The row over the Mandatory Provident Fund’s offsetting mechanism continues as civil society criticised the government’s lack of commitment in dealing with the problem which had caused a lot of those in the lower-working class to lose their retirement savings.
The offsetting mechanism - where employees’ retirement funds are used to cover their severance or long-service payments by the employers when their job is terminated, or ends - saw 43,500 employees lose a total of HK$3 billion in 2014, according to statistics in the public consultation on retirement protection.
But Wong Shek-hung, advocacy officer at Oxfam Hong Kong, criticised that the government still refuse tto commit to cancelling the mechanism, despite of it being obviously detrimental to helping employees save up for retirement.
“As long as the offsetting mechanism exists, the working class employees will continue to suffer,” said Hung, in a radio show yesterday.
An average of 94 per cent of the employers’ contribution to MPF used up in offsetting, the consultation revealed. And for employees who have a monthly income of HK$7,100 or less - which mean they don’t need to contribute to MPF, only their employers do - this would mean when they leave their job, they leave with no retirement funds saved up at all, because the funds are used to pay off severance or long-service payments.
However, the government stated in the consultation that offsetting is “a complicated matter”, and “cannot be simply retained or done-away with”, and said that the consultation was to “see if employers and employees can come to a compromise and balanced decision”.