Answering Raymond Leung: Universal Pension Is No “Low-IQ Scheme” — It’s Partially Pre-Funded

Budget debates have thrust universal retirement protection into the spotlight. Some claim market-driven MPF beats collective universal pensions for efficiency, even calling universal protection “the road to hell”. Neoliberal economist Raymond Leung’s Hong Kong Economic Journal essay “Why a Universal Retirement Protection System Won’t Work” led the charge. A rebuttal dismantles his case point by point, arguing it rests on misunderstandings.

How does Leung oppose universal pension?

Four claims: dependency-ratio doom, excessive funding, lower returns, and a “low-IQ” design. Leung argues pay-as-you-go universal pensions are hostage to dependency ratios, hurting the young; the community plan needs excessive funding — $750 trillion in government injections by 2056, beyond the $600 billion reserves; universal pensions return less than MPF, whose average returns could give retirees $8,700 a month versus the pension’s $3,000; and the whole thing is a low-IQ scheme that collapses under scrutiny.

Why call it a misunderstanding?

The community plan isn’t pure pay-as-you-go — it’s partially pre-funded. Leung equates the proposal with Chris Patten’s 1990s old-age pension — pure pay-as-you-go, doomed under ageing. But co-designer Professor Wong Hung has repeatedly explained the universal pension is a “partially pre-funded” system: save while the population is still young to meet future ageing. Reducing it to pure pay-as-you-go before attacking it is a straw man.

What’s the proposal’s pedigree?

Designed by academics, debated for years by 70-plus community groups, widely supported. The scheme was jointly researched by scholars from various professions and refined through years of discussion — not dreamed up overnight. Whether it’s truly as “low-IQ” as Leung claims, the public can judge by examining both sides’ arguments.

To compare charges and returns across MPF funds, visit MPF fund comparison.