Retirement protection is a government duty, not welfare: Ronny Tong

Retirement protection is not a welfare issue — it is the government’s responsibility. That was the message from legislator Ronny Tong during the Legislative Council debate on a motion for a comprehensive review of the MPF system. As one of the three pillars of retirement protection, he argued, the MPF simply does not deliver a reasonable standard of living for workers after retirement.

Why does the MPF fail to protect retirees?

High fees, offsetting erosion, and low savings — a triple blow. Tong started with fees: MPFA chairman Anthony Neoh had already warned back in 2007 that management fees could eat up 40% of a member’s total contributions. Take a worker contributing HK$2,000 a month for 40 years at a 5% return: without fees the pot would grow to HK$3.05 million, but with the trustee’s 2% annual charge only HK$1.85 million remains — HK$1.2 million swallowed by fees.

What is wrong with the offsetting arrangement?

Loyal workers are penalised; the more you are laid off, the less you keep. Employers can use their MPF contributions to offset severance and long-service payments. Tong called this exploitation of loyal employees: if a worker is laid off repeatedly, even with continuous employment, little of the accumulated savings survives.

What other difficulties do workers face?

Wages barely cover living costs — there is nothing left to save. Structural unemployment is severe in Hong Kong, and many workers earn only enough to get by. A Polytechnic University survey on MPF and retirement protection found that 40% of MPF members not yet retired have no private savings at all outside the MPF — it is their entire retirement lifeline. And for the city’s many full-time homemakers doing unpaid work, old age without a reliable husband or children means depending on CSSA welfare too.

Why call it a ticking time bomb?

Savings cover five years; Hongkongers live twenty past retirement. The insurance industry itself admits MPF savings cover only about five years of retirement spending — yet Hongkongers commonly live to 85, leaving 20 years after retirement. What happens after the five years run out? Without protection, retirees become a welfare burden. Delaying the universal retirement protection debate, Tong warned, only leaves a ticking time bomb for the next government.

To compare MPF fund fees and performance, visit MPF fund comparison.