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Monday, October 14, 2019, 00:35
Points to ponder over in Policy Address
By Paul Surtees
Monday, October 14, 2019, 00:35 By Paul Surtees

Carrie Lam Cheng Yuet-ngor, chief executive of the Hong Kong Special Administrative Region, must be weighing up which new policies to include in her coming Policy Address. Three key policies, upon all of which show the time is ripe for new approaches, spring to mind. None of them readily lend themselves to an instant fix, but each of them could certainly be addressed actively. This would surely do much to appease the entrenched anti-governmental sentiments expressed weekly by protests In Hong Kong’s strife-ridden streets.

A better way forward on the impossibly-expensive local housing market, such as by providing subsidized starter homes to new families, plus more land being made available for other urgently-needed housing needs, would be widely welcomed.

Taking steps to build up an enhanced level of democracy would also be widely welcomed.

The current Mandatory Provident Fund scheme started only in 2000. Many Hong Kong people had already retired before it was introduced. Many more entered the scheme part-way through their careers, meaning that their monthly contributions will not be made over a whole working lifetime. The comparatively low monthly mandatory contribution rates, for both employer and employee, are clearly insufficient to build up a high enough balance upon retirement. The lackluster investment returns, added to the still-too-high administrative charges built into the scheme, mean that the cash refund upon retirement will for most people not be high enough to guarantee anything like a financially-secure retirement.And thirdly, introducing, belatedly admittedly, a proper pension scheme to Hong Kong would be a wise way to use some of this city’s massive financial reserves, and would surely be appreciated by all.

None of them readily lend themselves to an instant fix, but each of them could certainly be addressed actively. This would surely do much to appease the entrenched anti-governmental sentiments expressed weekly by protests In Hong Kong’s strife-ridden streets

It is regrettable that our fabulously-wealthy city has failed, and continues to fail, to offer a meaningful pension to our aged citizens. Save for those lucky enough to be working for large blue-chip firms, and our legions of civil servants (who will receive generous pensions), the vast majority of Hong Kong workers have only this lackluster MPF scheme to sustain them in retirement.

Another basic flaw in our MPF scheme is that it does not provide for a monthly pension. Simply receiving back the contributions made while working means that a lump sum becomes payable. In most cases, even if reinvested wisely, the interest to be earned from this lump sum will not produce enough income for the retirees to live comfortably in their twilight years. And there may well be several decades of these twilight years, since Hong Kong citizens are among those living the longest in the world. Many of those retiring from modestly-paid jobs, being comparatively poor, will be tempted to treat this lump sum of capital as income and spend it; and when it has all gone they will be old, unemployed and even poorer.

From the start, it was mean of the planners to exclude contributing to this MPF “retirement protection’’ scheme from Hong Kong’s public funds. All the required contributions come only from the employer and the employee. In these days of recurrent street protests, over many causes, Hong Kong’s hoarding of vast financial reserves, while leaving the elderly to descend into poverty, is another cause for discontent.

There’s a whole silver generation of Hong Kong people, today’s grandparents, whose hard work, many coming here as migrants from the north, built up Hong Kong into the financial powerhouse that it is today. Their work came before this belated MPF scheme’s introduction; nor do they have alternative pension provision in most cases. It is surely a tough sell that these old-timers are not given a share of Hong Kong’s wealth — a wealth which their lifetime’s toil helped to build up. 

But even for our younger people, still of working age, this MPF scheme is manifestly inadequate. Since no pension becomes payable, and since the lump sum will in most cases not be enormous, they will need to have recourse to other sources of income, such as from a part-time job. We can still see the distressing sight of very aged Hong Kong citizens pushing around huge trolleys of discarded cardboard boxes, tin cans or newsprint, to earn a crumb from them as recyclable material. The continuation of this situation, where in Hong Kong, one of the world’s richest cities, has numerous old people living a very hard life of abject poverty, is surely morally unacceptable.

What is clearly needed is a universal pension, paid monthly; enough to live on comfortably — and without having to sleep in a cage home. The large amount of money needed to set up and run this proposed proper pension scheme, upon the abolition of the MPF scheme, is already there. Hong Kong’s untouched public financial reserves, for a medium-sized city, are staggeringly large, much more than is held in reserve by many sovereign countries with much bigger populations! 

As our society ages, there will be increasing numbers of Hong Kong people in that dire predicament of being old and poor and uncared for. So let’s see the belated introduction of a real and sustainable Hong Kong pension scheme, to be announced in the coming Policy Address.

The author is a veteran commentator on Hong Kong social issues and honorary lifetime adviser to the Hong Kong Federation of the Blind.

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