Offsetting mechanism in MPF robs people of hard-earned savings
In its latest submission to the Commission on Poverty on the public consultation on retirement protection, the Mandatory Provident Fund Schemes Authority made plain that the offsetting arrangement “gives rise to benefits leakage from the MPF System, weakening its retirement protection function”.
This echoes the call from the public calling for it to be reviewed, if not scrapped. Not that the government is not aware of the problem, but it appears to be too protective of business interests, so the recommendation seems likely to fall on deaf ears.
Under the present offsetting regime, bosses can use part of the accrued benefits to offset long-service and severance payments.
A total of about HK$28 billion has been withdrawn for offsetting since the introduction of the MPF. In 2015 alone, the offsetting amount accounted for a whopping 22 per cent of the total amount of benefits withdrawn from the MPF system – 5.6 per cent of the total amount of mandatory and voluntary contributions received.
Around 5.2 per cent of the total enrolled employers employed offsetting in 2015, meaning that the average offsetting amount per employee was HK$74,100. This is no small amount, compared to the chicken feed the grass-roots workers earn.
From the fundamental perspective of retirement protection, the idea of offsetting is nothing less than withdrawing the accrued benefits derived from employer contributions. Early withdrawal of accrued benefits alienates itself from the purpose of the MPF system, which is to preserve benefits in the system for the workforce after retirement.
The public is disheartened to be told yet again how the offsetting arrangement fritters away their hard-earned savings. Now everything rests with the government.
With the term of Chief Executive Leung Chun-ying coming to an end, the workforce does not hold out much hope for a change. Likewise, in the face of strong resistance from the business sector, the scrapping of the offsetting arrangement appears to be a tall order.
While the business sector remains hell-bent on the issue, with some even threatening to turn permanent staff into contract staff as a way to save costs, the idea of having the government shoulder the offsetting payments is equally not plausible. C. Y. has failed to live up to his electoral pledge of tackling the offsetting mechanism.
If he is to secure a second term, the time has come for him to demonstrate his will and commitment to return to the people what belongs to them.
Borromeo Li Ka-kit, Happy Valley