Tag Archives: MPF

Hong Kong government to subsidise firms scrapping MPF offsetting mechanism for a decade

Chief executive to unveil handouts for employers to finance ditching of controversial pension fund mechanism, but contribution to be lower than expected

Hong Kong employers will be subsidised for 10 years with taxpayers’ money – although the government’s yearly contribution will be lower than expected – after the scrapping of a controversial pension fund payment system.

Chief Executive Leung Chun-ying will unveil in his swansong policy address on January 18 the proposal to ditch the mechanism that allows companies to use the money they put into workers’ retirement funds to offset severance and long-service payments.

The government subsidy in the first year of the transitional period will be less than half the amount used for the offsetting purpose, and progressively reduced over a decade.

The government will launch a three-month consultation on the plan, and table legislation to amend the Mandatory Provident Fund (MPF) Schemes Ordinance and the Employment Ordinance if there is enough public support.

The plan, which will cost the government billions, is one of the major initiatives to be announced by Leung in his last policy blueprint before his tenure ends in June.

While rejecting popular demands for a universal pension scheme, he will instead hand out a monthly subsidy of HK$3,400 to elderly residents whose individual assets are capped at HK$140,000.

A source familiar with the matter said the amendment bills would specify a cut-off date, after which employers would no longer be allowed to offset staff severance and long-service payments with their MPF contributions.

However, the source said it was unlikely that the mechanism, a source of constant friction between companies and labour unions since the MPF system was implemented in 2000, would be scrapped this year because of time needed for public consultation and drafting of amendments.

“It’s also highly unlikely the amendment bills will be tabled to the Legislative Council before the tenure of the current administration expires in June,” the source said.

The plan, which will cost the government billions, is one of the major initiatives to be announced by Leung in his last policy blueprint before his tenure ends in June.

While rejecting popular demands for a universal pension scheme, he will instead hand out a monthly subsidy of HK$3,400 to elderly residents whose individual assets are capped at HK$140,000.

A source familiar with the matter said the amendment bills would specify a cut-off date, after which employers would no longer be allowed to offset staff severance and long-service payments with their MPF contributions.

However, the source said it was unlikely that the mechanism, a source of constant friction between companies and labour unions since the MPF system was implemented in 2000, would be scrapped this year because of time needed for public consultation and drafting of amendments.

“It’s also highly unlikely the amendment bills will be tabled to the Legislative Council before the tenure of the current administration expires in June,” the source said.

In Hong Kong, companies and employees are both required by law to contribute an amount equal to 5 per cent of workers’ monthly wages – capped at HK$1,500 – to their MPF accounts. In 2015, the total amount of employers’ contributions used to offset long-service and severance payments was HK$3.35 billion, up 11.5 per cent from 2014.

The chief executive is running out of time to fulfil his pledge in his 2012 election manifesto to “progressively reduce” the proportion of MPF contributions that can be used for offsetting payments.

The source said the government would offer subsidies for a decade after the ending of the mechanism.

“The subsidy offered in the first year of the transitional period will account for lower than half of the amount used for the offsetting purpose. It will decrease as time goes on,” the source said.

At present, severance and long-service payments are both calculated by taking two-thirds of an employee’s last monthly salary and multiplying it by years of service. The government will propose reducing the two-thirds base to half of the monthly salary.

Tang Ka-piu, of the Federation of Trade Unions, said the subsidy would be acceptable as long as it helped achieve the goal of scrapping the unpopular mechanism.

However, Federation of Hong Kong Industries deputy chairman Jimmy Kwok Chun-wah countered that owners of many small and medium-sized enterprises would object as it would increase their operating costs.

Irons Sze Wing-wai, an honorary president of the Chinese Manufacturers’ Association, also said the proposal was unacceptable.

Hong Kong government should offer a third option on retirement scheme

Since the introduction of the Mandatory Provident Fund (MPF) in 2000, retirement protection efforts have largely come to a standstill. While concern over the accrued returns of our MPF contributions is loud and clear, nothing much has been done to strengthen the existing system.

It is reassuring to see the government broaching the issue for public discussion.

Two proposals were tabled for discussion. The first option, advanced by University of Hong Kong social work professor Nelson Chow Wing-sun, considers retirement protection a basic right. With no means test, elderly members reaching a particular age are entitled to a monthly stipend. The hefty expenditure would mean either an increase in profits and salaries taxes or the introduction of new levies such as a goods and services tax.

