Options to retire earlier or later in life with flexible work arrangements should be promoted more among the public and private sectors as the city faces increasing manpower shortages, according to an influential think tank close to Chief Executive Donald Tsang Yam-kuen. With people living longer and many couples choosing to have fewer children, Hong Kong's old-age woes are not new. The government tried to address the issue by introducing a universal pension scheme, the Mandatory Provident Fund, in 2000 but low contribution rates mean the scheme is unlikely to support retirees fully into their twilight years. According to the Census and Statistics Department, people aged 65 or older will account for one-quarter of the city's population by 2033, up from 16.2 per cent now. 'Our rapidly ageing population will have adverse impact on Hong Kong's long-term competitiveness, as human capital is recognised as the most valuable asset of a knowledge-based economy,' said Winnie Ng, director of the Bauhinia Foundation Research Centre, which commissioned a study on optional retirement. 'Hong Kong needs to be more proactive in planning for policies regarding work options for the elderly, and optional retirement could be a means to address challenges posed by the ageing workforce.' Although there is no legally mandated retirement age in Hong Kong, employees at many firms in the private sector as well as civil servants are generally required to leave the workforce when they reach the age of 60. This arrangement would not be a problem were it not for the city's relatively low birth rate of less than one child per couple in 2007, well below the global average of 2.6 children. Better living standards and medical advances also result in longer lifespans, which are expected to reach 82.7 years for men and 88.3 years for women by 2036, about three years more than the life expectancy in 2006. Allowing retirees to stay in the workforce, such as on a part-time basis, could help meet labour shortages over the long term and reduce the public spending needed to support them, Ng said. But such schemes should be adopted gradually and after considering any impact on welfare benefits, the Mandatory Provident Fund and labour insurance. Optional retirement schemes are in practice in some relatively mature economies, such as Japan, the US, the European Union and Singapore. The think tank consulted the accounting, education, nursing, insurance, social-work and public-health sectors as part of the study. It found general consensus that employees and employers should mutually agree to post-retirement work, retiring senior management staff should step aside and work part-time, and a person's ability should be considered when looking at extending employment. HSBC, which employs about 21,000 staff locally, has a mandatory retirement age of 60. But employees could work out optional retirement arrangements with the bank, depending on need, an HSBC spokesman said. A Civil Service Bureau spokesman said there were no plans to allow staff to continue after they reach 60. 'Any extension of the existing retirement age will have implications on succession planning of the civil service as a whole, affecting the promotion prospects of serving civil servants, slowing down natural wastage, and reducing job openings in the labour market,' the spokesman said. 'We have no plan to change the normal retirement age of civil servants at this juncture.' A global retirement survey conducted by HSBC Insurance last year found Hongkongers were the most eager in the region to retire early, although women nearing retirement age wanted to stay employed. More than one-quarter of women aged 40 to 59 in Hong Kong were keen to retire early, while 43 per cent of women aged 60 to 79 expected to continue working for as long as possible. Twenty-seven per cent of men chose early retirement. Among those aged 60 to 79, 32 per cent expected to continue working for as long as possible.