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Following is a question by Hon Cyd Ho and a written reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in the Legislative Council today (November 4):
Question:
The incumbent Chief Executive (CE) made the following two pledges relating to employee benefits in his election manifesto, which I quote: "we will adopt measures to progressively reduce the proportion of accrued benefits attributed to employer's contribution in the Mandatory Provident Fund account that can be applied by the employer to offset long-service or severance payments" and "a special committee...will be set up to follow up on the study on standard working hours conducted by the current administration. This committee will examine issues relating to...legislative proposals on standard working hours". Only 20 months are now left in CE's term of office, but the Executive Authorities have not yet submitted the legislative timetable concerned to this Council. In this connection, will the Government inform this Council:
(1) whether it knows the number of Mandatory Provident Fund (MPF) accounts from which employers withdrew the accrued benefits derived from their contributions made for their employees to offset long-service or severance payments payable to the employees concerned under the Employment Ordinance (the offsetting arrangement) in each year since the implementation of the MPF scheme, and the relevant amounts of money involved, as well as the respective percentages of such amounts in the total amount of accrued benefits derived from employers' contributions before withdrawal; the number of MPF accounts from which the accrued benefits were withdrawn more than once;
(2) as CE indicated at the Question and Answer Session of this Council held on the 22nd of last month that, at this stage, he could not "make any pledge or state explicitly or implicitly the approach to be adopted by the Government" in respect of the abolition of the offsetting arrangement, of the reasons why the Government took such an attitude; whether one of the reasons is that "confidential information is involved"; if so, why the timing for CE to fulfil his election pledges is a piece of confidential information; and
(3) of the channels for the authorities to collect views from employees and the business sector on the abolition of the offsetting arrangement; the authorities' measures to ensure that the relevant legislative work will be completed within the term of office of the current Legislative Council or the incumbent CE's term of office, so as to honour the pledges made by CE in his election manifesto in relation to standard working hours and the abolition of the offsetting arrangement; of the authorities' plans to resolve the problem of employees' MPF being gnawed by the offsetting arrangement should the business sector refuse to abolish it, and to ensure that the Government will take the responsibility of safeguarding the retirement protection of employees?
Reply:
Acting President,
The Government's response to Hon Cyd Ho's question is as follows:
(1) According to the information from the Mandatory Provident Fund Schemes Authority (MPFA), the amount of accrued benefits under the Mandatory Provident Fund (MPF) Schemes used for offsetting severance payment (SP) or long service payment (LSP) was $3 billion in 2014. It involved 45 400 claims and represented 2 per cent of the total amount of accrued benefits in employees' contribution accounts derived from employers' contributions for that year. MPFA does not keep information on the number of MPF accounts involved and the respective number of withdrawals.
(2) The offsetting of SP and LSP against the accrued benefits arising from employers' contribution to MPF involves the interests of various stakeholders. It is an issue of great concern to the community and is also related to the important issue of retirement protection. Introducing changes to the existing arrangement will affect both the retirement benefits of employees and operating costs of employers, especially those of small and medium enterprises (SMEs). At present, the views of the employers and employees on this issue are rather divergent.
We understand that the labour sector is concerned about the reduction of MPF accrued benefits for employees arising from the offsetting arrangement, and strongly calls for abolishing the offsetting mechanism as soon as possible so as to enhance retirement protection for employees. On the other hand, employer groups consider that the offsetting mechanism represents the consensus reached after extensive consultation when the MPF arrangement was passed into law. They had agreed to support the implementation of the MPF system at that time because the Government agreed to stipulate clearly in the Mandatory Provident Fund Schemes Ordinance to permit offsetting of SP/LSP by MPF accrued benefits arising from employers' contributions. As such, employer groups maintain that abolition of the offsetting mechanism would not only amount to a breach of the then consensus of setting up MPF schemes, but would also increase employers' financial burden and impact significantly on the business environment of SMEs in particular. Hence they object strongly to the abolition of the offsetting mechanism.
At the Question and Answer Session of this Council on October 22, 2015, the Chief Executive stated that the offsetting arrangement was a very complicated issue and that the community would need time to thoroughly discuss and holistically examine it. The Government has all along been attaching great importance and listening carefully to the views of different sectors of the community, especially those of employees and employers, on the offsetting arrangement and will maintain an open mind in considering any feasible proposals. We hope that both employees and employers could, in the overall and long-term interests of Hong Kong, be sympathetic and accommodating towards each other's position so as to build consensus and forge the greatest possible mutual understanding in tackling this issue.
(3) The current retirement protection system has four pillars, one of which is the MPF. As such, the offsetting arrangement of MPF is related to retirement protection. There has all along been a substantial body of opinion in the community 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. The Government will maintain an open mind in listening to different views and, on completion of the consultation, analyse and study in detail the views collected and examine this issue holistically.
On working hours policy, the Government in April 2013 set up the Standard Working Hours Committee (SWHC) to follow up the earlier completed policy study on standard working hours (SWH), with a view to advising the Government on the working hours situation in Hong Kong, including whether a statutory SWH regime or any other alternatives should be considered. With reference to the findings of extensive public consultation and a comprehensive working hours survey conducted last year, SWHC is further exploring the directions of a working hours policy applicable to Hong Kong and aims to submit its report to the Government in the first quarter of next year.
Ends/Wednesday, November 4, 2015
Issued at HKT 15:50
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