HONG AU,
JEMOCRATIC
COUNDATION
HONG KONG DEMOCRATIC FOUNDATION
PROPOSALS FOR A UNIVERSAL OLD AGE PENSION
17TH NOVEMBER 1991
This paper presents the Foundation's case for a non-means tested old age pension for all of Hong Kong's citizens over the age of 65. It explains why the alternative proposals put forward by the Government and others are inadequate to deal with the real problems facing Hong Kong's elderly. Finally, the paper shows how a universal old age pension could be paid for, and that the cost, funded largely by a contribution from employee and employer of 2% of wages, would be at an acceptable level.
The paper deals with the following topics:
(1) The consensus on the need for retirement provision
(2) The needs of Hong Kong's elderly
(3) Current provision for the elderly
(4) Disadvantages of a central provident fund
(5) Proposal for an old age pension
(6) Proposals for private sector retirement schemes
(1) The consensus on the need for retirement provision
There is now a broad consensus in Hong Kong that a major effort is needed by the Government to upgrade retirement provision for the population. This consensus has developed in the wake of September's Legco elections, in which most of the directly elected legislators emphasised retirement benefits in their platforms.
Faced with a legislature where the majority are in favour of more extensive retirement provision, in particular a central provident fund, the Government on 1st November announced its conversion to a compulsory retirement scheme. The former Occupational Retirement Schemes Bill, much criticised for its flaws, long delayed and aborted last June, was based on voluntary compliance by the employer. Its successor, due in 1992, is expected to retain this voluntary principle. However, the Government has now announced its intention to make some form of retirement scheme compulsory for all employers.
The Foundation welcomes this change of heart by the Government. However, the Foundation believes that the Government should go further and establish a scheme that benefits not just the current workforce when they eventually retire, but those who are now old and in need. A universal old age pension is the only remedy for this need.
(2) The needs of Hong Kong's elderly
The proportion of elderly people in Hong Kong is increasing rapidly. As
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