Law No. 7/2017 (Non-Mandatory Central Provident Fund System) came into force on 1 January this year.  The original provident fund individual accounts of residents have automatically become government-managed sub-accounts.  Starting today, members of the public can pay contributions through the contribution schemes or transfer the balance of government-managed sub-account flexibly in order to appreciate value to their retirement through investment.

The purpose of establishing the non-mandatory central provident fund system is to strengthen the social protection for the residents of the Macao SAR in their old age and to complement the existing social security system.  Since 2010, the SAR Government has opened provident fund individual accounts for eligible residents and injected start-up funds into their individual accounts, and it has made allocations for eight consecutive years after considering factors such as the fiscal surplus.  Since the implementation of non-mandatory central provident fund system, the original provident fund individual accounts of residents have automatically become the government-managed sub-accounts, and the allocation of government funding continues to be managed by the Social Security Fund (abbreviated to FSS in Macao).  Members of the public may transfer the balance of the government-managed sub-account flexibly, or pay contributions through the contribution schemes in order to accumulate wealth by appreciating value through investment, thus creating conditions for a more comfortable retirement.

The non-mandatory central provident fund system is composed of the joint provident fund scheme and individual provident fund scheme.  Generally speaking, Macao SAR permanent residents or non-permanent residents aged 18 or older are eligible to participate in the schemes.  The joint provident fund scheme is voluntarily set up by employer and voluntarily participated by employee, and both parties make contributions together.  In order to encourage enterprises to shoulder social responsibilities on their own initiative and to improve the protection for employees in their old age, the contributions paid by the employer towards the joint provident fund scheme may be considered as the operating cost, and can be deducted from the taxable income of the profits tax and group II of salaries tax.  In the first three years of the coming into force of the law, employer contributions can also enjoy an additional two times of the amount of tax concessions.  As for the individual provident fund scheme, it is voluntarily set up by Macao SAR residents who make contributions themselves.

In order to deepen the understanding of the community about the non-mandatory central provident fund system, the FSS so far has organized over 20 explanatory sessions since the publication of the law in last June, briefed employers, employees and other residents on the contents of the law and answered their questions.  The FSS also delivered the message of “Participate in Central Provident Fund System for Greater Peace of Mind in Your Retirement” through a variety of channels including the website, Macao’s Chinese and Portuguese radio and TV commercials, newspaper column, outdoor advertising banner, bus media advertising, TV advertising of buildings, online social networking platform, holding of community promotion day and quiz game, etc..  The non-mandatory central provident fund system is closely related to the retirement life of residents.  For more information about the System, please visit the website of the FSS at www.fss.gov.mo or call 2853 2850 during office hours for enquiries.