David Wong says Hong Kong should follow Singapore model, which would help workers accumulate wealth for their retirement
NG KANG-CHUNG
UPDATED : Thursday, 09 June, 2016, 7:43pm
David Wong wants provident fund members to be able to use their savings to buy a flat. Photo: Bruce Yan
Hong Kong should follow Singapore’s model in allowing employees to use part of their provident fund savings to buy their first property, according to the regulator of the city’s pension system.
Mandatory Provident Fund Schemes Authority chairman David Wong Yau-kar said it would not breach the principles of the system because helping people buy a flat was also a means to “accumulate wealth”.
“In the context of Hong Kong, if you can own your own property, it will already provide some protection for retirement,” Wong said in an interview with RTHK on Thursday.
Given Hong Kong’s high flat prices, Wong admitted provident fund savings might not be able to cover even the down payment in most cases.
“A couple having worked for over 10 years might have accrued some HK$400,000 or more in total. Even if it does not fully help pay the down payment, the burden should be significantly eased,” he said.
Singapore’s Central Provident Fund is a compulsory savings plan for working Singaporean to fund their retirement needs. Fund members are allowed to use part of their provident fund savings to buy public or private residential flats, subject to various conditions.
Wong said his idea was still in its infancy but he hoped to encourage more discussion in society. “I believe many people would be interested in it,” he said.
Hong Kong adopted a mandatory provident fund scheme in December 2000. It covers some 2.6 million employees. They and their employers are each required to make a monthly contribution equal to five per cent of an employee’s pay, capped at HK$1,500.
The savings can be withdrawn when an employee reaches 65.
But critics say the administrative fees are too high and savings cannot support a worker’s retirement.
Federation of Trade Unions lawmaker Wong Kwok-hing welcomed David Wong’s idea. “It is especially helpful to those higher-income workers. They can feel more secure for their retirement if they own their own flat,” the legislator said.
“Our federation organised visits to Singapore many years ago to study the city state’s pension system. We found that it is much better than Hong Kong’s. Apart from housing, the Lion City’s system also covers health care,” he said.
Meanwhile, acting Chief Secretary Matthew Cheung Kin-chung said yesterday the government would give proper consideration to various options, including increasing tax incentives to encourage people to make more contributions on top of the mandatory contribution.
http://m.scmp.com/news/hong-kong/economy/article/1970658/allow-hong-kong-provident-fund-beneficiaries-use-money-buy
