Equal Opportunities Commission


Press Releases

Press Releases

EOC Chairperson shares his views on Hong Kong’s Retirement Protection Policy


Professionals and consultants of the financial sector discussed and shared their views on the retirement protection policy in Hong Kong at today’s (26 May 2010) Hong Kong Retirement Schemes Association Luncheon, titled “Heads in the Sand : Hong Kong’s Retirement Protection Policy”.
Speaking at the luncheon, Mr. LAM Woon-kwong, Chairperson of the EOC, shared his views on Hong Kong’s current retirement protection policy. He said, “The Mandatory Provident Fund Scheme (MPF) can only provide marginal protection for retirement for two reasons. First, it does not protect the homemakers and low income workers, many of whom are women. Second, the future investment returns of individuals’ MPF accounts are not entirely predictable as the global financial crisis has recently demonstrated.”
“MPF is one of the World Bank’s three-pillar policy on retirement protection. However, it is a weak pillar as the compulsory contributions from employers and employee are too small, and the MPF fund management costs and other charges are high,” said Mr. LAM.
He pointed out that MPF was grossly insufficient on its own especially for people who have already reached middle or old age and for those with low income.
Mr. LAM explained, “Since the number of low income earners in Hong Kong is large, and low income earners can’t make much savings and their earning capacity is further diminished with aging, it is unrealistic to expect private savings, the second pillar, to provide much protection either. That will add burden to the Comprehensive Social Security Assistance (CSSA), the third pillar and the protection of last resort. Last year, CSSA expenditure amounted to $18.6 billion, a 43% increase over the last decade. Its share among the total recurrent government expenditure increased from 7.5% in 1998/99 to 8.6% in 2008/09. We rely on our very narrow tax base to fund a steadily growing CSSA. Its sustainability is questionable given the rapidly aging population”
“The EOC is particularly concerned that women would suffer most under the current unsatisfactory retirement protection policy. It is worth noting that no retirement protection was provided to 680,000 homemakers, 98% of whom are women. Only meager protection is given to 262,000 very low income workers whereby 65% of them are women. We are also concerned that many women in elementary occupations are still earning much less than their male counterparts and would hardly be in the position to save for their own retirement,” Mr. LAM said.
In his concluding remark, Mr. LAM called upon the Government to review the current MPF scheme and look seriously into other retirement protection options to stop the Hong Kong community from sliding further into the huge income gap between the rich and the poor.
For media enquiries, please contact Ms. Mariana LAW at 2106-2226.
Equal Opportunities Commission
26 May 2010