Can MPF contributions be used to offset Long Service Payment or Severance Payment upon the employee's termination of employment?
Yes. An employer can use the accrued benefits in the MPF scheme that are attributable to the employer's contributions to offset any Long Service Payment (LSP) or Severance Payment.
For example, if the accrued benefits are more than the LSP, the employer can withdraw an amount equal to the LSP to fulfill its obligations. However, if the accrued benefits are less than the LSP, the employer can withdraw an amount equal to the accrued benefits as partial payment, but must pay the LSP shortfall in order to fulfill obligations.