Universal retirement protection: unionists’ 2011 call for MPF to run alongside it

The 2011 Policy Address again refused universal retirement protection on the grounds of “no social consensus”, promising more study instead. FTU legislator 葉偉明 pushed back in writing: the MPF system was riddled with gaps, low earners could hardly live on it in retirement, and the government should run both tracks — MPF and universal retirement protection — so everyone could age with dignity.

Why was MPF protection deemed inadequate?

MPF protection was inadequate because contribution rates were low, the offsetting mechanism ate into employer contributions, and low earners accrued too little to live on in retirement. 葉偉明 illustrated with a 45-year-old earning $7,000 a month: at 65, ignoring investment returns, the pot would hold only about $168,000 — readers could judge for themselves whether that covers a decade-plus of retirement. For those earning below the contribution floor and non-working women, MPF could provide no retirement protection at all.

What is the MPF offsetting mechanism and how does it erode savings?

The offsetting mechanism was MPF’s cruellest feature for workers: when an employee was dismissed, the employer could use the employer-contribution portion of MPF to offset severance or long-service payments owed — as if the employee had contributed for nothing. Informal estimates put the annual offset at HK$2 billion; 葉偉明 had handled many labour disputes where workers dismissed three or four times were left with almost nothing, their “retirement protection” barely better than none. Labour groups long demanded the MPF offsetting abolition to protect employees’ rightful contributions, plus greater fee transparency.

How did universal retirement protection answer the “huge cost” objection?

Critics called universal retirement protection hugely expensive — workers subsidising low earners and the non-employed. 葉偉明’s answer: if MPF cannot support old age anyway, struggling citizens will end up on CSSA, swelling welfare spending all the same — potentially “bursting” it as the population ages. Better to seriously consider a universal, stigma-free retirement protection scheme than pay more later. The MPF education hub explains how the MPF system works.