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LCQ5: Retirement protection
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     Following is a question by the Hon Leung Yiu-chung and a reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in the Legislative Council today (November 18):

Question :

     The Hong Kong Poverty Situation Report 2014 published by the Government on the 10th of last month indicates that after recurrent cash policy interventions, the number of elderly persons classified as poor accounted for 30 per cent of the elderly population in 2014, and this percentage was similar to that of the year before.  There are views that the current means-tested poverty alleviation measures are unable to resolve the problems concerning elderly poverty and retirement protection.  Meanwhile, the Government has announced that it will conduct a public consultation on retirement protection at the end of this year. In this connection, will the Government inform this Council:

(1) whether it has assessed if the establishment of a universal retirement protection scheme will be more effective in resolving the problem of elderly poverty than the implementation of means-tested poverty alleviation measures; if it has assessed, of the details; if not, the reasons for that;

(2) of the approach to be adopted for conducting the aforesaid public consultation; the specific details of the various retirement protection options to be included in the consultation paper and whether universal retirement protection options will be included in such options; if such options will be included, of the timetable for implementing the relevant options; if not, the reasons for that; and

(3) given that while the Research Report on Future Development of Retirement Protection in Hong Kong was published by a team led by Professor Nelson Chow way back in August last year which put forward universal retirement protection options, but the Government has not implemented any of such options so far, whether the Government will shoulder the financial and political responsibilities arising from the delay in implementing a universal retirement protection option; if it will not, of the reasons for that?

Reply:

Acting President,

     According to the Hong Kong Poverty Situation Report 2014, 293 800 elderly persons (i.e. aged 65 or above) were identified as poor after recurrent cash policy intervention, with a poverty rate of 30 per cent, which was 0.5 percentage point lower than that of 2013. It is noteworthy that one of the limitations of the poverty line is that it takes household income as the single indicator for measuring poverty without considering the amount of assets. As the population continues to age rapidly, a considerable number of elderly persons who have retired and are lacking employment income will easily be identified as poor.

     Comparing the effectiveness of various recurrent cash benefits in alleviating elderly poverty in 2014, the Old Age Living Allowance, which is targeted at elderly persons with financial needs, had the largest impact. It led to a reduction in the elderly poverty rate by 7.2 percentage points. This was followed by the Comprehensive Social Security Assistance Scheme with a reduction of 6.8 percentage points. As regards the non-means-tested Old Age Allowance, it reduced the elderly poverty rate by 1.3 percentage points.

     My consolidated reply to the Hon Leung Yiu-chung's question is set out below.

     The Commission on Poverty (CoP) further deliberated on the framework and main content of the consultation document on retirement protection at the meeting held on July 22, 2015 and reached consensus on some areas, including those set out below:

(i) CoP members considered that the core issue to be addressed in the public consultation was whether the Hong Kong community should adopt a so-called universal retirement protection proposal (or simply "universal proposal", i.e. regardless of the financial needs of the elderly persons, and without means testing) or a non-universal proposal (i.e. for those with financial needs and with means testing) to provide better protection for the needy elderly in old age. Hence, the consultation document should set out both the universal and non-universal policy proposals for public consideration;

(ii) To facilitate public understanding on the characteristics of the universal proposals and non-universal proposals, the consultation document should provide a simple and easy-to-understand framework to compare one universal proposal against another non-universal proposal in terms of the overall and extra financial commitments required during the projection period as well as the additional subsidy amount received by different groups of elderly persons.  The "Demo-grant" proposal from the consultancy team led by Professor Nelson Chow should be used as the basis for analysing the universal proposals. As to non-universal proposals, an example would be put forward for comparison after making reference to the two non-universal proposals covered in the report submitted by the consultancy team;

(iii) The consultation document should address the issue of "who foots the bill". Given limited resources, the community should discuss how much more resources we are willing to invest in retirement protection without affecting the sustainable development of other policy areas. The issue of how to increase public revenue cannot be avoided in discussing retirement protection; and

(iv) CoP members expressed understanding that the consultation document should explain clearly the Government's stance on the future development of retirement protection. Having regard to the sustainability of the universal proposals and their impact on public finance, as well as the guiding principle that allocation of public resources should be directed to help the under-privileged, the Government has reservation on these universal proposals. Nonetheless, the Government acknowledges that there is room for improving the existing multi-pillar retirement protection system.  The community should focus on discussing how to consolidate the existing system and improve and strengthen each pillar with a view to providing more appropriate assistance to the needy elderly persons in their old age. As such, the consultation document should review the situation of each pillar and put forth possible ideas for improvement based on CoP's deliberations in the past meetings.

     At the CoP meeting held on September 23, 2015, members agreed that the public consultation period should last for six months, running from December 2015 till June 2016, to allow sufficient time for the community to have in-depth discussion and build consensus on the issues concerned. To tie in with the work of the public consultation, CoP members acknowledged the need to promote in-depth, informed, objective and rational discussion of various sectors of the community on retirement protection issues in order to collectively explore and identify options that suit the circumstances of Hong Kong. To this end, the CoP agreed to enhance community understanding of issues on retirement protection through Announcements in the Public Interest on television and radio, posters and leaflets, as well as a thematic website, etc. At the same time, the Government would use various channels to promote public engagement, including canvassing the views of the Legislative Council and District Councils; organising public consultation sessions targeting at members of the public; arranging focus group meetings to collect views of stakeholders and think tanks; and organising consultation sessions with government advisory bodies and stakeholders.

     Retirement protection is a very important social issue. The Government looks forward to rational and pragmatic discussions with a view to arriving at a community consensus. The Government agrees that protection for needy citizens after retirement should be improved. To demonstrate its determination and commitment, the Government has earmarked $50 billion to provide for future needs.

Ends/Wednesday, November 18, 2015
Issued at HKT 14:08

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