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The Chief Secretary for Administration, Mrs Carrie Lam, chaired the sixth meeting of the Commission on Poverty (CoP) in its second term this afternoon (June 26). Members continued discussions on retirement protection.
So far, the CoP had discussed three of the pillars under the multi-pillar retirement protection model. At today's meeting, members deliberated on the retirement protection functions of Pillar 3. According to the multi-pillars for retirement protection as put forward by the World Bank, Pillar 3 comprises voluntary savings, which in Hong Kong's context include the voluntary contributions under the Mandatory Provident Fund Scheme and retirement savings-related insurance and other products. At the meeting, members were briefed by the representatives from the Office of the Commissioner of Insurance (OCI) on savings-related life insurance products as well as the current situation of the provision of annuity products by insurance companies.
Nowadays, many insurance companies have launched savings-related life insurance products which entitle the insured person to receive various kinds of protection (including death, dreadful diseases and accidents) from the policy on one hand, and facilitate the insured person to do long-term savings on the other. The insured person could withdraw the savings by a lump sum or instalments which would form a stable source of income upon retirement. At present, there are 11 million effective life insurance policies, of which around 64 per cent (around 7 million) is savings-related. A large proportion of these policies are believed to be retirement-related. Members took note that the life insurance market played a crucial role in strengthening the retirement protection functions of Pillar 3.
At the meeting, representative of the OCI also introduced the current situation of the provision of annuity products by insurance companies. Members noted that the size of the local annuity market was relatively small and the number of products was limited. There are only annuity products with a fixed term in the market while life-long annuity products rarely exist. One possible reason is the lack of quality matching assets in the market for insurance companies to hedge against longevity and inflation risk. This discouraged the insurance companies from developing the annuity market.
Besides, member of the CoP, Dr CK Law, also briefed the meeting on his public annuity scheme proposal put forward in 2011. The report submitted by the team led by Professor Nelson Chow has not discussed in detail the proposal. Noting that the proposal could facilitate elderly persons to convert their savings into a steady stream of monthly income with possible top-up from Government depending on the elderly's financial situation, members agreed in principle that further study should be conducted on the proposal. Areas requiring further examination may include the financial sustainability of the proposal, the viability of launching a public annuity scheme in Hong Kong, the interface between the proposal and other elderly social security programmes etc. Members took the view that if further study indicates that the proposal is viable and practicable, considerations could be given to including the proposal in the consultation document for the purpose of inviting public views.
In addition, the CoP was briefed on the work progress of the Social Innovation and Entrepreneurship Development Fund (SIE Fund). Members noted that the SIE Fund had engaged four organisations, namely the Hong Kong Council of Social Service, PolyU Technology and Consultancy Company Limited, SOW (Asia) Foundation Limited, and The Yeh Family Philanthropy Limited as intermediaries to assist in the efforts to promote innovation and entrepreneurship. The SIE Fund is also preparing to launch new programmes in relation to social innovation and promotion of entrepreneurship, including a flagship project on food assistance to be launched in 2016.
Ends/Friday, June 26, 2015
Issued at HKT 21:07
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