In mainland China, the vast majority of people save for their pension through social security, while Hong Kong residents do so through mandatory provident fund contributions. Although both are social welfare systems, there are many differences between the two.

Mainland pension insurance

1 Contribution base
Companies generally use the total salary of their employees as the contribution base, while individual employees typically use their average monthly salary from the previous year as the base for their social insurance contributions.

2 Contribution rate
According to the current social insurance policies, different contribution rates are implemented for different types of social insurance.

3 Welfare rights
In mainland China, individuals who have participated in pension insurance for at least 15 years and reach the legal retirement age can receive a basic pension monthly until death upon retirement.

Ps: Hong Kong residents who settle, study, or even work as self-employed individuals in mainland China can participate in the social security program, and the benefits and contribution arrangements are aligned with those of mainland residents. It is worth noting that if a mainland resident becomes a permanent resident of Hong Kong after contributing to pension insurance, they can continue to participate in the insurance while enjoying dual benefits from both mainland China and Hong Kong.

Hong Kong Mandatory Provident Fund

The Mandatory Provident Fund (MPF) in Hong Kong, also known as the MPF, requires all general employees, temporary employees, and self-employed individuals aged 18 to under 65, except for exempt persons, to participate in the MPF scheme.

1 Contribution base & contribution rate
Employers must contribute to the MPF scheme for their employees, paying 5% of the employee's monthly salary as mandatory contributions to the employee's MPF account, with a cap of $1,500. If the employee's monthly salary exceeds $7,100, 5% must also be deducted from the salary as a contribution, with the same cap of $1,500. Even summer workers are protected under the MPF system as long as they are continuously employed for 60 days or more.

2 Welfare rights
Individuals aged 65 and above can withdraw the accumulated benefits from mandatory contributions and tax-deductible voluntary contributions. However, if plan members meet the following criteria, they can withdraw accumulated benefits before the age of 65. These situations include:

· Aged 60 and retired early;

· Permanently leaving Hong Kong;

· Completely losing the ability to act;

· Suffering from terminal illness;

· If we talk about the differences between the MPF and the five insurances and one fund, the MPF is market-oriented, allowing individuals to choose the type of fund, but it also carries risks, while the five insurances and one fund have national standards, offering lower but relatively stable returns.