The Mandatory Provident Fund Schemes Authority has warned of a potential fourth consecutive annual increase in employer contribution defaults, with hundreds of unrecoverable cases each year involving more than HK$10 million in unpaid contributions.

MPFA Managing Director Cheng Yan-chee revealed on a television program on Sunday that notices issued to employers owing MPF payments climbed from 340,000 in 2022 to 390,000 in 2024, a seven to eight percent annual increase.

He projected similar or slightly higher growth this year.

Employers currently face a flat five percent surcharge regardless of the length of the delay period. Cheng said the authority is discussing legislative changes with the government to implement a multi-tier penalty system, where extended delays would trigger a 10 percent surcharge.

Cheng also welcomed the suggestion to expand the government’s Protection of Wages on Insolvency Fund to cover MPF defaults, as only about HK$10 million annually becomes unrecoverable - a sum he said wouldn't strain government finances.

The comments come as the MPFA prepares to announce next month the results of its public consultation on MPF full portability, which would allow employees to transfer both their contribution portions and that of their employers between schemes.

Cheng expressed confidence that the measure could take effect next year.

The authority is also reviewing the Default Investment Strategy, including potentially delaying its risk adjustment phase from age 50 to 60 to reflect increasing lifespans. This review is expected to conclude within two years.

Stiffer MPF penalties in discussion as employer defaults keep climbing