Lawmakers seek review of 'inadequate' MPF scheme
Lawmakers yesterday passed a non-binding motion calling for a comprehensive review of the Mandatory Provident Fund on the fund's 10th anniversary.
Many criticised the fund as offering inadequate retirement protection for people to rely on.
'Unfortunately, there is no celebration for the anniversary in society or the government, [you] can tell how well the MPF is received,' unionist legislator Leung Yiu-chung said.
Admitting there was room for improvement, Secretary for Financial Services Professor Chan Ka-keung said the fund was only one of several pillars to protect people planning for their retirement.
'The original aim of the scheme was not to cover all the needs of retirement,' he said. Many lawmakers criticised a provision in the fund that enabled bosses to dip into the employer contribution section of a worker's account to make long-service or severance payments.
'It is exploitation. Such an arrangement contradicts the idea of offering retirement protection to workers,' Civic Party legislator Ronny Tong Ka-wah said.
According to MPF figures, employers have taken out more than HK$12 billion from employees' MPF accounts to make severance and long-service payments since the fund was established.
Democratic Alliance for the Betterment and Progress of Hong Kong lawmaker Ip Kwok-him said the problem worsened in recent years.
In the first half of 2001, HK$166 million of MPF money contributed by bosses was used to offset such payments. But that jumped to HK$1.1 billion in the first half of this year.
'A low-income worker may end up having a tiny sum in his MPF account when he retires if he got fired a couple of times and his employers clear their contributions for those payments. It is so unfair,' he said.
The high administration cost of the MPF and its low returns also drew anger from legislators.
Unionist lawmaker Wong Kwok-hing demanded that the government try to lower the fees that fund trustees charged account holders.
'According to a Consumer Council study in 2007, a 3 per cent fee could eat up 52 per cent of retirement benefits over 40 years, assuming a 5 per cent annual return and HK$2,000 is invested each month,' Wong said.
'It is outrageous. Most workers do not know how the money is deducted from their accounts ... they only see the vanishing of their hard-earn money,' he said
Chan replied that the government and the MPF authority were trying to improve transparency and lower fees. 'We are proposing changes to the scheme to allow employees to decide on the provider to manage their individual contributions,' he said. 'With its introduction, competition for the fund will increase, so will the transparency, and fees will also be lowered.'