Proposed HK$3,000-a-month pension 'could be cut in tough economic times'
Academic behind proposal to pay HK$3,000 to every elderly Hongkonger says the amount could be reduced if it proves unsustainable
A proposed HK$3,000 monthly pension for each Hongkonger over 65 can be reduced if the scheme looks to be unsustainable in the future, the don who led a research team that made the recommendation said.
Projections show that the pension pool would collect less money than it pays out beginning in 2026, under the proposal drawn up by the government-commissioned team.
But a public debate would be needed before the city shrank the payouts to elderly people, lead researcher Professor Nelson Chow Wing-sun of the University of Hong Kong said.
"In the worst-case scenario, the amount can be lowered," Chow told RTHK a day after he presented the findings to the government-appointed Commission on Poverty, chaired by Chief Secretary Carrie Lam Cheng Yuet-ngor.
Under Chow's universal retirement protection scheme, elderly residents - rich or poor - would get a pension of HK$3,000 a month without a means test.
He suggested a "payroll old-age tax" that would see workers who made less than HK$10,000 a month, and their employers, each contributing one per cent of the employees' pay to the pool.
Those earning a monthly wage of below HK$6,500 would be exempted, but their employers would contribute one per cent.
And for salary bands between HK$10,000 and HK$20,000, and HK$20,000 to HK$120,000, both sides would each pay 1.5 per cent and 2.5 per cent, respectively.
According to Chow's report, about a million people now make HK$10,000 or below a month, and roughly 1.4 million earn HK$10,000 to HK$20,000.
He projected that, if the monthly pension was set at HK$3,000, by 2041 the scheme would only have HK$13.5 billion in the pool, but would need to pay out HK$92.3 billion a year. Chow said that if that happened, pay-outs could be lowered.
"After [severe acute respiratory syndrome] hit Hong Kong [in 2003], the government recorded fiscal deficits for six years," he said. "Different social security schemes, including Comprehensive Social Security Assistance, were slashed by 13 per cent. And the public accepted it."
On criticism of why the proposal encompassed the city's rich, Chow said: "The old-age allowance scheme has been running for about 40 years, and 10 per cent of people who are qualified do not apply for it."
That scheme pays out a monthly HK$1,180 in so-called "fruit money" to residents aged at least 70 without a means test.
Professor Chou Kee-lee, an expert on retirement at the Institute of Education, suggested raising the age threshold to 67 if Chow's scheme faced sustainability problems by 2041.
He also said sustainability would be less of a problem if everyone, regardless of their salaries, contributed 2.5 per cent.
Simon Wong Ka-wo, president of the Federation of Restaurants and Related Trades, said big companies with annual profits of more than HK$10 million should pay additional profits taxes.
Wong had doubts about the payroll tax, which he said would impact small and medium-sized companies. "If the economy slows down and businesses need to pay the [payroll tax], they will transfer the cost to the customers," he said.