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Mandatory Provident Fund (MPF)

CY Leung promises to resolve MPF offset controversy before term ends

But Chief Secretary Carrie Lam says actual implementation of such a change will have to left to the next administration

PUBLISHED : Thursday, 29 September, 2016, 1:45pm
UPDATED : Friday, 30 September, 2016, 4:10pm

Chief Executive Leung Chun-ying has promised to sort out a controversial clause in Hong Kong’s ­official pension scheme that is the source of much friction between employers and workers within the remaining months of his current term as the city’s leader.

During a meeting with the Federation of Trade Unions yesterday, Leung discussed the ­possibility of scrapping the ­offsetting mechanism that allows employers to settle severance and long-service payments using ­employees’ Mandatory Provident Fund savings.

The Chief Executive’s Office followed up with a written statement saying Leung would, within this term of government, “expend the greatest effort” to tackle the offsetting mechanism as promised in his election manifesto.

Chief Secretary Carrie Lam Cheng Yuet-ngor also said yesterday that the unpopular arrangement was a priority for the government, but she did not expect new arrangements could be ready by the end of its term, which expires next June.

Back from a trip to Europe, Lam said: “The offsetting issue is one of the issues that we shall ­handle in the next nine months ... It is hoped we can come up with a policy direction within this term.

“As for the corresponding ­implementation work, it may have to be handled by the next term of government.”

Unionist legislator Alice Mak Mei-kuen, speaking after meeting Leung, said: “The chief executive said he takes this [issue] very seriously, and he aims to solve this problem within his term of office.”

In 2012, as part of his election manifesto, Leung had pledged to “progressively reduce” the proportion of the employer’s MPF contributions that could be used for offsetting.

He has yet to deliver on that pledge, and Bill Tang Ka-piu, the federation’s outgoing legislator, said earlier this week that the group might support other candidates in the chief executive election next March if Leung failed make good his promise.

The issue was included in the government’s recent public consultation on retirement protection, which ended in June. It asked the public whether an in-depth discussion should be held on the alternatives to the offsetting mechanism, but did not directly address whether it should be scrapped altogether.

The government is expected to spell out the way forward early next year.

Federation president Lam Suk-yee said the government had yet to work out a concrete plan on how to resolve the problem. But she said they would meet with the administration again soon to ­discuss the way forward.

Shirley Yuen, CEO of the Hong Kong General Chamber of Commerce, warned that cancelling the offsetting mechanism would create more problems and push smaller firms out of business.