Replies to LegCo questions

Legislative Council Question No. 4 (Oral Reply)

Date of Sitting : 5 Junr 2002

Asked by : Hon. LEUNG Yiu-chung 

Replied by : Secretary for Health and Welfare 

Question : 

It is learnt that the Government is studying a proposal to combine the Old Age Allowance Scheme and the Comprehensive Social Security Assistance Scheme. In this connection, will the Government inform this Council:

(a) of the specific details of the proposal and the expected completion date of the study;

(b) of the justifications for the proposal to combine the two Schemes; and 

(c) how it will ensure that the benefits and rights already enjoyed by the elderly will not be affected by the proposal?

Reply :


Madam President,

For parts (a) and (b) of the question. Hong Kong's population is ageing. According to the latest population projections, the proportion of the population aged 65 or above will grow from 11.2% in 2001 to 24.3% in 2031. In other words, by the year 2031, one in every four persons in Hong Kong will be 65 years of age or older. The number of older population will increase to over two million, more than double the current 780 000.

Currently, elders in Hong Kong who are in financial need can apply for the Comprehensive Social Security Assistance (CSSA) Scheme for financial assistance. In addition, the Old Age Allowance (OAA) Scheme, which was first introduced in 1973 to help families to look after their elders, provides a flat-rate monthly allowance to help elders to meet their special needs. As at the end of April 2002, there were 139 800 old age cases under CSSA, which account for 56% of the CSSA total caseload. The average payment of a singleton CSSA old age case is about $4,000 per month. On the other hand, there were 458 100 cases under OAA (either the Higher Old Age Allowance at $705 per month which is non means-tested for elders aged 70 or above, or the Normal Old Age Allowance at $625 per month which is subject to income and asset declaration for elders aged between 65 and 69). Altogether over 610 000 elders aged 60 or above are receiving social security payments under CSSA or OAA. This figure represents 61% of the population aged 60 or above and 78% of those aged 65 or above. In this financial year, the Government will be spending an estimated total of $11.8 billion to provide financial assistance to elders through the CSSA and OAA Schemes, which are both non contributory, representing an increase of 50% compared with $7.8 billion in 1997-98.

In view of the ageing population and the differences in the socio-economic and demographic profiles of the current generation and the future generations of older persons, the Government has been considering the provision of retirement income protection for older persons in the context of the "three-pillar model" recommended by the World Bank:

* First Pillar A publicly administered, privately managed
mandatory provident fund;

* Second Pillar Private savings, investments and annuities

* Third Pillar A publicly managed scheme to provide minimum
protection, such as a social safety net to provide
financial protection to needy elders to meet their basic needs

Under the First Pillar, we have established the Mandatory Provident Fund (MPF) in December 2000 which is a privately managed but mandatory retirement protection scheme for the working population and the future generations of older persons. The Government is reviewing the existing social security schemes for elders with a view to reinforcing the Third Pillar. The objective is to develop a long-term sustainable safety net that better targets resources at those needy elders, and which takes into account our local circumstances, particularly our low and simple taxation system. How to achieve the objective is a complex issue, which we are examining carefully.

Given the resources involved in the OAA and CSSA Schemes for elders, it is prudent for the Government to review whether the current arrangements are financially sustainable in the long term, and examine whether there are options in utilizing these resources even more effectively and efficiently, and would enhance our capacity to target even greater assistance to those elders most in need.

One consideration is to explore the merits and the feasibility of taking the resources for CSSA old age cases out of the CSSA system and combining the resources for the OAA scheme with a view to providing more than one level of financial assistance to needy elders, depending on the financial means and family support.

However, I would like to stress that we are at the initial stage of our consideration and are open to other viable options. As this stage, we do not have a timetable for the completion of the study, given the complexity of the issues involved. If and when there are proposals to introduce major changes to the system, we will consult the Legislative Council and the public first.


For part (c) of the question. We are sensitive to the concerns of the elders about their eligibility under the existing system if there are proposals to introduce major changes. We will certainly take the concerns into account in developing any new proposals.