Means test may be used for all old-age grants

PUBLISHED : Monday, 24 December, 2007, 12:00am
UPDATED : Monday, 24 December, 2007, 12:00am

A means test may be introduced for all old-age allowance recipients under a government review of the scheme, according to a senior government source.

The source said the government was estimating the burden of the so-called 'fruit money' on future public finances amid Hong Kong's rapidly ageing population.

All Hong Kong residents aged 70 or above are eligible for an allowance of HK$705 a month, regardless of their wealth, while those aged 65 to 69 can receive HK$625 a month if they pass a means test.

The government is facing growing calls from grass-roots and elderly groups to raise the monthly assistance to HK$1,000. The Elderly Commission, a group set up to advise the government on policy regarding the elderly, has also called for a rise.

Some elderly people depend entirely on their 'fruit money' because their assets exceed the limit set for receiving Comprehensive Social Security Assistance (CSSA).

The source said the government was having a 'rethink of the fundamental principles' of the scheme.

'The original idea was to give some pocket money to elderly people. But while many of them are using this payout to support their basic living, we now have to think about why this is the case. Should we have a new policy - such as making the subsidy more targeted to the needy?'

Spending on the old-age allowance rose from HK$3.2 billion in 1997-98 to HK$4 billion in 2007-08, while the number of recipients jumped from 439,848 to 467,320 over the period. About one-third of people aged between 65 and 69 and two-thirds of those aged 70 and above currently receive the allowance.

The source said the scheme might not be sustainable in the long run if the government continued to give the allowance indiscriminately.

'Now, one-eighth of the population is elderly [aged over 65]. This ratio will increase to a quarter by 2033, so expenditure on the old-age allowance will snowball at a very rapid rate. Our economy can't be rosy all the time; we have to consider the sustainability of long-term funding.'

The government estimates it would have to spend an extra HK$1.7 billion a year if it raised the allowance to HK$1,000 a month. But the source could not say how much a means-tested allowance might be.

'I can't answer the question of whether needy elderly can eventually get HK$1,000 a month if a means test is applied in future so that resources can be reallocated. We have to find out what is the basis for this figure,' the source said.

Wong Hung, assistant professor of social work at Chinese University, said the government should keep the old-age allowance as a universal scheme without a means test.

'The scheme is effectively a second safety net for the elderly apart from the CSSA. It will lose its meaning if a means test is applied.'