'There's no free lunch,' says Chan of universal pension | South China Morning Post
  • Tue
  • Jan 27, 2015
  • Updated: 12:49am
NewsHong Kong
SOCIAL SECURITY

'There's no free lunch,' says Chan of universal pension

Research is necessary to find out how much taxpayers are prepared to contribute towards a proposed universal scheme, Exco member says

PUBLISHED : Tuesday, 02 April, 2013, 12:00am
UPDATED : Tuesday, 02 April, 2013, 4:16am
 

Executive councillor Bernard Chan has urged the government to reveal how much a universal pension scheme would cost taxpayers, a move he says is needed to assist public debate.

Chan, who chairs the Council of Social Service, said the authorities should ask people how much extra they would be prepared to pay for different levels of pensions for retirees.

"How much would we, as taxpayers, be willing to pay?" he asked, adding that without this question discussion of such a scheme would be "empty talk".

"As long as [the government] does not explain it, people will keep criticising the authorities for not doing it."

His remarks in an interview with the South China Morning Post coincided with a study of retirement plans that have been floated in public by University of Hong Kong social administration chair professor Nelson Chow Wing-sun.

The year-long study was authorised last month by the Commission on Poverty.

Chan said asking the workforce to contribute to a pension fund for all "would mean a de facto tax increase".

"Maybe they can't afford to sustain [the monthly universal pension of] HK$4,000 that Professor Chow suggested. How about HK$1,000 or HK$2,000? How much would people be willing to pay?" he said.

"I may not accept a 10 per cent tax increase, but may agree to pay 2 per cent more."

He said that while the government repeatedly expressed concerns over the financial sustainability of a universal pension scheme, "without figures, we all have no idea how much we are talking about".

Under a proposal by the Alliance for Universal Pensions, part of the retirement fund would be financed by employers' and employees' contributions.

Employee contributions to the Mandatory Provident Fund would be halved to 2.5 per cent of the monthly salary. Workers would pay another 2.5 per cent as a pension contribution.

Chan, also president of Asia Insurance Company, said the proposal was unlikely to work.

"It is ridiculous. It would be like imposing a tax on those who contribute [to the pension fund]," he said. "You share workers' contributions supposedly for their own retirement with others. The current MPF is to benefit oneself, while the proposed pension scheme would be to share one's money with all [local elderly] people.

"I am not against it. But you have to call a spade a spade and explain to people. How much is it going to cost? In the end, me, you and everyone else has to pay. There's no free lunch."

How much is it going to cost? In the end, me, you and everyone else has to pay. There's no free lunch

Chow told the Post that his six-member team would work with actuaries to estimate the contributions of the government, employers and employees over the next 30 years under about five pension proposals that had been floated.

The estimates, he said, would be based on assumptions of factors, such as population changes, economic growth rates and government fiscal conditions.

The professor acknowledged that some people might see their contributions as a tax.

He believed the government should discuss this with the public, if it deemed such contributions necessary. He expressed hopes of completing the study by the end of this year.

Under the pension proposal floated by Chow, everyone aged over 65 would receive HK$4,000 a month, with half of the costs borne by the government and the other half by employers and employees' contributions.

Under the Civic Party's proposal everyone aged above 65 should get HK$3,000 a month. Employers and employees will each contribute 3 per cent to a pension fund to be managed by the Monetary Authority. Their contributions to the MPF will drop to 2 per cent and the government will have to put in HK$50 billion every five years.

 

Share

Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or