Reformed and means-tested CSSA can support elderly who truly need help

Concern is growing about improving retirement protection for our elderly and different ideas have been put forward.

The Business and Professionals Federation of Hong Kong believes that a universal pay-as-you-go or even partly funded pension is not the solution. Government revenue is distributed to those who do not need it. Given our ageing population and low, narrow and volatile tax base, this is unsustainable. Those who have sufficient means should fend for themselves and the responsibility to save for retirement should rest with them.

There has been much criticism of the Mandatory Provident Fund (MPF), such as inadequacy, lack of choice and high charges, but since it is now well established, scrapping it cannot seriously be considered. It can be improved to become the main pillar for retirement protection.

A central administrative platform, streamlined management including reduced fees, full portability, drawdown of accrued benefits for limited approved purposes, greater investment freedom and even provision of long service payments are just some of the features that can be considered.

When a contributor has accumulated sufficient MPF savings, the idea of creating an income stream from contributions instead of giving out a lump sum upon retirement should be explored. There are those who will not be able to save or save enough for retirement. We need a main supporting pillar - a reformed, means-tested Comprehensive Social Security Assistance (CSSA) for the elderly.

We should try to remove the perceived stigma of receiving social assistance and think of it as providing a reasonable basic income to those who truly need help. This will involve rebranding it as a means-tested individual retirement income benefit, taking into account such factors as housing status, increased medical costs and marital status. The need to furnish a 'bad-son letter' (in which the recipient's children confirm they are not financially supporting their parent) must be removed. 'Fruit money', or Old Age Allowance, should be rolled into this enhanced means-tested elderly benefit, although existing recipients could be allowed to continue with the scheme.