Old age pension plan is worth supporting
Updated: 2015-07-29 06:58
By Fung Keung(HK Edition)
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Professor Nelson Chow Wing-sun's call for the Hong Kong government to give a pension of HK$3,000 a month to all Hong Kong citizens aged 70 or above is worth supporting. About 550,000 elderly people would benefit from the scheme if it is adopted.
Chow, an emeritus professor of the Department of Social Work and Social Administration at the University of Hong Kong, heads a retirement study initiated by the government's Commission on Poverty. His latest proposal, which would make many old people happy, was revealed to the public on July 24, 2015.
Chow earlier suggested a government, employer and employee contribution model to fund a universal pension, but he later abandoned this plan. This is because employers and employees were unwilling to contribute. Chow could not blame them.
Currently, people aged 65 or above can apply for an Old Age Living Allowance. However, many elderly people are not eligible to apply because they have assets exceeding HK$210,000. The dilemma is that elderly people treat their limited assets as an "emergency fund" and will not touch them unless there is a life-or-death situation. In reality, these people live in abject poverty. They receive no money from the government and do not want to deplete their "emergency fund".
Chow's latest proposal is fantastic, as no old people will fall through the cracks because the HK$3,000 pension is not "means (or assets)-tested". The universal pension will be welcomed by employers and employees alike as they do not need to contribute to the pension.
Many employees in Hong Kong have complained about the existing pension plan, the Mandatory Provident Fund (MPF). Under this scheme, employers are required to contribute 5 percent of employees' income to the MPF, capped at HK$1,500 a month. The employees' MPFs are managed by fund companies, many of whom charge exorbitant fees as there is limited, if any, government supervision. Many employees' fund returns become negative after the high management fees are deducted. (To give the government credit, it is working to regulate the fee structure but nothing concrete has surfaced.)
It is time the government showed its concern for the elderly by conceding to Chow's latest proposal. This will allow all people aged 70 or above to receive HK$3,000 a month without the need to meet any prerequisite conditions. It would make more than half a million people happier. Happy people would contribute to more efficient governance. The government should approve the proposal without hesitation.
Of course, every good deed comes with a price. The government would need to allocate between HK$6 billion and HK$7 billion a year to pay the 550,000 old folks the HK$3,000 a month pension. The amount totals about 2.3 percent of the government's annual recurrent expenditure.
Some people may ask where the government will find the additional expenditure. Well, the answer is very simple: Charge the middle class and businesses more taxes. In Hong Kong, the standard salary tax is 15 percent and corporate tax is 16.5 percent. Hong Kong is a caring society. In order to make elderly people happier, the middle class and corporations should have no objections if the respective salary and profit tax rates are hiked slightly.
Kudos goes to Chow and his team, who have spent a lot of effort in coming up with different pension plans for elderly people. His latest proposal is sensible and workable. Let us all embrace it.
(HK Edition 07/29/2015 page9)