Unsurprisingly, the public are taken aback by its grave financial implications. Their resistance, however, seems to be a far cry from their quest for more extensive protection, which inevitably entails substantial costs to be borne by all.

The second option, which operates on a needs basis, involves a lower cost. Applicability will be assessed based on the poverty situation of the elderly. The proposal is said to adhere to the long-standing “one supporting oneself” principle and core values of self-reliance. However, the proposal is nothing more than yet another gesture for poverty alleviation. It is far from the intended goal of universal protection.

In juxtaposing the two options, the government has unwittingly, if not subtly, demonised the first option by stressing its low financial viability. The forgone conclusion is that the government is incentivising the public to make do with the second option.

That the first option is unwelcoming because of its prohibitive tax hikes should not make the second option more palatable. After all, the second option deviates from what the public has been calling for and it falls short of the notion of universal protection. The consultation exercise seems to have dissolved into yet another false dilemma. While issues of ageing population and shrinking workforce are pressing, the public should not feel obliged to choose the lesser of the two evils.

With the discussion gaining momentum, the government should capitalise on the opportunity to “forge ahead”, as how the consultation document is rightly entitled. To say we are looking for a consensus, it is more realistic to thrash out a third option accepted by the majority.

Borromeo Li Ka-kit, Happy Valley

Hong Kong’s conundrum: Both proposals for a comprehensive pension scheme have flaws

The public can be excused for feeling dismayed by the government’s answers to the quest for a full retirement protection scheme. After years of anticipation, we are told to choose between two options that, regrettably, cannot address the complex issues facing a rapidly ageing society like Hong Kong’s. The government believes both proposals would require tax hikes to offer pensioners a monthly stipend of HK$3,230. In order to cover everyone regardless of whether they are rich or poor, as proposed by welfare expert Professor Nelson Chow Wing-sun, salaries and profits taxes may have to rise significantly to foot a staggering bill of HK$2.395 trillion in the next 50 years.

The government’s option would cost one-tenth of that, at around HK$255.5 billion, but about three in four will miss out under a proposed threshold to exclude people with assets of HK$80,000 or more. Taxpayers and companies would still have to fork out more, though not on the same scale as in the academic’s proposal.

If the public feels caught between a rock and a hard place, it is because neither option is desirable. Laudable as it, Chow’s blueprint raises concerns over the financial burden in the long run. Assuming the government’s projection is accurate, it would require a 4.2 percentage point rise in profits tax, or an 8.3 percentage point increase in salaries tax, to meet the costs of Chow’s plan.

Given that the workforce and tax revenue are to shrink as the elderly population swells, sustainability is a valid concern. The alternative is not reassuring, either. While the public purse will be less strained, it confuses the concept of retirement protection with poverty alleviation. It is essentially creating another safety net for the needy under the current welfare system.

That the government is willing to broach the thorny issue demonstrates its commitment, according to Chief Secretary Carrie Lam Cheng Yuet-ngor. But she also conceded that the way forward remained unclear. If the war of words between Lam and Chow is any reference, the prospect of forging a consensus is not promising. The clamour for a universal pension scheme owes much to the inadequacies in the mandatory provident fund scheme, which was introduced in the wake of the last citywide debate on the issue in the 1990s.

The question is simple: do we want a universal pension scheme, and if so, how should we go about it? Perhaps we should not limit the debate to the pros and cons of the two options on the table. Between a scheme that costs a fortune to benefit all and one that screens out the majority, could there be a third option?

Hong Kong employers are failing to provide basic protection and benefits for their workers

The government’s attempt to shed its responsibility to introduce a universal retirement scheme again highlights the lack of even basic protection for the working population in Hong Kong, especially those on a low income. The upcoming consultation on retirement protection is nothing but posturing, devoid of real commitment.

READ MORE: ‘Universal’ not the burning issue for a Hong Kong retirement protection scheme, Carrie Lam says

Even Professor Nelson Chow Wing-sun, who was commissioned by the government to conduct a study on retirement protection, has said he was disappointed with how the consultation document is being framed.

