Legislator Chan Kin-por on MPF income thresholds: raise contribution cap to HK$30,000 in two steps

Legislator Chan Kin-por (insurance sector) spoke on MPF relevant-income thresholds, making three points:

How should the contribution cap rise?

Backs two steps to HK$30,000, not four. Chan said a key reason the MPF is criticised as inadequate for retirement is the low contribution rate and low cap. Since the MPF launched in December 2000, the cap has stayed at HK$20,000, so raising it is the right move; but whether to jump straight to HK$30,000 or phase it in should be put to stakeholders including employer and employee groups. He personally supports reaching HK$30,000 in two steps rather than four, to reduce the administrative burden.

How do you keep admin fees in check?

More complex systems mean higher fees — consult the providers. Setting the minimum and maximum relevant income levels must factor in the cost of changing payroll and MPF administration systems and the impact on admin fees — the more complex the systems and procedures, the higher the fees. The government must consult MPF service providers, including insurers, trustees and fund companies; he urged early consultation with the Hong Kong Federation of Insurers.

What is the timetable?

Formal proposals before July 2011. The government replied it will make formal proposals on the minimum and maximum relevant income levels within the 2010–11 legislative year — before July 2011 — and submit them to the financial affairs panel.

To see how much different incomes must contribute, visit MPF fund comparison.