Loosening the eligibility requirements for the government's existing social security benefits programme is the best way to overhaul the city's pension system, an Institute of Education survey has found.
That conclusion is based on the findings of a five-year study of more than 8,000 households, which analysed the cost-effectiveness of three proposals to change the city's retirement protection system.
These included an expanded Comprehensive Social Security Assistance (CSSA) scheme that would benefit 80 per cent of retirement-aged people, compared with the 50 per cent now covered. CSSA is a key government welfare scheme helping low-income groups.
The expansion plan would cost an extra HK$5.3 billion on average per year. But it would lower the poverty rate for Hong Kong's elderly to 19 per cent by 2041 from the current 23 per cent, said Professor Chou Kee-lee. Chou, head of the institute's Department of Asian and Policy Studies, conducted the study.
The proposal would allow residents to apply for benefits on an individual basis, and would do away with the current requirement that relatives provide statements saying they cannot afford to support the applicant.
Chou offered two more proposals, based on his study. One would entitle all people aged at least 65 to receive HK$3,000 in monthly pension payments. The other would raise the existing old-age living allowance payment to HK$3,000 from just HK$2,285.
The average additional costs per year for these two proposals would be higher: HK$30 billion for the universal pension and HK$5.5 billion to raise the existing payments.
But Chou said the old-age poverty rate would also go down to 12.8 per cent and 20.4 per cent, respectively, under each of the two plans.
"It is important to tackle old-age poverty, but the government must be able to bear the costs long-term," Chou said yesterday.
"We should be able to guarantee a minimum standard of living but this has to be financially sustainable. For this reason, I personally support broadening the old-age provisions in CSSA."
Chou's study comes ahead of tomorrow's publication of a government-commissioned report, which is to provide details of actuarial studies on the funding, cost and sustainability of some six proposed retirement benefit schemes.
His study also evaluated the government's old-age living allowance scheme, which was implemented this year.
Findings revealed that the scheme itself had "substantial" anti-poverty effects on older adults, with a 10 per cent drop in poverty rates this year. But its long-term price may pose problems for the government, incurring an average of HK$10.8 billion in additional costs each year.