Accountants join outcry against pension scheme

ACCOUNTANTS have become the latest professional group to attack the Government's proposed old age pension scheme.

The Hong Kong Society of Accountants said the scheme would discriminate against unincorporated businesses with a higher tax burden.

President Eric Li Ka-cheung said self-employed people would be forced to pay an additional three per cent of profit tax in addition to current income tax, while limited companies only contributed 1.5 per cent of the payroll cost under the scheme.

'Lawyers will be most adversely affected because they are legally prohibited from incorporating as limited companies,' he said.

Under the Company Ordinance in Hong Kong, lawyers and accountants are strictly barred from incorporating.

The Government has granted approval to accountants to establish limited companies, leaving lawyers to bear the brunt.

Mr Li also complained the system did not link benefits to contribution.

The criticism was included in the society's submission to the Government last month. The three-month consultation ends this month.

The society also said the pension scheme was not the best long-term measure for retirement protection.

It urged the Government to consider measures such as improving government welfare payments for the elderly, coupled with a compulsory private sector retirement scheme.

The society said 'the contribution is a tax in disguise, and the benefits a welfare payment' under the old age pension scheme.

It argued the scheme was 'a waste of resources and has a danger of eroding the traditional value of self-reliance'.

China is opposed to the scheme which it considers social welfare instead of retirement protection.

In April, the society gave its view on the pension scheme to China's Preliminary Working Committee.