Kenneth Lau
Wednesday, August 20, 2014
People aged 65 and over can collect a flat-rate monthly pension without a means test if a study report is accepted.
But the report by a team under University of Hong Kong academic Nelson Chow Wing-sun, which went to the administration near the end of June, also warns of a financial deficit if a universal retirement scheme is implemented.
The report will be discussed today at a meeting of the Commission on Poverty, chaired by Chief Secretary for Administration Carrie Lam Cheng Yuet-ngor.
Chow has already said the proposed flat-rate pension will not be less than the existing old-age living allowance of HK$2,285 a month.
If the idea is accepted, the pension will replace both the old-age allowance of HK$1,180 a month, which is non-means tested and covers those aged 70 and over, and the old-age living allowance, which is means-tested and open to people over 65.
Chow, the chair professor in social work and social administration at HKU, was appointed by the Commission on Poverty to compile the study in March last year.
Its main thrust is through an analysis of six suggestions put forward by different groups, including Chow's team.
Four of the six suggestions dispense with means or asset tests, which is also where Chow stands. The cost would be higher than the two other proposals, but resources would be spread evenly among the elderly.
A source claiming to have insights on the issues said there had been findings that a universal pension whether paid by employer, employee and the government or by taxpayers alone would lead to increased expenditure and result in a financial deficit earlier than in fiscal year 2029-2030, which has been suggested.
As for the four proposals that do not include means or asset tests, they would lead to a structural financial deficit within 15 years.
The head of the Department of Asian and Policy Studies at the Hong Kong Institute of Education, Chou Kee-lee, said a deficit for a universal pension would be normal and depend on how much employers and employees contributed to a scheme.
If it was 2.5 percent, Chow said, a universal pension would have enough money for the first decade. But he was worried about what would follow as the size of the labor force decreased.
Shirley Yuen, chief executive of the Hong Kong General Chamber of Commerce, said the administration needed to provide more long-term figures on a universal pension to help the chamber decide on a stance. As things stood, she added, the labor force will start dropping from a recent 3.71 million to 3.51 million by 2018.
Meanwhile, people aged 65 or above will rise from 1.05 million to 2.56 million in 2041, which would be 32 percent of the total population.
http://www.thestandard.com.hk/news_detail.asp?we_cat=11&art_id=148559&sid=42836399&con_type=1&d_str=20140820&fc=4
