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Enoch Yiu

Pension experts have told the Government it needs to encourage companies to better protect their workers by setting up retirement plans in addition to the Mandatory Provident Fund (MPF).

Grahame Stott, Asia-Pacific regional director at pension consultancy firm Watson Wyatt, said there was a pressing need for employers to implement their own pension schemes.

'The MPF is not going to provide enough savings to protect the retired lives of the three million workers in Hong Kong,' Mr Stott said.

The MPF, which was launched on December 1, 2000, is the first compulsory retirement scheme in Hong Kong. It covers 250,000 companies employing more than two million workers.

Another about one million are covered by pension schemes set up before the MPF.

Mr Stott said the MPF could not provide sufficient retirement protection to investors because contribution levels were too low. He said the shortfall would be felt in particular by low-income workers and employees who joined the MPF at middle age.

Under the law, employers and employees are obliged to each pay 5 per cent of the monthly salary into an MPF fund.

But Mr Stott said many companies already had good retirement schemes which they simply abandoned when the MPF was introduced because it was too onerous to get these schemes recognised by the authorities.

Companies which had established pension schemes before the introduction of the MPF in 2000 were required to apply for an MPF waiver from the pension watchdog, the Mandatory Provident Fund Schemes Authority.

But Mr Stott said many companies did not bother applying for the waiver.

'It is a shame that so many well-established pension plans had been abandoned,' he said.

He said that some of these pension plans had higher contribution levels than that of the MPF.

'The Government is wrong to try to standardise all pension plans to become MPF,' he said.

'This is wrong as some pension schemes have better features than the MPF. They provide a better benefit for the employees.'

Mr Stott said the Government should offer tax incentives to companies that set up pension schemes in addition to the MPF.



Top-up scheme needed to protect employees, pension experts warn