CY Leung policy address 2014

No plans to scrap MPF 'offsetting' mechanism, says Leung Chun-ying

Chief Executive still weighing up action on employers' use of retirement fund for severance

PUBLISHED : Friday, 17 January, 2014, 12:52pm
UPDATED : Saturday, 18 January, 2014, 8:02am

Speculation that Chief Executive Leung Chun-ying was planning to abolish the much-criticised offsetting mechanism in the Mandatory Provident Fund was a "misunderstanding", the city's leader said yesterday.

"Alternatives" will be considered before a decision is made, Leung said, in the face of calls from unionist lawmakers, including some from the Beijing-loyalist Federation of Trade Unions, to do away with the mechanism.

The process allows employers to offset severance and long-service payments to employees against their contributions to an employee's MPF, the city's compulsory retirement account.

Speaking separately, labour minister Matthew Cheung Kin-chung said that when the MPF was established in 2003, a deal was made with employers to include an offsetting mechanism in order to ensure their agreement to the fund.

During a radio phone-in show on RTHK yesterday morning, Leung was asked whether it was wrong to think that he was going to scrap the mechanism.

"That's definitely a misunderstanding," Leung said. "I would like to forge a consensus between employers and employees as much as I can before we announce [any action] … After this policy address, I will continue with that consultation," he said.

"I want to make sure there is no devil in the detail that we overlook. I often remind myself of the experience we had a few years back when we legislated for the statutory minimum wage, when we didn't realise a simple matter like whether lunch hours should count for the minimum wage could become a [problem]."

On Thursday, FTU lawmaker Tang Ka-piu slammed the chief executive for "failing to make good on his election promise" that he would set out his plan to scrap the mechanism.

Leung said his election manifesto only stated that he would "adopt measures to progressively reduce the proportion" of accrued benefits attributed to employer's contributions that can be offset by the employers.

Yesterday, Tang insisted that Leung's problem was lack of time, not being misunderstood.

"The problem is that Leung has failed to explain clearly his plan," Tang said. "Even if he is only reducing the proportion, he needs time to amend legislation to make it happen. I don't know how he could find enough time to realise his pledge."

Leung also snubbed calls for a review of the one-way permit scheme, which allows 150 mainlanders a day to settle in Hong Kong. The scheme has been blamed by pan-democrats and the public for pushing up the city's property prices.

"Constitutionally the question of one-way permits is in the hands of the central authorities," Leung said. "If you look at the composition of the people who come down on these permits, who mostly come down for family reunion purposes, if you were in charge of deciding who can and who cannot come down, would you have a different decision?

"I probably wouldn't because it's all family reunion - children joining their fathers … and wives joining husbands in Hong Kong."