Policy Address

Retirement Protection

114.     The Old Age Living Allowance (OALA) was implemented shortly after I assumed office.  The allowance has benefited more than 420 000 elderly people, or 40% of the elderly population.

115.     After the release of the report on the "Future Development of Retirement Protection in Hong Kong" submitted by a research team led by Professor Nelson Chow last August, there have been divergent views on the issue in the community.  Some supported the "demo-grant" proposed by the consultancy team, considering that "non-means-tested, universal and uniform payment level" retirement protection is the basic right of the elderly.  Yet, a considerable number of people opposed any options that are non-means-tested, maintaining that public resources should be devoted to the most needy elderly people.  They also raised crucial questions such as financial sustainability and "Who pays?" It is estimated that the retirement fund of the four universal retirement protection options (including that of the non-means-tested demo-grant) mentioned in the report will be exhausted between 2030 and 2050.  Overseas experience shows that universal retirement protection schemes operating on the "pay-as-you-go" principle are bound to result in financial problems, entailing a long and painful financial adjustment process that usually involves extension of retirement age, reduction of retirement payment or upward adjustment to contribution rate.

116.     As pointed out in the report, we cannot rely solely on the Government for universal retirement protection.  It is also a shared responsibility of both employers and employees.  However, public discussions reveal that both employers and employees resist additional contributions or additional taxation.  We are therefore not optimistic a consensus on retirement protection financing arrangements can be reached.

117.     Retirement protection is a very important social issue.  In the coming few months, the Commission on Poverty will devise a framework and set out the details for a public consultation in the latter half of this year.  I look forward to rational and pragmatic discussions with a view to arriving at a community consensus.

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