Chief Secretary Carrie Lam Cheng Yuet-ngor has already said retirement protection won’t be implemented during this term of government. But the business community is up in arms, regardless. They are mainly taking aim at the proposal to partially or completely abolish the existing mechanism that allows employers to offset the accrued benefits of their contributions into the Mandatory Provident Fund schemes against severance or long-service payments. The business lobby went so far as to object to even a public discussion on the possibility of abolishing offsetting, which is expected to be one of the proposals in the consultation paper

It must be remembered that the offsetting was only put in place as a stop-gap measure when MPF schemes first started. Over the years, such offsetting has substantially weakened the fund. This, in addition to the high administration fees and employer malpractices, has rendered the scheme almost meaningless.

It is naive to assume that passing the buck to the government would take away the burden on employers

It is regrettable that the former vice-chancellor of the Chinese University of Hong Kong and prominent economist Lawrence Lau Juen-yee has lent his support to the business community on the offsetting issue. Professor Lau recently addressed a seminar that was co-organised by the Business and Professionals Alliance for Hong Kong with the purpose of applying pressure on the government. He said severance payments were effectively an unemployment insurance, and suggested that social security modelled after the US system should be introduced instead; but he saw it as a responsibility of the government only.

It is naive to assume that passing the buck to the government would take away the burden on employers. Someone has to foot the bill. Sooner or later, the government would have to tax businesses to fund the benefits. More importantly, the fundamental principle is that severance or long-service payments serve a different purpose from that of MPF or retirement protection.

Workers in Hong Kong have long been disadvantaged. The post-war economy of Hong Kong was built on the basis of low wages and exploitation. During the colonial days, there were no benefits or social security to speak of until the 1967 riots forced a government rethink and it started basic housing, social and education programmes. In the run-up to 1997, legislation for collective bargaining was approved but was swiftly abolished after the handover. The proposed central provident fund was watered down to become the lame MPF scheme we have today. And after years of discussions, the minimum wage finally came into effect in 2011, but not without scaremongering by employers that it would cause massive business closures and job losses – which have not happened. The regulation of working hours is also a non-starter because of the strong opposition by the business sector. The list goes on.

In short, Hong Kong is lagging seriously behind other developed economies in providing basic protection and benefits for workers.

Capitalists and workers need each other for an economy to function properly. This is particularly relevant to Hong Kong because we are a service economy. Our success relies on people. A retirement protection scheme funded by contributions from employers, employees and the government is reasonable and workable. If our capitalists continue to refuse to shoulder their basic responsibilities, they will be sowing the seeds for social discontent and instability.

強積金專版 三專家加倉區內股票

上周環球投資環境相當複雜,法國恐怖襲擊陰霾、A股重啟IPO在即、美國加息憂慮轉移憧憬加息步伐緩慢,左右市場投資情緒。上周建議大家先審慎,強積金策略宜守不宜攻,各專家對本周的投資環球有何看法?

 

東驥資產管理表示,美國月初公布的就業數據理想,令下月加息機會大增,若通脹數據也上升,即消除加息最後障礙,聯儲局是否加息已不重要,市場焦點將是明年加息幅度及步伐。

美國企業盈利下跌及聯儲局快將加息,投資者亦受恐襲等消息影響。90%已公布業績企業,平均盈利下跌0.9%,為6年來首次倒退,分析預料本季業績再跌2.4%,勢將連跌兩季。美股因企業盈利欠佳及零售銷售疲弱,出現8個月來最大跌幅,投資者宜小心,並於反彈後減持。

日本方面,經濟連續兩季收縮,陷於技術性衰退,市場相信日本央行必然再次推行量寬,惟日央行遲遲未有行動。

富道財經副總裁陳皓怡指出,聯儲局大部分委員認同下月適合加息,面對9年來首次加息,聯儲局有必要管好市場預期,眼見美匯指數抽升至100附近,美股這個最後探戈遲到好過無到。美國加息將至,市場已有充分心理準備,歐央行和日央行有望加碼放水,相信短期利好兩地股市,故模擬組合維持國際基金和美股基金比例不變,但將部分現金買入追蹤港股表現的恒指基金。

中原理財表示,美國下月加息勢在必行,法國恐襲對短期經濟及股市影響有限。人民幣加入SDR進入最後階段,預計匯價波幅減低,加上國家主席習近平強調改革需繼續,令投資者回復信心。投資策略仍應採取防守,若美國落實加息,資金不一定大幅回流美國,本周決定增持亞洲股票基金。

