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Exco convener Lam Woon-kwong says city can afford universal pension plan

Exco convener says land sales can help finance plan without workers and firms paying in

PUBLISHED : Tuesday, 20 November, 2012, 12:00am
UPDATED : Tuesday, 20 November, 2012, 4:35am

A universal pension scheme funded solely by the government should be financially viable, Executive Council convenor Lam Woon-kwong says.

The funding could come from land-sale revenues and budget surpluses, said Lam, 61, who advocated a pension scheme from 1992 to 1994 as a top official during the colonial era.

But it would be "very difficult" to persuade employers or workers to contribute to a pension fund, he said last week.

Lam's remarks came amid recent calls from the community for a universal pension scheme, with contributions from the government, employers and employees. But officials insist Hongkongers have yet to reach a consensus on the matter.

As for Chief Executive Leung Chun-ying's election pledge to set up a fund to look after the elderly, Lam said it could be used for retirement protection.

"The government does not need to pour several hundred billion dollars into the fund in one go, as it will take time for the population of older people to grow."

He floated ideas such as setting aside half the revenue from government land sales for the fund.

"Or, taking a more conservative approach, in those years when the government has a surplus, we could allocate half the surplus for elderly welfare," he said. "These are all fiscally safe proposals and won't affect our tax revenue."

Government projections show that the proportion of the population aged 65 and over will jump to 30 per cent of 8.469 million people in 2041, from 13 per cent of 7.0716 million people last year.

"When the fund has accumulated a certain level, the interest generated will form a substantial income," Lam said.

"Even if the rate of return on a fund worth [for example] HK$600 billion was just 3 per cent, which is a very conservative estimate, the return would be HK$18 billion a year. It would be sufficient for the government to provide sound retirement protection. It is affordable.

"A three-way contribution system would not work. When we proposed [a contributory pension scheme] some 20 years ago, the middle class were against it, and were resistant to the concept of contributing to benefit others.

"It would be very difficult to persuade them to pay for others' retirement," he said. "We should find a way that is widely acceptable to the community instead."

Lam said he was "very pleased" to see the recent revival of the Commission on Poverty, which is studying retirement protection and social security.

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