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4 mins readSmart Strategies for MPF Withdrawal
Retirement marks a major life milestone, and understanding how to withdraw your MPF is a crucial part of your financial plan. This guide will help you navigate the essential details and make smart decisions to manage your retirement savings effectively.
When Can You Withdraw Your MPF?
- Upon reaching the age of 65
- Under specific legal conditions, including early retirement at age 60, permanent departure from Hong Kong, total incapacity, terminal illness, death and small balance account closure
What Are Your MPF Withdrawal Options at 65?
Upon reaching the retirement age of 65, you can choose from several options for managing your MPF savings:
- Withdrawal in one lump sum
- Withdrawal by instalments
- Remaining in the MPF scheme for continuous investment
What Documents* Do You Need to Withdraw MPF at 65?
- Identity document (e.g. HKID Card)
- Claim form for payment of MPF on grounds of attaining the retirement age of 65 or early retirement
* If your MPF trustee and scheme are onboarded to the eMPF platform, all administrative processes will be handled through the platform.
Are There Any Fees for Withdrawal by Instalments?
- Generally, MPF trustees must process at least four installment withdrawals per year free of charge. However, policies vary between schemes, so it’s best to check with your trustee before applying.
Key Considerations When Withdrawing Your MPF
Before making a withdrawal, be sure to consider the following factors:
- Market Conditions: If fund prices are low, withdrawing immediately may not be ideal. You may want to leave your funds invested to benefit from future growth, but be aware that market fluctuations could affect your balance.
- Voluntary Contributions: If you've made voluntary contributions, check with your trustee regarding the withdrawal rules for this portion.
- Guaranteed Funds: If you're invested in a guaranteed fund, ensure that you meet the conditions (e.g., lock-in period) to qualify for guaranteed returns. Early withdrawal could cause you to lose these benefits.
- MPF Offsetting Mechanism: Under the Employment Ordinance, employers may use their MPF contributions to offset long service or severance payments, potentially reducing the amount you receive upon withdrawal.
Enjoy Taxe Benefits and Accumulate Your Retirement Savings with MPF Tax Deductible Voluntary Contributions (TVC)
Introduced in 2019, TVC allows members to make additional voluntary MPF contributions while enjoying tax deductions. Under the current tax system, you can claim tax deduction of up to HK$60,000 per tax year. At the highest tax rate of 17% (for the 2023/24 tax year), this could result in savings of up to HK$10,200 in taxes. However, it’s important to note that this deduction cap applies to both TVC and qualifying annuity premiums.
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Everything You Need to Know About MPF Contribution
The MPF system is a cornerstone of retirement protection for employees in Hong Kong. Understanding the contribution requirements ensures both employers and employees fulfill their responsibilities correctly and can plan effectively for the future.
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Three Simple Steps to Make MPF Consolidation Easy
Life in Hong Kong is fast-paced, and managing MPF accounts is often overlooked when changing jobs. This can result in multiple MPF accounts under your name, making management inefficient and potentially affecting your investment strategy. In fact, consolidating your MPF personal accounts is straightforward—just follow these three simple steps.
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