*******************************************
Following is a question by the Hon Mrs Regina Ip and a written reply by the Secretary for the Civil Service, Miss Denise Yue, in the Legislative Council today (May 16):
Question:
As stated in a discussion paper provided by the Government to this Council in April this year on the establishment and strength of the Civil Service, there will be a continuous increase in the number of civil servants retiring from the Civil Service in the coming decade, from the annual average of around 3,800 for the five-year period ended 2010-2011 to around 5,200 in the five-year period ending 2015-2016 and around 6,900 in the next five-year period ending 2020-2021. Moreover, no more new appointees are appointed to the Civil Service on permanent and pensionable terms starting from June 1, 2000. Instead, they will enjoy retirement benefits based on the terms under the Mandatory Provident Fund (MPF) Scheme or the Civil Servant Provident Fund (CSPF) Scheme. In this connection, will the Government inform this Council of:
(a) the respective numbers of those among the 158,444 serving civil servants as at the end of March 2011 who are entitled to retirement benefits based on permanent and pensionable appointment terms and on the terms under the MPF or CSPF Schemes;
(b) the current number of retired civil servants and judicial officers who are in receipt of pensions from the Government of the Hong Kong Special Administrative Region; and the amount of the Government's average monthly recurrent expenditure on pensions, including lump sum pension gratuities and monthly pension;
(c) the numbers of retired civil servants and judicial officers in receipt of a monthly pension in each of the next 10 years as estimated by the Government, together with their rates of increase and the amounts of recurrent expenditure on pensions, as well as the changes in such amounts; and
(d) the time, as estimated by the Government, by which the expenditure on pensions and pension obligations will completely come to an end, as no more new recruits are appointed to the Civil Service on permanent and pensionable terms since June 1, 2000?
Reply:
President,
Regarding part (a) of the question, as at March 31, 2011, there were a total of 158,348 civil servants (Note 1), judges and judicial officers (JJOs). Among them, 126,131 were appointed on pensionable terms (Note 2) and 32,217 were appointed on terms under the Mandatory Provident Fund Scheme or the Civil Service Provident Fund Scheme.
As for part (b) of the question, according to the Treasury's records, as at March 31, 2012, there were a total of 103,720 retired civil servants and retired JJOs in receipt of pension payments. According to the approved estimates for the 2012-13 financial year, the estimated average monthly recurrent expenditure on pensions (including the commuted lump sum pension gratuities and monthly pensions) is $1,846 million for the said financial year.
As for part (c) of the question, the number of persons in receipt of pension every year and the annual expenditure on pensions are affected by the following factors:
(i) the timing of retirement of officers appointed on pensionable terms - For civil servants, the normal retirement age under the Old Pension Scheme (Note 3) is 55 (Note 4), while that under the New Pension Scheme (Note 5) is 60, but civil servants appointed before July 1, 1987 and have opted for the New Pension Scheme may retire between the age of 55 and 60. In the next 10 years, a considerable number of civil servants appointed before July 1, 1987 and have opted for the New Pension Scheme will reach the "permitted retirement age". Their decisions on the timing of retirement will impact on the number of pensioners each year and the annual expenditure on pensions. As regards JJOs, their normal retirement age (depending on the rank) is 60 or 65, but those appointed before July 1, 1987 and have opted for the New Pension Scheme may retire (depending on the rank) between the age of 55 and 60 or between the age of 55 and 65. In the same way, their decisions on the timing of retirement will impact on the number of pensioners each year and the annual expenditure on pensions.
(ii) the lifespan of retirees - As pension is payable to a retiree on a monthly basis until his death, the lifespan of retirees will also impact on the annual number of pensioners and the expenditure on pensions.
(iii) the annual pay adjustment for civil servants and JJOs - Under the pension legislation, pension payment is calculated on the basis of an officer's highest annual pensionable emoluments, his length of service and the pension factor under the applicable pension scheme. If there is an upward adjustment in the pay for civil servants and JJOs in a financial year, the pension payment to those officers retiring in that year will change correspondingly, thus affecting the expenditure on pensions in that year and subsequent years.
(iv) the commutation percentage opted by individual officers under their respective pension schemes - According to the pension schemes provided under the pension legislation, an officer may choose to commute a certain percentage of his pension into a lump sum pension gratuity which will be paid to him upon his retirement. The remaining part of the pension will be payable to the officer on a monthly basis until his death. The decisions by individual officers on their commutation percentage will impact on the annual expenditure on pensions.
(v) the annual inflation rate - Under the law, the amount of monthly pension payable to a retiree in receipt of pension by the Government shall be adjusted each year in accordance with the Consumer Price Index (A) (if the Index registers an increase). Therefore, the annual inflation rate will impact on the pensions expenditure.
Due to the many variables mentioned above, it is difficult for us to have a full grasp of the number of pensioners each year and the estimated annual expenditure on pensions for the coming decade.
Regarding part (d) of the question, civil servants joining the Government on or after June 1, 2000 are no longer appointed on pensionable terms. We estimate that the last batch of civil servants appointed on pensionable terms will retire in 2040 or so, on the assumption that these officers were at the age of 20 when they joined the Government before June 1, 2000 and will retire in 2040 upon reaching the age of 60. The Government has the statutory obligation under the pension legislation to make pension payments to civil servants employed on pensionable terms when they retire and until they die. As regards JJOs, the Judiciary is still allowed to appoint JJOs on pensionable terms at the moment. As such, there is no end-date to the Government's expenditure on pensions and pension liabilities.
Note 1: Including officers of the Independent Commission Against Corruption but excluding locally engaged officers working in the Hong Kong Economic and Trade Offices in the Mainland and overseas.
Note 2: Refers to the pension schemes provided under the Pensions Ordinance (Cap. 89), the Pension Benefits Ordinance (Cap. 99) and the Pension Benefits (Judicial Officers) Ordinance (Cap. 401).
Note 3: Refers to the pension scheme provided under the Pensions Ordinance (Cap. 89).
Note 4: Under the Old Pension Scheme, civil servants having attained the age of 45 may apply for early retirement (e.g. on medical, compassionate or personal grounds) in accordance with the Pensions Ordinance and the Civil Service Regulations.
Note 5: Refers to the pension scheme provided under the Pension Benefits Ordinance (Cap. 99) or that provided under the Pension Benefits (Judicial Officers) Ordinance (Cap. 401).
Ends/Wednesday, May 16, 2012
Issued at HKT 15:06
NNNN