本版版主李嘉麟認為,市場上周充斥利淡消息,但開始對利淡消息重新包裝,美國由加息憂慮,轉炒加息步伐緩慢憧憬,中港股市欲跌卻跌不下,恒指上周一裂口跌至22,000點邊緣後,已完全回補當日裂口,滬綜指守於3,600點之上,故本周重新加倉中國及香港股票。月供方面,歐元及歐股低殘,是趁低收集時機,故月供方面轉買歐洲股票基金。

註:組合於2015年11月2日開倉,資料截至11月16日 

In Asia, most left unprepared for future care needs

Governments across Asia, including Hong Kong, are not doing enough to provide funding and adequate care services for the elderly – leaving many feeling unprepared to deal with future care needs.

Despite a high level of awareness regarding the need for long-term care, many in Asia do not know how to start preparing and feel unable to afford such services, according to a report released today by Swiss Reinsurance Company. The study surveyed 6300 respondents in Hong Kong, China, Japan, Korea, Taiwan and Singapore.

“Increasingly, consumers are expressing concern over their ability to pay for their future care, given that many believe their governments will not be able to fund such expenditure and because the cost of care is highly unpredictable,” the report said.

Only 10 per cent of participants felt they had the financial resources to fund their long-term care requirements, with many reporting a funding gap of 50 to 60 per cent of estimated care costs.

Approximately a sixth of respondents said they have some form of insurance.

“The reality is that we are not really prepared for old age, and in the next decade or so we have to find a solution to support our elderly population,” said Nelson Chow Wing-sun, professor of social work at the University of Hong Kong. “Filial piety is diminishing and those who do have children only have one or two. You have to support yourself when you grow old.”

The number of elderly people in Asia is expected to reach 572 million by 2030, almost double from 2010, and 10 per cent of the population will be aged 65 or more by 2025.

In Hong Kong, affordability is the most crucial factor for those considering insurance and investing in other long term care services, with 38 per cent citing it as their top reason. About 20 per cent said they were financially able to cover the costs of their parents’ care needs – the lowest percentage in all the countries surveyed.

Forty per cent of Hong Kong respondents said that they felt prepared for future care needs, and 34 per cent trust that the government will adequately fund and provide such services.

This month, a proposal to dramatically decrease the cost of the Mandatory Provident Fund, a compulsory saving scheme for retirement, will be submitted to Legco. The proposal requires all schemes to have a “core fund” – for those who do not specify how their contributions should be invested – and decrease the management fee cap for such funds from 1.64 per cent to 0.75 per cent.

If approved, it will launch at the end of 2016, and will be the biggest reform of the MPF since the programme was established in 2000.

 

“The return is simply quite low and not satisfactory at all,” Chow said. “Even for one earning a medium income, working 30 years – the sum they accumulate is less than one million dollars. How can you support yourself? The amount accumulated is too small for most people.”

MPF上月賺4.7% 表現僅次「大時代」 人均進帳萬元 惟未抵消上季虧損

 

 

http://www.mpfinance.com/htm/finance/20151104/news/ec_ech1.htm

【明報專訊】強積金經歷差不多半年頹勢,上月終於大反撲,絕大部分基金均錄得正回報,令10月份單月整體錄得4.66%回報,即每名打工仔平均進帳10,440元,是今年回報升幅第二大的月份,僅次於處於「大時代」的4月。有投資顧問認為,10月份強積金表現理想,主要是由股市帶動,建議年輕僱員可考慮買入環球股票基金賺取回報。

 

明報記者 鄭智文

 

截至今年6月底,強積金的總資產值為6201.36億元,有登記的自僱人士及僱員達276.8萬名。以此粗略計算,每名僱員10月份額外賺10,440元。不過,若回顧7月、8月、9月情況,分別錄得2.06%、5.61%、1.73%跌幅,即每名打工仔第三季虧損達21,059元,即使10月份表現回升,每名僱員下半年仍蝕10,620元。

 

日股基金最標青 升近一成

 

