Hong Kong LSP + MPF Offset Abolition Calculator
From 1 May 2025, Hong Kong abolished the MPF offset mechanism for Long Service Payment (LSP) and Severance Payment (SP). Employers can no longer offset LSP/SP using employer MPF contributions accumulated after 1 May 2025. Calculate your LSP entitlement under the new rules.
| Monthly Wage | — |
| Wage Capped at HK$22,500 | — |
| Years Pre-1 May 2025 | — |
| Years Post-1 May 2025 | — |
| LSP Pre-May (offsettable) | — |
| LSP Post-May (not offsettable) | — |
| Employer MPF Pre-May Accumulated | — |
| LSP Pre-May Net (after offset) | — |
| LSP Post-May Net (no offset) | — |
| Total Net LSP | — |
MPF Offset Abolition Background
Long Service Payment (LSP) and Severance Payment (SP) under the Employment Ordinance — historically reduced by accumulated employer MPF contributions. The offset meant that long-service employees often received zero LSP because the employer's MPF balance equalled or exceeded the LSP entitlement.
The MPF offset abolition (Employment and Retirement Schemes Legislation Amendment Ordinance 2022) eliminates this from 1 May 2025 onward for service rendered after the transition date. Pre-May 2025 service continues under the old offset rules.
Source: mpfa.org.hk + Labour Department
How LSP Is Calculated
LSP = 2/3 × monthly wage × years of service. Monthly wage is capped at HK$22,500 for LSP calculation. Total LSP cannot exceed HK$390,000.
Eligibility: employees with 5+ years continuous service whose employment is terminated by employer (other than for serious misconduct). Resignation does not trigger LSP unless triggered by reaching retirement age (65) or terminal illness.
Transitional Rules
Pre-1 May 2025 service: LSP/SP can still be offset by employer MPF contributions accumulated during that pre-May 2025 period. Old rules apply.
Post-1 May 2025 service: LSP/SP for this service period cannot be offset by any employer MPF. Employee receives full LSP entitlement. Employer pays from operating funds.
Government Subsidy Scheme
To ease the transition, the government provides a 25-year subsidy scheme to assist SMEs with post-May 2025 LSP payments. Employers can claim partial reimbursement for LSP paid to long-service employees.
Reimbursement decreases over the 25 years as employers are expected to build savings reserves. Details: 50% subsidy in year 1, decreasing to 5% by year 25. Apply via MPFA portal after paying LSP.
Source: MPFA LSP/SP government subsidy