MPF doesn't work for the little guy
A fund manager friend calls it the Mandatory Poverty Fund. Most of us call the MPF by its more polite name. But my friend has a point. The way the quasi-pension fund is run now, you are guaranteed a life of penury if you have to live on it after retirement.
In the past decade, the only people who have really been benefited were managers in the banking and fund management industry, for which MPF fees and charges have been a bonanza. And while I admit bosses don't like having to contribute their shares of MPF into workers' accounts, it has not been a complete drag for them.
Hong Kong is probably the only developed economy that allows employers to legally raid such pension accounts to pay for - "offset" in technical terms - a worker's severance and long-service payments. Everywhere else it's a jailable offence. So if you lose or change jobs a few times, you can pretty much kiss your bosses' parts of the MPF contribution goodbye.
I give Chief Executive Leung Chun-ying credit for at least openly acknowledging this problem. Still, it is a disappointment that he didn't do anything about it in the latest policy address, as many people had expected he would. So there was a misunderstanding, as he said yesterday on radio. He would never, of course, ban this "offsetting mechanism" in one fell swoop; the business community would never let him do it. Nevertheless, he could and should start introducing limits on how much bosses could dip into their contributions to an employee's MPF account in coming up with funding for severance and long-service payments. It should eventually be phased out.
"Offsetting" was not originally proposed in the MPF scheme. But the Liberal Party, after the handover when it still had influence, effectively forced the government to allow it as a condition for its supporting votes for its passage in the Legislative Council.
So the Federation of Hong Kong Industries is being disingenuous when it claims the "offsetting mechanism" should not be amended because it was the outcome of a consensus. There was no consensus, only a cynical move by the business community and its Legco pals to make sure the MPF works for everyone except the little guy for whom it was designed to protect in the first place.