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Following is a question by the Hon Leung Kwok-hung and a reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in the Legislative Council today (November 14):
Question:
According to a survey report published by the "Alliance for Universal Pension" in September 2010, over 90% of the respondents urged the Government to expeditiously carry out comprehensive planning and public consultation on the establishment of a universal retirement protection system. On the other hand, the Secretary for Labour and Welfare has indicated earlier that a task force on social security and retirement protection under the soon-to-be re-established Poverty Commission will be set up and headed by the Chief Secretary for Administration to conduct in-depth studies on the issues concerned, and to examine proposals for enhancing the existing retirement protection system. In this connection, will the Government inform this Council:
(a) how it will build consensus in the community regarding the implementation of a universal retirement protection system, and of the specific timetable for conducting public consultation;
(b) when the aforesaid task force will be set up and of the roadmap of its work; and
(c) regarding the enhancement of the existing retirement protection system, whether the authorities have considered implementing systems such as public trustee for Mandatory Provident Fund (MPF), public annuities and "MPF Full Portability", and considered such proposals as combining the Comprehensive Social Security Assistance payments for the elderly and the Old Age Allowance, and made projections of the sustainability of these proposals; if they have, of the estimated expenditure of various proposals; if not, the reasons for that?
Reply:
President,
My reply to the question raised by the Hon Leung Kwok-hung is as follows:
(a) and (b) The retirement protection system in Hong Kong comprises mainly three pillars: the Mandatory Provident Fund (MPF) system, voluntary private savings and the non-contributory social security system [comprising Comprehensive Social Security Assistance (CSSA), Old Age Allowance and Disability Allowance at present]. This model was adopted in the 1990's after lengthy discussion by different sectors of the community.
The Central Policy Unit (CPU) is conducting studies on the sustainability of the existing three-pillar system, and had completed five relevant studies between 2007 and 2010. A summary of these studies was appended to the Administration's paper submitted to the meeting of the Subcommittee on Retirement Protection on July 19, 2011 in the previous term of the Legislative Council. As the socio-economic environment in Hong Kong has undergone many changes after the financial tsunami and there have been adjustments to relevant policies, CPU has commenced a new round of territory-wide household survey to update the relevant data. The initial findings are expected to be available by the end of 2012 at the earliest for reference by relevant policy bureaux.
Nonetheless, I must clarify that CPU's studies on the subject of retirement protection are about the financial sustainability of the existing three pillars, and are not studies on a universal retirement protection system. "Universal retirement protection scheme" is a very complex and controversial issue, and there has not been a consensus on this subject, especially on issues like whether or not benefits should be paid to contributories only. The newly-formed Commission on Poverty will be underpinned by a Social Security and Retirement Protection Task Force, with the Chief Secretary for Administration as chairman and the Secretary for Labour and Welfare as vice-chairman, to follow up on ways to strengthen and improve the social security and retirement protection systems.
As a pragmatic way forward, the Government has proposed to introduce the Old Age Living Allowance, pitched at $2,200 per month, to supplement the living expenses of needy elders aged 65 or above. It is estimated that this new allowance will benefit over 400 000 elders, and can effectively strengthen the social security system as one of the pillars of the retirement protection system.
(c) The Government is determined to enhance the MPF system and promote reduction in MPF fees. For example, the Government has requested the Mandatory Provident Fund Schemes Authority (MPFA) to study supporting measures to facilitate the implementation of a full portability arrangement in future, while preparing for the implementation of the Employee Choice Arrangement. Moreover, MPFA will shortly release the results of its consultancy study on the cost of trustees, which will include proposed measures to lower their administration cost. Drawing reference from the cost study, MPFA will also put forward proposals on some reform direction. The Government will carefully consider the effectiveness and implications of each proposal.
The MPF system is a privately managed system designed to help the working population accumulate retirement savings, with contributions from both employers and employees. Its ongoing operation within the current parameters therefore will not have major direct impact on public finance.
Ends/Wednesday, November 14, 2012
Issued at HKT 12:06
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