A growing burden

PUBLISHED : Thursday, 11 April, 2002, 12:00am
UPDATED : Thursday, 11 April, 2002, 12:00am

Hong Kong does not have a properly funded pension scheme that guarantees a basic standard of living for all retirees. But the financially destitute can apply for help under the Comprehensive Social Security Assistance scheme, and more than 100,000 senior citizens have done so.

Yet, out of a desire to maintain their dignity, many poor elderly people are known to have opted not to apply for CSSA payments. Instead, they choose to survive on odd jobs, supplementing their income with the several hundred dollars they get under the Old Age Allowance scheme - $625 a month for those aged 65 and $705 for those above 70.

Many elderly citizens who do not qualify for CSSA because they live with their families, but are not getting much pocket money from their children, also find the allowance a precious source of income. But the problem with the scheme is that it is largely non-means-tested. While recipients aged between 65 and 70 cannot have savings of more than $150,000, no such restrictions apply for those aged above 70.

Last year, some 457,000 recipients of the allowance collected a total of $3.56 billion - a financial burden on the Government that will only grow as the elderly population increases. Clearly, far too many elderly people who probably do not need the allowance are getting it. If we take the view that payments from the public coffers should only go to the needy, then a strong case could be made for introducing a tougher means test to weed out most of the recipients of the allowance so the money saved could be spent elsewhere.

But since it was introduced some 30 years ago, the allowance has come to be seen as a reward for senior citizens' past contribution to the community, and the public clearly want it to remain that way. The challenge for the Government is to find the money to meet the scheme's ever-growing demand for cash, by pointing out there is no such thing as a free lunch and that the allowance as it is can only be sustained by higher taxes.