Universal pension won't meet needs of greying Hong Kong

Here we go again. Some legislators have sought to hijack the governance of Hong Kong by demanding a quick fix to retirement protection through the introduction of a universal pension. If only the solution were that easy and made financial sense.

Not so. The challenges of retirement protection are far more complex and today's decisions have to be paid for by future generations for many decades to come. Retirement income is only one facet of this.

Too many reformers seem mesmerised by the past rather than by the priorities and needs of today. Britain was one of the first to introduce a means-tested non-contributory pension scheme, in 1908, followed by a contributory pension for low-paid workers in 1925.

In those days, post-retirement life expectancy was five years or less and there was no universal health care. The initiative was therefore a relatively inexpensive way of protecting retirees from abject poverty. Even when the universal, and regrettably only partially funded, National Insurance scheme was introduced in 1948, the objective was still to lift individuals from absolute poverty in their declining years. At that time, post-retirement life expectancy was still 10 years or less. Universal health care was a new concept.

The issues of retirement are now vastly different. Life expectancy on retirement is 25 years or more, and increasing. Far more people in retirement live healthy and active lives for many years but eventually face the burdens of chronic care.

With retirement representing up to a third of one's lifespan, it is now more appropriate to break down retirement protection needs for the majority into three phases.