據理柏亞洲最新資料,10月份強積金以日本股票基金表現最佳,單月升9.62%,其次是中國股票基金及美國股票基金,回報分別有8.95%和8.58%,香港股票基金則以8.21%回報排第四。強積金總數合共約為483隻基金,上月只有11隻基金回報錄得下跌,其中又以債券基金為主,但跌幅最多亦不足0.4%。雖然10月份基金回報突然大轉勢,但市場預期今年餘下時間市况持續反覆,打工仔或會關心應否更改資產配置來迎合市况。浸會大學財務及決策系副教授麥萃才表示,市况波動只是影響短期回報,但強調強積金配置應該是按年紀而定。他提到,部分基金是按客戶人生階段來轉換配置,建議可考慮相關基金。

 

康宏:年輕僱員可買環球股票

 

 

康宏理財強積金業務拓展董事鍾建強則認為,市况未來數月仍會波動,例如美國可能12月加息、歐洲、日本、內地或推出政策刺激經濟,建議僱員秉承長遠目光來投資強積金,年輕僱員可考慮買入環球股票基金,將屆退休年齡人士,則宜買有保證回報成分的基金,以承受波動。被問到自行投資是否比供強積金理想,鍾建強表示,強積金是供僱員準備退休的良好工具,可享僱主供款,退休取供款時亦毋須納稅,以及投資風險較低。

理柏10月份強積金錄逾4%增長 但年初至今仍跌1.45%

<匯港通訊> 理柏10月份強積金數據顯示,整體強積金錄4.66%增長,當中日本股票表現最佳,升幅達9.62%;中國股票及美國股票分別升8.95%及8.58%,港股則升8.21%。而表現最差的是南韓股票,跌0.31%。

 

 

不過,累計今年首10個月,強積金仍蝕1.45%。中國股票基金表現則最差,至今跌幅達7.2%,香港股票基金則跌2.58%。

強積金上月人均賺6,990元

經歷過第三季的中、港股市震盪,10月份市況氣氛轉明朗。據湯森路透理柏發佈資料顯示,受到日股、A股、美股及港股基金彈升帶動,上月強積金整體表現按月錄4.66%增長,即每名強積金成員賺約6,990元。惟年初至今,強積金仍平均要蝕1.12%。 please only add this icon at the end of the article

資產按季縮587億 歷來最傷

專門蒐集強積金數據的Gadbury數據顯示,截至今年9月底,強積金總資產為5,613億元,按季減少超過587億元,為強積金面世15年以來,最大的季度減幅。湯森路透理柏發佈10月份強積金數據,整體表現錄增長4.66%,其中以日本股票表現最佳,升幅達9.62%;中國股票及美國股票分別反彈8.95%及8.58%。至於港股則升8.21%。

雖然上月強積金表現收復部份失地,惟年初至今計,強積金平均仍錄蝕1.12%,以現時人均強積金資產15萬元計,即大約蝕1,680元。

就個別基金而言,10月表現最好的是「滙豐強積金自選計劃-自選美國股票基金」及「恒生強積金自選計劃-自選美國股票基金」表現最為標青,升幅為11.4%,年初至今同樣微賺1.41%。

 

今年來表現計,升幅最多為「海通MPF退休金-海通韓國基金-A」,錄23.11%升幅;緊隨其後為「宏利環球精選(強積金)計劃-宏利MPF日本股票基金」,升幅13.24%。根據積金局網站,現時兩隻基金最新開支比率分別為1.81%及1.96%,收費雖較平均水平1.6%貴,惟以回報取勝。 

 

 

《星島》指政府擬明年起取消強積金對沖但無追溯力

僱主用來抵銷解僱員工時支付遣散費及長期服務金的強積金對沖機制,多年來都為人詬病。《星島日報》引述政府消息於頭版報道,特首梁振英擬於明年一月的《施政報告》中宣佈取消對沖機制。

但報道引述政府消息人士稱,為免對僱主「一次性作出太大承擔」及減少商界反對聲音,政府考慮新措施將不設追溯力,即僱主在新措施實施日期前的舊有供款,仍可作出對沖。

強積金已推行十多年,原意是為保障僱員退休後的生活,但根據資料,強積金2001年至2014年對沖金額已逾207億元。特首梁振英曾在對競選政綱承諾會消取強積金對沖比例,但至今仍無聲氣被勞工界質疑「走數」。前金管理局主席胡紅玉今年3月卸任前接受《蘋果》訪問時亦直指強積金對沖機制蠶食打工仔的血汗錢,窒礙推行強積金自由行,認為政府有責任把對沖機制與強積金脫鈎。

 

http://hk.apple.nextmedia.com/realtime/news/20150916/54210201