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Leung Chun-ying

Hong Kong leader Leung Chun-ying must deliver on his promise to revamp MPF retirement scheme

PUBLISHED : Thursday, 24 September, 2015, 2:02am
UPDATED : Monday, 05 October, 2015, 8:58am

With less than two years remaining of his term, Chief Executive Leung Chun-ying is facing growing pressure to make good his election promises.

The controversial offsetting mechanism in the Mandatory Provident Fund (MPF) Scheme is one of them.

It is good to learn that the pledge has not been swept under the carpet. Labour minister Matthew Cheung Kin-chung has vowed to strike a balance between different views when taking the issue forward.

Unionists have long been fighting for the abolition of the mechanism, which allows bosses to use their portion of MPF contributions to offset severance or long-service payments.

The arrangement was a trade-off in return for business support for the retirement-saving scheme introduced in 2000.

Leung rightly committed himself to revamp the system when campaigning for office in 2012, despite resistance from businesses.

The road ahead is not easy, as reflected in the strong response from leading business figures. They argue that business costs would increase if the mechanism was scrapped.

The concerns are understandable, especially when the labour sector has been actively pushing for better benefits and protection on other fronts.

Looming on the horizon is a proposed law mandating that bosses spell out standard working hours and overtime payment, if any, in employment contracts.

But there is every reason for Leung to take on the challenge.

The amount of severance and long-service payments offset over the past 15 years is estimated to be HK$23 billion.

The mechanism effectively allows employers to shirk their responsibilities when it comes to severance payments and rewarding long service.

Worse, it depletes the already meagre savings and returns in a scheme meant to finance a decent life in retirement.

The chief executive's policy address in January is a good opportunity for him to take stock of what has - and has not - been achieved. If there is further delay, it is less likely that Leung will be able to deliver on this important promise.

The chief executive must step up his efforts.