Hong Kong Business Community Joint Conference rejects ‘unacceptable proposal’ to scrap MPF offsetting mechanism
Alliance of small and medium-sized business owners says plan that would stop them from dipping into pensions to cover employee benefits is too costly
Hong Kong’s small and medium-sized business owners put up a united front on Tuesday against a government proposal to stop employers from dipping into pension funds to pay for severance and long-service payments, calling on officials to offer more subsidies indefinitely.
The government’s proposal to scrap the so-called offsetting mechanism in the city’s Mandatory Provident Fund would harm expansion and deter people from launching start-ups, said the Hong Kong Business Community Joint Conference, an alliance representing 114 business chambers on the issue.
Employers would eventually pass the costs on to the public, the alliance said.
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The proposal “is very unfair and would deal a blow to the small to medium-sized companies’ finances. It is an unacceptable proposal,” Aaron Shum Wan-lung, the alliance’s secretary general, said.
Since the MPF came into effect in 2000, employers have been allowed to withdraw contributions from staff accounts to offset long-service and severance payments. In 2016, employers offset HK$3.85 billion (US$490 million).
Under the government’s latest plan, the offsetting mechanism would be cancelled. Employers would be required to set up a savings account and contribute 1 per cent of employees’ wages to cover the payments. It would be capped at 15 per cent of a worker’s annual wage.
The government would provide HK$17.2 billion in subsidies to soften the blow to employers for 12 years. The subsidy scheme would be rolled out as a complex, two-tiered system under which the government would offer a 50 to 75 per cent subsidy for the first three years.