Press Releases
Government concerns about welfare of retirees and elders
In response to media enquiries, a spokesman for the Health, Welfare and Food
Bureau said today (April 26) that the Government had all along attached
importance to the welfare of retirees and elders, adding that it had been
providing financial security to the elderly in need through the current social
security system to meet their basic and special needs.
The spokesman said the current approach adopted by Hong Kong in providing
financial assistance to the elderly had taken into account of the three-pillar
approach on retirement protection advocated by the World Bank.
This included:
* setting up a safety net, managed by the Government and funded by tax revenue,
for the needy elders, i.e. the Comprehensive Social Security Assistance (CSSA)
scheme and the Old Age Allowance (OAA);
* providing a mandatory retirement savings scheme managed by private
institutions for the working population, i.e. the Mandatory Provident Fund (MPF)
scheme; and
* encouraging the public to save up and take out insurance policies.
The MPF scheme implemented in December, 2000, had strengthened the retirement
protection for the local working population. The scheme, which aimed to help the
working population save up for their retirement, was a consensus reached by the
community after many years of discussion.
At present, more than 2.3 million employees and self-employed persons have
joined the scheme. As at the end of March, 2006, the accumulated net asset value
under the scheme had exceeded $160 billion.
Presently, a total of 190,000 elderly are receiving CSSA as well as related
special grants and supplements, while more than 460,000 people are receiving OAA
which is payable to eligible elderly aged 65 or above to cater for their special
needs due to old age. The expenditure concerned accounts for 6.3% of the total
government recurrent expenditure in 2005-06.
The Government has also built up a vast safety net, providing special care and
heavily subsidised services to the elderly in medical and housing policies. The
elderly also enjoy various transport concessions.
Regarding the recent calls for the Government to review the feasibility of
setting up a universal old age pension scheme, the spokesman noted the universal
pension schemes operating under a pay-as-you-go system in Western countries had
begun to experience financial problems.
"It is even more difficult for such a system to sustain in the face of ageing
population and a shrinking pool of contributors. On the other hand, the personal
pension account system, such as the MPF scheme, had gained general recognition
in the international community.
"If the proposed universal old age pension scheme was introduced, the amount
payable to the retirees under the MPF Scheme would be significantly affected, as
the proposal has suggested that half of the payments originally belonged to
members of the MPF scheme be set aside for the establishment of a universal
pension fund, which is tantamount to pooling half of the MPF contributions for
public distribution. One of the proposals goes even further and involves an
increase of the profits tax rate by 1.75%.
"Hong Kong has been maintaining a simple tax system with a profits tax rate of
17.5%. A low tax rate can help attract foreign investments. As employers have
already been making contributions to the MPF scheme for their employees, further
requirement for them to contribute to a universal pension scheme would have an
adverse impact on the overall business environment," the spokesman said.
The spokesman added that while taking a cosmopolitan outlook with Hong Kong's
position as Asia's world city, Hong Kong people treasured many Chinese
traditional values, such as "to honour the aged of the others as we honour our
own". According to a survey done by the Census and Statistics Department, 61% of
the elderly population received financial support from their children or
relatives every month.
"We should cherish our traditional family values and should not shift the
responsibility of supporting the elders to the community. Moreover, 'saving up'
has always been a virtue of the Chinese society as well as a key factor in
personal financial management and financial security. People in Hong Kong, which
is one of the freest economies in the world, should have the freedom to make
their own financial arrangements and set their own priorities for the use of
their savings."
Ends/Wednesday, April 26, 2006
Issued at HKT 18:04
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