Six per cent of government spending in the next financial year will be on civil service pensions - more, surprisingly, than on the environment and food, housing and infrastructure. The annual pension payment has doubled to more than HK$16 billion over the past decade and will grow as the number of civil service retirees peaks in the years ahead. We do not set aside the money to meet that liability. Taxpayers foot the bill each year. There is no question about the government's ability to meet its annual pension liability, given that this year's bill amounts to less than 7 per cent of net financial assets at the end of March last year (after deducting the pension commitment and other liabilities). But there is no doubt either that it is one of the biggest long-term financial clouds hanging over a city facing the rising cost of health care and social welfare for an ageing population. Over the long term, the government's pension bill will decrease, as civil servants appointed from May 2000 are put on the contributory Civil Service Provident Fund Scheme. But before it comes down, the bill will continue to grow as civil servants recruited in the 1980s and 1990s retire in the years ahead and can be expected to live for decades afterwards. Calls for changes to the way we finance this liability that would lighten the future burden on taxpayers' funds should not therefore be lightly dismissed. Academics have suggested that the government could dip into its massive fiscal surplus to finance buyouts of pension entitlements for staff willing to switch to the provident fund scheme, and pay the money into the fund. This option could appeal in particular to people leaving the service or who do not envisage spending their entire working life in the government. Another is to inject more money into the Civil Service Reserve Fund, which has never been used since it was set up in 1995, and convert it into a self-financing source of funds to meet the annual pension liability. While this would require too large an initial sum up front, a sizable capital injection could enable it to earn enough to contribute significantly to pension payouts over time. Given the drain on revenue and the need to control recurrent spending, these ideas are well worth actuarial studies. Options to be studied could include extending the voluntary buyout concept to people already retired who may wish to consider accepting a lump sum in lieu of their estimated pension entitlement in their remaining years. Allowing civil servants to cash out their pension entitlements could be politically controversial, as it might be seen as self-serving for the civil servants who formulate such a plan. But that should only mean that the idea would require careful articulation to the public, preferably as one of many innovative means of using the reserves to free up more government revenue for recurrent spending on priorities such as health care and education.