image

Hong Kong's state-funded pension scheme

Rich or poor: Which pension scheme’s best for Hong Kong?

PUBLISHED : Thursday, 28 January, 2016, 5:26pm
UPDATED : Thursday, 28 January, 2016, 5:26pm

I refer to Alex Woo’s letter “Pension comes at a price but are Hong Kong people prepared to pay?” (January 22). Let me first say that I cannot agree more with the writer that “who pays” is a pertinent question we as a community have to address in this important debate on retirement protection.

Helping the elderly is a key priority of this term of the Hong Kong SAR government. It introduced the Old Age Living Allowance in 2013, now benefiting 430,000 senior citizens aged 65 or over who receive a monthly allowance of HK$2,390. Meanwhile, the Comprehensive Social Security Assistance scheme provides a safety net for some 173,000 elders aged 60 or over, with a monthly payment ranging from HK$3,667 to HK$10,462.

On a universal basis, the government provides an elderly health care voucher to those aged 70 or over at HK$2,000 a year, increased from HK$500 in 2012, and has expanded the coverage of the public transport fare concession scheme (the “HK$2 scheme”) for elders aged 65 or over to green minibuses.

Together with medical and health and other welfare services for the elderly (discounting elderly public housing provided by the Housing Authority), government recurrent expenditure on the elderly has increased from HK$42 billion in 2012-13 to HK$61 billion in 2015-16, representing an increase of 45 per cent and now accounting for about 20 per cent of the recurrent budget. This has not included the HK$15 billion injected into the Community Care Fund and the HK$50 billion earmarked for enhanced retirement protection. Any criticism that the government is mean to elders is untenable.

With the elderly population projected to double in the next 20 years, government expenditure will surge. Nonetheless, the government wants to do more for the elderly in need and hence embarks upon this public consultation on retirement protection. In line with the spirit of the question raised by Mr Woo about “how much we are willing to pay for retirement protection”, our consultation document presents two basic approaches. One is a pension which is available to all “regardless of rich or poor”. The other targets “those with financial needs”. We have developed two simulated options to illustrate how much each approach will likely cost the community in the next 50 years, as well as the tax increases or new taxes needed to pay for the cost. This is to facilitate an informed discussion.

As I have repeatedly stressed, the “HK$80,000 asset limit” under the “those with financial needs” simulated option is only for reference, and is not a government proposal. We are open to suggestions. We welcome views from the public before the consultation ends on June 21.

Carrie Lam Cheng Yuet-ngor, chief secretary for administration