Hong Kong Fact-File Part 7:
Business Owner Welfare and Lifestyle

7.3 Hong Kong Offshore and International Pensions

Pension Portability

Expatriate individuals working in Hong Kong are exempt from the MPF if they are members of an overseas pension fund. An overseas scheme does not have to be approved or recognised by the MPFA.

From the point of view of business owners from the United Kingdom looking to relocate to Hong Kong, it is sometimes possible to ensure continuity in this area.

QROPs (Qualifying Recognised Overseas Pensions Schemes) are designed for those who have contributed to a UK pension scheme, but are now living elsewhere as an expatriate, and have terminated their residence in the country.

For the first five years after transfer, the QROPS provider is obliged to report transfers and payments to HM Revenue and Customs, but after that period, the various tax benefits of the retirement scheme can be taken according to the rules of the country in which it is established; generally with more favourable tax consequences than in the UK, as QROPs providers have tended to establish themselves in countries that tax pension benefits minimally.

In addition, QROPS offer greater flexibility compared to their UK counterparts, with the pensioner not obliged to purchase an annuity at 75 (or face a tax penalty for not doing so), meaning that the assets can be invested elsewhere, and a greater proportion of the pensioner's wealth can be passed on to his or her beneficiaries.

Pension Portability

MPF pensions are not portable as such, but if an individual changes jobs, he/she may either opt to retain their contributions in the same scheme, or transfer them to the scheme that his new employer uses.
In the event of an individual moving away from Hong Kong, his/her ‘pension pot’ will be paid as a lump sum.