When starting a new job in Hong Kong, some employers offer new employees the choice of MPF vs ORSO for retirement savings. Many employers only offer MPF, and while I earlier posted some data on some of the best MPF plans in Hong Kong in lowering fees below 1% (still many times higher than many comparable US plans), I still find MPF plans to be overly rigid and expensive for what they offer. Unless you are fortunate enough to work for a employer that offers an ORSO plan with lower fees and/or better options, you have no choice but to have HK$3,000/month between you and your employer go into an MPF plan that you can hopefully at least invest in a globally diversified stock index for less than 1%/year.
If you do have the choice between an MPF and an ORSO, some questions to consider include:
- Will ORSO contributions all be made by you, your employer, or a combination of both? Some ORSO plans I’ve seen require no employee contribution, which some view as an immediate plus.
- In MPF, your employer will usually put in at least the HK$1,500 mandatory amount if you make more than HK$30,000/month – will your employer contribute at least as much to your ORSO?
- Does your employer match any voluntary contributions to the plan? If so, I usually recommend contributing up to the match if you plan to stay with the employer long enough to vest, as an employer match is close to being free money.
- Is there any recognition of the ORSO plan in your home country? Very few plans have this, but this would also be a huge plus.
- Does the ORSO offer any better, different, or lower-cost investment options compared with the MPF option?
Sometimes the employer does not have an MPF exemption for their ORSO scheme, but instead offers it as a “top up” where you must contribute to MPF, but may optionally also contribute to ORSO. Here I evaluate the ORSO scheme like any other savings plan, and generally would only go for it if there are significant tax savings or an employer match. Otherwise, I find investing in an individual brokerage account outside of work that can be invested in freely in stocks, bonds, or lower cost ETFs is the much better option.