The controversial offsetting mechanism in the Mandatory Provident Fund is included in the six-month consultation on retirement protection.
That, said Chief Secretary Carrie Lam Cheng Yuet-ngor, is because officials recognize the mechanism deprives employees of benefits.
There has not yet been any official dialogue with the business sector on MPF arrangements, Lam added, but at least the sector acknowledged the topic can no longer be avoided.
In the current mechanism, employers can take the accrued benefits from their contributions into employees’ MPF schemes to offset severance or long- service payments.An average of 94 percent of employers’ contributions to the MPF was in fact used for offsetting purposes.
Lam noted that workers on less than HK$7,100 a month lack protection as their entire MPF pot is funded by employers.
She also repeated the line that the complexity of the offsetting issue cannot be underestimated, and so there should not be a focus on keeping or abolishing the mechanism.
Offsetting got through when the Mandatory Provident Fund Schemes Ordinance was enacted in 1995. It has since been widely criticized by workers.
Lam also noted that Chief Executive Leung Chun-ying’s election manifesto in 2012 included the aim of gradually easing back on the offsetting ratio.
The MPF Authority is to make a proposal to improve the scheme during the consultation period.
Wednesday, December 23, 2015