• Thu
  • Oct 2, 2014
  • Updated: 7:48am
CY Leung policy address 2014
NewsHong Kong

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


  • Yes: 90%
  • No: 10%
18 Jan 2014
  • Yes
  • No
Total number of votes recorded: 182

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."



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This article is now closed to comments

Only the banks love the MPF - it's like roulette for them but with a fresh supply of money each month to gamble with, after taking their fees up front, but without any pressure to actually provide a return on their lousy funds. It's been a rip off since inception for all employees. Does the Government care? Of course not! Top civil servants receive a pension and have no idea what ordinary employees have to deal with. They don't have a clue and don't care to stop the banks from ripping us off. Face it CY - there will never be consensus and you're a fool to say such things in relation to the MPF.
The beneficiary of MPF are those banks or insurance companies which makes big money out of this scheme. It is ridiculous our money can only be spent on the fund while some safer and cheaper options like government bonds or index fund are excluded. Secondly MPF return depends very much on asset allocation and timing and it is beyond most people capability. Look at Singapore, the MPF are giving the employees lots of choice in using the fund including buying property. A cheaper scheme and more choices more freedom is what HK MPF scheme should aim at.
I don't understand why MPF contributors are not allowed to use their MPF to invest in property in HK or overseas. The whole MPF scheme is a rip-off that only benefits mutual funds and banks.
The only fee for the MPF should be a percentage e.g. 10% of the annual returns the funds generate. If there is no return generated there will be no fee for the fund managers which should make them working harder to make the funds worth the while .


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