Six ways Hong Kong could fund a universal pension scheme

The biggest controversy in the universal pension debate remains whether Hong Kong can introduce such a scheme without facing the financial woes of countries such as Britain, an established welfare state.

The key challenge is that in a rapidly ageing society fewer workers will have to support a growing number of retirees and the government would have to increase taxes to fund a pension system.

Many business groups, including the Hong Kong General Chamber of Commerce, have made it clear that they strongly oppose any extra tax on companies for a retirement protection scheme.

A government source said that a non-means-tested universal pension scheme would also hasten the city's plunge into a structural deficit, predicted in a long-term fiscal planning report released in March to occur around 2030.

"Our major concern is the financial sustainability of a universal pension scheme," the source said. "How can it be sustainable when a smaller working population supports a larger elderly population in the long run?"

But others believe a universal pension system, which requires contributions from employers, employees and the government, would be more sustainable than the current elderly protection schemes, which depend solely on government funding.

University of Hong Kong academic Nelson Chow Wing-sun and his team predicted that their universal pension proposal could be sustained until 2041.