A government-contracted study proposed a new pension scheme in light of the strong need for social security measures for the elderly in coming years. The report, entitled “Future Development of Retirement Protection in Hong Kong”, was conducted by HKU’s Department of Social Work and Social Administration and headed by top academic Nelson Chow. It was released yesterday by the Commission on Poverty.
Though Chinese society prides itself on its respect for its elders, a 2012 government study found that 43.5 percent of people aged 65 or above are living below the poverty line, which for a single person in 2012 was HKD3,600 per month. Even when taking into account the cash assistance provided by different social security measures, like the Mandatory Provident Fund (MPF), the Comprehensive Social Security Assistance, or the Old Age Living Allowance, the income of one in three elderly people is still below the poverty line.
These sad statistics, coupled with the fact that most baby boomers are set to retire in the next decade, make it clear that the elderly in Hong Kong have a strong need for financial support. The report thus proposes a new system by which all Hongkongers above the age of 65 would receive a pension of HKD3,000 per month. The system would be half-funded by a payroll old age tax paid by both employers and employees, with the government responsible for the other half of the costs. The government would also have to inject a one-time fund of HKD50 billion to launch and sustain the scheme.
The payroll tax would range from 1 to 2.5 per cent depending on the employee’s salary. For those earning between HKD6,500 and HKD10,000, both the employee and their employer would pay 1 percent, while those earning below HKD6,500 would be exempt, though their employer would still have to pay 1 percent. For employees earning between HKD10,000 and HKD20,000, both they and their employer would pay 1.5 percent. Finally, for people earning HKD20,000 or above (up to HKD120,000), both they and their employer would have to pay 2.5 percent of their salary.
Unlike the current social security systems available for the elderly, under this proposed pension system all Hong Kong permanent citizens above the age of 65 would be eligible, regardless of their level of income.
The executive summary of the report is available in English here. The report itself is only available in Chinese.
Photo: A young child helps her grandmother in Sham Shui Po (by Laurel Chor)
