Author Archives: Eddie Choy

CY Leung failed to get his MPF reform off the ground: it’s time to let someone else have a go

The outgoing chief executive has had five years to end a practice that allowed employers to take severance and long service pay out of employees’ pension, but has made no progress

Leung Chun-ying is a man in a hurry. With barely two more weeks in office, the outgoing chief executive is desperate to fulfil an election promise he made five years ago to overhaul a key compensation mechanism under the Mandatory Provident Fund pension scheme.

While it’s usually a good thing for political leaders to try to keep their promises, this is not the case here. Leung has come up with a half-baked proposal that even members of his own Executive Council can’t agree on, let alone opposing representatives from labour and the business sector.

His successor, Carrie Lam Cheng Yuet-ngor, is fully acquainted with the issues. It would make more sense for her administration to work out the reform plan than trying to force through a compromised solution that will not satisfy anyone.

The so-called offsetting mechanism has long enabled bosses to make payments for long service and severance using contributions they have already paid into the pension funds of departing employees.

Under this mechanism, bosses offset HK$3.85 billion last year from the cost of pensions– up 70 per cent from HK$2.27 billion in 2012.

Leung has promised to phase out this practice, which many consider exploitative, over 10 years with a government subsidy of HK$7.9 billion to help employers meet such obligations.

Neither the labour nor business sectors were happy with what the government had proposed.

Under the latest government plan, bosses would still be allowed to offset long service payments while being barred from doing so for severance payments. Now, even Leung’s own cabinet can’t reach a consensus on the revised proposal.

But Leung has gone on the offensive by criticising alternatives put forward by labour and business representatives. He insists there is no time left and that his latest is the only workable plan.

Who is he kidding? The only one who has no time left is him.

And he has no one to blame but himself – and perhaps Matthew Cheung Kin-chung, the former secretary for labour and welfare and currently the chief secretary.

They have had five years to work out an overhaul of the offsetting mechanism, yet allowed negotiations to drag on fruitlessly for two of those years. Then came the boycott of those negotiations by union leaders.

Precious time was wasted, and so here we are. Time’s up, CY. It’s too late in the day. Let Carrie Lam take care of it from here.



取消強積金對沖 政府破格處理







MPF對沖 唔洗一日即轉軚





Mercer Launches Hong Kong Mandatory Provident Fund Index

Consulting firm Mercer has launched a monthly index, the Mandatory Provident Fund Satisfaction Index, which will measure the satisfaction level of Hong Kong residents toward the Mandatory Provident Fund (MPF) system.

“We believe that the survey will provide useful insights on the MPF system and hopefully to improve understanding of satisfaction with the scheme,” said Billy Wong, Mercer’s wealth business leader for Hong Kong, China, and Korea.

The MPF is a compulsory pension fund for retirees in Hong Kong. In its inaugural survey for April, the index registered a 50.3 on a scale of a possible 100, with only 11% of respondents saying they were “satisfied” with the MPF system. Nearly 60% indicated they are “dissatisfied,” and only 31% deemed the system “fair.”

The survey found that younger employees seem to be less satisfied with the MPF system than their older counterparts. The average satisfaction index for respondents aged 55 or above was 66.4, compared with 47.3 for those aged 35 to 54, and 45.59 for those aged 20 to 34.

“To younger workers, retirement planning may seem like a distant matter which does not require immediate attention, while some may wish they had the funds to invest in other ventures,” said Wong. “The Mercer MPF SI offered us very interesting insights as to the different needs and sentiments towards MPF or retirement among employees in different life stages. These differences will be important for MPF providers and government bodies to keep in mind when devising retirement planning or MPF communications and education.”

The monthly survey was conducted among Hong Kong workers aged 20 to 65 on Mercer’s behalf by market research firm Nielsen. The survey examined knowledge, understanding, and satisfaction with the MPF system, as well as with current MPF-related developments.

The survey results also showed a lack of confidence among employees that the MPF will meet their retirement needs. Although 43% of respondents had average expectations when asked if the MPF would cover their post-retirement expenses, 36.8% had “low” or “very low” expectations, while only 21.2% had high expectations.

The survey also found a positive correlation between how knowledgeable a respondent is of the MPF system and their satisfaction with it. The average satisfaction index for those who deemed themselves “not knowledgeable” about the MPF system was 42.1, compared to 47.5 for those who considered themselves as having “average” knowledge, and 52.8 for those who considered themselves “knowledgeable.”

“Depending on individual needs and goals, it is good practice for employees to review their MPF portfolios at least once a year,” said Wong. “It is important for all stakeholders, including the government, MPF providers, and employers to work together to fill this knowledge gap.”

傳行會今加開會議 商取消MPF對沖 或本周公布方案

  • 取消強積金對沖方案未有定案,今日《星島日報》報道指,特首梁振英為趕及任期內作決定,要求行政會議今天召開特別會議討論,冀在日內公布決定。

  • 報道中提到,政府在周二的行政會議曾提出3個不同方案,包括先取消遣散費對沖,暫時保留長期服務金對沖及按月薪三分之二計算遣散費長服金的方法,亦有建議政府斥資62億至79億元補貼僱主10年以上的遣散費或長服金等。《星島》亦引述消息人士指,因時間倉促,難以決定新方案,並估計原定的「劃線」方案會獲通過。