Letters | To achieve ‘common prosperity’, Hong Kong needs a universal basic income
- Readers discuss why Hong Kong’s mandatory retirement savings scheme is inadequate, and how the Hong Kong dollar could distinguish itself
MPF is not a government-run non-contributory pension scheme, such as the one for civil servants, but a mandatory, privately managed, fully funded self-contribution savings scheme, which effectively ties up 10 per cent of workers’ income until age 65.
It should have been obvious to government officials that most workers, and their employers, did not possess the required investment knowledge to decide on the most suitable choices from the constituent funds. Many constituent funds have a strong Hong Kong and China bias, which means many future retirees put too many eggs in one basket.
On October 28, the Hang Seng Index closed at 14,863 points, just below the 14,870 points at which the index closed at the beginning of January 2001 soon after the commencement of the MPF. Thus, in effect, our workers have been mandated to serve the financial services industry, and their monthly contributions over this more than 20-year period have been seriously devalued.
The MPF, and various welfare payments, should be replaced by a universal basic income – a periodic cash payment unconditionally delivered to all Hongkongers, without a means test or work requirement – funded by Hong Kong’s sovereign wealth assets or by taxation. This would be fundamentally fair.