Leung Chun-ying’s race against time to solve MPF’s fraught offsetting mechanism
The Hong Kong government’s No 2 official Carrie Lam Cheng Yuet-ngor has promised to tackle what she has called the ‘three mountains’ the administration is facing including the controversial Mandatory Provident Fund. The rule allowing bosses to use MPF contributions against severance payments is still a bone of contention
When Leung Chun-ying wrote in his 2012 election manifesto that he would enhance the Mandatory Provident Fund and tackle the controversial offsetting mechanism, he did so cautiously.
Instead of declaring he would scrap the mechanism – as the labour sector had demanded for years – he walked the middle ground, wary of a hostile business sector.
He pledged that, were he elected chief executive, he would “adopt measures to progressively reduce the proportion of accrued benefits” bosses could use to offset long-service and severance payments.
He also said he would explore ways to enhance the MPF, including reducing management fees, providing choices of annuities and introducing investment products with steady returns.
Almost four years after he became the city’s leader, steps have indeed be taken to improve the MPF. But few inroads have been made to tackle, if not completely scrap, the offsetting mechanism.