Letters | Two steps for Hong Kong to ensure better retirement protection for all under MPF scheme
- While the low contribution rate makes it impossible to accumulate sufficient retirement income, the offset mechanism eats into employee benefits
- Eliminate offsets by April 2021, and allow public funding of some part of MPF contributions. Shouldering the cost would not be too onerous for the government
Hong Kong needs to do more to give people hope and confidence in the future. One way that this can be done is to make major improvements to the Mandatory Provident Fund scheme to provide better retirement protection for all.
The Business and Professionals Federation of Hong Kong has long advocated for an increase of mandatory contributions from the current 10 per cent (5 per cent each from employers and staff) to 15 per cent. Given the prevailing business environment and perceived uncertainties of the future, it would be very difficult to increase the mandatory contributions made by employers – particularly small and medium-sized enterprises. It is now time for the government to accept that public funding of some part of MPF contributions is necessary.
We suggest that, starting in April 2021, the government contribute an additional 5 per cent of relevant income to all MPF accounts. It is worth pointing out that contributing to MPF accounts will later reduce the demand on government to provide for those that fail to build a sufficient retirement fund.