Extending Hong Kong officials' retirement age to 65 should be phased in, says expert

Singaporean population expert says the move should be phased in as it will add to the city's financial burden and won't help productivity

PUBLISHED : Monday, 28 April, 2014, 11:13am
UPDATED : Tuesday, 29 April, 2014, 4:45am

Hong Kong should extend the retirement age to 65 in stages instead of introducing the change in one go in order to ease the financial burden of such a move, a former population planner for Singapore says.

Paul Cheung, director of population planning in Singapore from 1986 to 1996, warned against swift change, saying a phased approach would ensure Hong Kong had enough time to adjust, evening out the budgetary burden over a period of time.

To be effective Cheung said the initiative should entail three measures – assessing the impact on overall efficiency and productivity, reshaping the organisational structure to raise efficiency and training older workers to move with technology.

But a local academic and government adviser agrees with the Civil Service Bureau’s proposal earlier this month to implement the measure as soon as possible, saying it will help tackle the problem of an ageing population in Hong Kong.

The bureau on April 3 floated the idea of postponing the retirement age of new recruits in the civil service to 65, and those working in the disciplined services to 57.

“Simply increasing the retirement age to 65 without considering [certain factors] appears to be a very short-sighted and overly aggressive approach,” Cheung said in an interview with the South China Morning Post.

That would raise the government’s financial burden without enhancing the productivity of civil servants proportionately, he said.

“Civil servants in Hong Kong are mostly on pension,” Cheung said. “Keeping them on the job for another five years will add a lot to the pension, but will civil servants be more productive?

“I don’t think the total increase in wage costs will be compensated by the increase in productivity.”

The plan also allows existing civil servants to apply for delayed retirement, but approval is granted at the discretion of their department heads.

Critics say it raises the possibility of favouritism coming into play and hindering the promotion prospects of younger employees.

In Singapore, the statutory retirement age was raised to 62 in 1999 and extended to 65 in 2012.

The country’s government is looking into further postponing it to 67 in the near future.

Professor Paul Yip Siu-fai, a member of the government-appointed steering committee on Hong Kong's population policy, said he preferred a quicker approach.

If the retirement age was postponed to 65 across all sectors in the immediate future, Hong Kong would have 10 more years to cope with problems of ageing, Yip said.

He referred to a critical social situation – known as the closing of the demographic window – in which only two economically active people (aged 15 to 60 years old) supported one economically inactive person (aged under 15 or over 60).

“At present, the demographic window will close in 2016. But it would close in 2025 if the age limit is extended from 60 to 65,” he said.

To deter favouritism, Yip suggested establishing a scoring system that would make the handling of extension applications from existing civil servants more transparent.

“The government can set up a central pool in which clerks and executive officers can queue for a vacancy from their own department or get relocated to other departments according to their talents and qualifications. They should also be informed of the waiting time.”

Yip’s idea of the closing demographic window was challenged by Cheung, who said the importance of such dates were “over-dramatised”.

“Something bad won’t happen immediately. In fact, the economy and the manpower market are very resilient and will adapt.”

A bureau spokeswoman conceded there was a need to consider a progressive approach for new recruits to smoothen any adverse effects on “promotional prospects and turnover in the civil service” during the transition.

She said the bureau would assess the financial implications of the proposal, particularly those relating to the government’s voluntary contributions under the Civil Service Provident Fund Scheme, given that such contributions rose progressively with the years of service of officers covered by the scheme.