MPF offsetting mechanism a ‘loophole that must be addressed’, says Hong Kong Chief Secretary Carrie Lam

An offsetting mechanism which allows employers to settle severance and long-service payments using employees’ Mandatory Provident Fund savings is a loophole that needs to be addressed, the chief secretary said yesterday.

But Carrie Lam Cheng Yuet-ngor refused to guarantee the mechanism would be scrapped during her tenure, which ends in June next year.

Speaking to secondary students at a forum on universal retirement protection organised by the Hong Kong Federation of Youth Groups, Lam said the offsetting mechanism is a “complicated matter” that also affects businesses.

Quoting figures from the Mandatory Provident Fund Authority in 2014, Lam said a total of 43,500 workers were affected by the mechanism since the MPF scheme was introduced in 2000. Of those, two-thirds had their employer’s contribution of the MPF savings completely withdrawn.

But Lam rejected accusations that Leung and his cabinet have failed to fulfil his election promises, saying he has already achieved more than he could on livelihood policies, except for the two thorny issues of the offsetting mechanism and standard working hours.