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Hong Kong General Chamber of Commerce says no to payments for retirement scheme

Business chamber rejects extra tax on firms and says government should foot bill to help poor

PUBLISHED : Wednesday, 20 August, 2014, 4:14am
UPDATED : Wednesday, 20 August, 2014, 12:18pm
 

One of Hong Kong's most influential business chambers says it opposes any retirement protection scheme that would require employers to inject money.

Shirley Yuen, chief executive of the Hong Kong General Chamber of Commerce, said the government should be responsible for funding such schemes.

"You can imagine that people have reservations about it [asking employers to pay]. In Hong Kong, the cost of running a business is not low," she said yesterday.

A long-awaited study on retirement protection schemes by University of Hong Kong academic Nelson Chow Wing-sun, commissioned by the Commission on Poverty, will be tabled at a commission meeting on Wednesday.

The study is expected to analyse the sustainability of proposals put forward by six groups, including the Alliance for Universal Pension, the Federation of Trade Unions and the Democratic Alliance for the Betterment and Progress of Hong Kong.

The alliance suggested companies that make an annual profit of more than HK$10 million pay additional profits tax of 1.9 per cent for injection into a pension pool. It said the government should also contribute HK$50 billion.

The FTU proposed that both bosses and workers should transfer 1 per cent of their mandatory provident fund contributions to the pension scheme. They should also each pay an additional 0.5 per cent of their monthly salary into the scheme.

Table: How the six plans break down

 

Yuen said she opposed extra taxes for businesses to fund a retirement scheme as this would be "against the international trend".

She proposed a means test so that limited resources went to those most in need. "Is there a need to give away limited resources to everyone, no matter whether they are rich or poor?"

She said the government could consider improving existing safety nets, such as the old age living allowance.

"The old age living allowance has reduced the old-age poverty rate from 33 per cent to 23 per cent and that is encouraging," she said, citing a report by the Institute of Education.

She said the issue had to be dealt with carefully because the working population would start to fall after 2018, and on top of an ageing population this would mean fewer people contributing to the pension scheme but more taking money out of it.

Au Yeung Kwun-tung, the alliance's organiser, said the additional tax the alliance proposed was necessary to make the scheme sustainable.

"We understand that there can be pressure for small to medium-sized enterprises. That's why we are asking the big companies to pay, because they have less pressure," he said.

FTU lawmaker Tang Ka-piu feared the scheme would be unsustainable if only the government paid for it.

"If the government faces financial troubles in future, it is hard to imagine what can happen to the scheme," he said.

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