As Hong Kong approaches the May 2025 transition, where the Mandatory Provident Fund (MPF) offsetting mechanism for Long Service Payments (LSP) has be abolished, companies face a significant shift in how they must calculate and report these liabilities. At Valtech Valuation, we believe that fulfilling these requirements is not merely a matter of data entry, but a professional undertaking requiring deep actuarial expertise and rigorous judgment.
1. A Different Direction: Professionalism Over “Self-Serving” Processes
Many businesses are tempted by “self-serving” online tools that promise instant LSP results. However, we believe that technical matters regarding actuarial valuation should be left to professionals.
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Beyond Input and Output: Valuation is not a simple automated process; it requires a critical review of the underlying data. Overly simplistic models often rely on flawed assumptions, such as zero mortality or zero layoff rates, which fail to meet the scrutiny of professional auditors.
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The “Loyalty Factor”: We go beyond generic turnover rates by incorporating employee seniority and loyalty into our estimates. Ignoring these factors can lead to significant distortions, often resulting in the underestimation of potential liabilities.
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Data-Driven Rigor: Our models allow for non-zero layoff and mortality rates aligned with Hong Kong Government census statistics, ensuring your financial projections are grounded in reality.
2. Ensuring Audit-Ready Compliance and Consistency
For companies reporting under HKAS 19, the challenge lies in explaining the “why” behind the numbers to auditors and regulators.
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Variance Analysis: Valtech is uniquely equipped to explain the consistency—or lack thereof—between previous years’ figures and current valuations. We provide the necessary bridge to help management understand the drivers of change in their LSP obligations.
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Complete Disclosure Support: We prepare comprehensive disclosures in accordance with HKAS 19, covering actuarial modeling assumptions, remeasurement, roll-forwards, and sensitivity analysis.
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A Proven Track Record: Our team has a demonstrated history of successfully passing actuarial reviews by reputable accounting firms, providing you with the confidence that your reports are defensible under regulatory scrutiny.
The Valtech Edge: Scalability and Expertise
Whether you are a local NGO or a multinational corporation with tens of thousands of employees, our team provides the same level of meticulous care.
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Customized for Large Employers: For organizations with more than 1,000 employees, we build customized actuarial models to monitor long-term service costs and handle complex workforce structures, including a mix of permanent and contract staff.
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ISO-Certified Quality: Since 2021, Valtech has maintained ISO 9001 certification, ensuring that our valuation advisory and financial modeling processes meet international quality management standards.
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Multidisciplinary Team: Every engagement is handled by highly credentialed professionals, including CPAs, CFAs, and FRMs, who bring international case experience from Hong Kong, Singapore, and beyond. Our valuation programme has also been certified by a fellow actuary.
Is your LSP valuation process audit-ready?
Don’t leave your compliance to chance. Contact our specialist team today to ensure your long service payment liabilities are supportable, reasonable, and professionally managed.
