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Following is a question by the Hon Wu Chi-wai and a written reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in the Legislative Council today (October 28):
Question:
Under the Mandatory Provident Fund Schemes Ordinance (Cap. 485), an employer may use the accrued benefits derived from the contributions he made for an employee to a Mandatory Provident Fund (MPF) scheme to offset the severance payment (SP) or long service payment (LSP) payable to the employee under the Employment Ordinance (Cap. 57) (the offsetting arrangement). Some employees have pointed out that the offsetting arrangement undermines the interests of employees, depriving them of retirement protection. Recently, in response to reports that the Government planned to propose the abolition of the offsetting arrangement in the 2016 Policy Address, the Secretary for Labour and Welfare said that the Government had not taken any stance on the abolition of the offsetting arrangement and would continue to listen to the views from all sectors of the community. In this connection, will the Government inform this Council:
(1) whether it will conduct public consultation on the abolition of the offsetting arrangement before the end of the current term of the Legislative Council; if it will, of the details and timetable; if not, the reasons for that;
(2) as the information from the Mandatory Provident Fund Schemes Authority shows that the amount of accrued benefits withdrawn under the offsetting arrangement in each year from 2010 to 2014 accounted for 20 per cent or more of the total amount of accrued benefits withdrawn in the corresponding year, and the amounts of accrued benefits withdrawn under the offsetting arrangement in 2010 and 2011 were even more than the amounts of accrued benefits withdrawn on the ground of retirement and early retirement in those two years, whether the Government has reviewed if the offsetting arrangement runs counter to the original intent of setting up MPF schemes; if it has, of the relevant details; and
(3) of the respective amounts of accrued benefits withdrawn by the Government for the disbursement of (i) SPs and (ii) LSPs to non-civil service contract (NCSC) staff in each of the past three years; whether the Government has plans to abolish the offsetting arrangement when appointing new NCSC staff or offering further appointments to existing NCSC staff members, so as to take the lead in this respect; if it does, of the relevant details; if not, the reasons for that?
Reply:
President,
On the question raised by the Hon Wu Chi-wai, based on the information provided by the Policy and Project Co-ordination Unit under the Chief Secretary for Administration, Financial Services and the Treasury Bureau, and Civil Service Bureau, our reply is as follows:
(1) The current retirement protection system has four pillars, one of which is the Mandatory Provident Fund (MPF). As such, the offsetting arrangement of MPF is related to the issue of retirement protection. There has all along been a substantial body of opinion that the retirement protection function of MPF should be strengthened. The Commission on Poverty will launch a 6-month public consultation on retirement protection in December this year. We will in that context consult different sectors on matters that render the MPF not being able to discharge its inherent retirement protection function such as the offsetting arrangement.
(2) When the Government set up the MPF Schemes in 1995, the policy intent was to adhere to the long-established offsetting arrangement under the Employment Ordinance, allowing employers to offset severance payment (SP) or long service payment (LSP) payable to employees against the accrued benefits derived from their contributions to MPF schemes so that employers were not required to make double payments. As stated above, the scope of the public consultation on retirement protection will cover the ways and means of strengthening the functions of every pillar under the retirement protection system.
(3) Under the Non-Civil Service Contract (NCSC) Staff Scheme, Heads of Departments have to account on their own for the employment and management of as well as funding for engaging their NCSC staff. These include the calculation and disbursement of LSP and SP; and the arrangement for offsetting SP or LSP against the accrued benefits derived from the contributions made to the MPF schemes for employees. The Civil Service Bureau does not collect information on the amount of accrued benefits which were used by individual departments for offsetting SP and LSP of NCSC staff in the past three years.
On the proposal of abolishing the offsetting arrangement, the Government understands that employers and employees have different views on the issue and will continue to listen to the views from both sides. Before any decision is made by the Government on the proposal, there is no plan to change the arrangement of using the accrued benefits derived from employers' contributions to MPF schemes to offset SP and LSP of government employees (including NCSC staff).
Ends/Wednesday, October 28, 2015
Issued at HKT 14:13
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