contribution + gratuity receivable = original gratuity amount ==>> NO effect on the staff cost budget

11. The MPFO era - HKBU Policy - 2 of 3 • Staff with no retirement benefit • join the MPF scheme • staff & U contributes 5% of relevant income = legal requirement • Extra 5% from your staff cost budget to pay the U mandatory contribution

12. The MPFO era - HKBU Policy - 3 of 3 • Staff who claim exemption under MPFO • Staff will declare • Personnel Office will verify • staff & U will NOT contribute ==>> NO extra 5% from your staff cost budget

13. The Impact on your budget • Mandatory contribution is required for : • Part-time staff • Short term appointment < 1 year • Research staff • Student helpers • Temporary helpers

14. The Impact on your budget • From 1.12.2000 • If you appoint any of the above staff group, • you will have to pay the 5% of relevant income from your staff cost budget • Maximum = $1,000 per month ==> Pls add 5% to your estimated staff cost

15. The Impact on your budget - An example - 1 of 2 • A research assistant is appointed for 6 months from 1.1.2001 • Monthly salary = $10,000 • The salary is paid by a research project • The amount charged to staff cost budget of the research project = 10,000 + 5% X 10,000 = 10,500 per month

16. The Impact on your budget- An example - 2 of 2 • If NO MPFO ==> Staff cost is $10,000 ==> RA will receive $10,000 • With MPFO ==> Staff cost is $10,500 ==> RA will receive $9,500 (I.e. 10,000 - 10,000 X 5%)

17. The Impact on your budget • UGC will NOT provide additional funding to cater for the new legal requirement • The University does not have any extra resources to top up the additional contribution ===>> PLEASE build in your staff cost budget for the extra contribution

18. Budget Clearance Procedures- 1 of 2 • Prepare staff requisition form (“SRF”) to Personnel Office (“PERS”) • If use PR, send the PR directly to FO • PERS will fax the SRF to FO for budget clearance • PSYS/FO will clear Recurrent Fund staff cost • ATS/FO will clear non recurrent fd staff cost

19. Budget Clearance Procedures- 2 of 2 • A copy of the form will be sent to PERS /user • FO will add 5% MPF mandatory contribution to the staff cost commitment • The committed staff cost will be adjusted when MPF contribution is confirmed NOT required

20. Commonly Asked Question - 1 of 3 • Will an employee from China be exempted from MPFO ? • He will be exempted if he enters HK with work permit for the first 12 months and • the 12 months’ period will be counted from the 1st day he lands HK.

21. Commonly Asked Question - 2 of 3 • If an overseas employee extends his contract beyond 12 months, what happen ? • He will be required to join the MPF scheme, unless he’s covered by an overseas scheme; • The U & the staff will contribute from the 1stday & 31st day of the 13th month respectively.

22. Commonly Asked Question - 3 of 3 • When MPF comes in, do we need to provide Long Service Payment (LSP) ? • The law allows LSP to be offset against the U contribution to MPF scheme • LSP requires 5.8% provision and MPF is 5% • Need to provide the additional 0.8%

23. Hot Lines Personnel policy • Ms Alice Chu Ext 7512 Financial issues • Ms Melinda Young Ext 7925 • Ms Alice Chan Ext 5018 MPFO information • http://www.hkbu.hk/~fohome/mpf

24. MPF Implication on Research Grant Holders Questions and Answers Thank You