Offsetting Arrangement of Long Service Payment ("LSP") and Severance Payment ("SP")
As an employer, if you are planning to offset the Long Service Payment or Severance Payment paid to your employees with the MPF accrued benefits derived from the employer's contribution, please note the following:
Under the Employment Ordinance, some employees may be entitled to Long Service Payment or Severance Payment. According to the MPF legislation, an employer can offset the Long Service Payment or Severance Payment paid to an employee with the MPF vested benefits derived from the employer's contribution made to an MPF scheme for that employee.
The offsetting sequence is:
- Vested balance of employer voluntary contributions (if any)
- Employer mandatory contributions
- Employers should communicate with their employees if they have revised the Agreement in relation to the Long Service Payment or Severance Payment offsetting arrangement.
- Employers should communicate their intention to their employees with regard to Long Service Payment or Severance Payment claim before applying the offsetting agreement.
How to File Offsetting Agreement

Complete Claim Form
Mark "Long Service Payment /Severance Payment Claim" and indicate the Long Service Payment / Severance Payment amount in the relevant columns on the remittance statement or the Employee Termination Notice

Submission
Submit the original Long Service Payment / Severance Payment receipt duly signed by you and your employee
Note
- Long Service Payment / Severance Payment offset to employer will only be made on the condition that the employee concerned had given his / her instruction on fund transfer or claim; or after three months from the date of receipt of Employment Termination Notice, whichever is earlier.
- In order to expedite the process to reimburse Long Service Payment / Severance Payment amount from employer’s contribution account, please submit the completed “Claim Form for Payment of Accrued Benefits on Ground of Permanent Departure from Hong Kong / Total Incapacity / Terminal Illness / Small Balance / Death (For Scheme Member)” [FORM: ABD (MEM)-W(O)] or “Claim Form for Payment of Accrued Benefits on Ground of Attaining the Retirement Age of 65 or Early Retirement (For Scheme Member)” [FORM: ABD (MEM)-W(R)] or “Request for Fund Transfer Form (for self-employed person, personal account holder or employee ceasing employment)” [FORM: RFT (MEM)] of the relevant employee(s) against whom Long Service Payment / Severance Payment amount(s) is / are claimed; otherwise, the reimbursement will be paid in approximately 120 days from the date the “Employee Termination Notice” is received.