Hong Kong leader Carrie Lam’s proposal to increase MPF subsidy to HK$29.3 billion over 25 years to remove offsetting mechanism fails to impress business leaders or unionists
Chief executive makes clear in policy address that controversial mechanism in pension scheme must be scrapped
For years, the so-called offsetting mechanism has allowed bosses to use their portion of contributions to employees’ MPF accounts to cover long service and severance payments.
Unionists complain that workers have little left in their pension funds after the offsetting and demand it be scrapped.
“The issue of MPF offsetting has been a bone of contention for a long time,” she said. “I consider now the time to make a decision to settle the issue that has beleaguered wage earners for years and to accord better retirement protection to employees.”
Last year, then chief executive Leung Chun-ying proposed a subsidy of HK$7.9 billion over 10 years for employers. After Lam took over as leader, she proposed HK$17.2 billion over 12 years under a complex, two-tier subsidy scheme.