Wealth disparities in Hong Kong are among the most severe around the world. With the life expectancy of the average person here becoming longer and the population profile fast ageing, it is high time for employers, employees and the government to fully review the Mandatory Provident Fund.
The compulsory savings scheme requires employees and their employers to each contribute 5 per cent of the monthly salary to an account, subject to a minimum and a maximum salary levels.
This 5 per cent proposal was made in the early 1990s when the Sino-British Joint Liaison Group argued over our welfare expenditures in the last days of the colonial government.
Hong Kong always compares itself with Singapore. The government of Singapore runs the Central Provident Fund to provide a modest standard of living for its retired citizens. Under one of its schemes, members could receive a fixed monthly payout after retirement.
The monthly contributions, meanwhile, vary with their ages. Employees aged below 50 have to contribute 20 per cent, and their employers 17 per cent, of the monthly salary to their own account. That is 3.7 times more than the contribution in Hong Kong.
The monthly contributions go to four accounts: ordinary account is for housing, insurance, investment and education; special account is for old age and investment in retirement-related financial products; a "medisave account" is reserved for the costs of medical treatment and insurance; and a retirement account is created when one turns 55. It is set up to meet basic needs during old age.