HK journalist Tim Hamlett has written an interesting column on this subject. Nothing new, but the arguments are nicely phrased.
Chief Executive Leung Chun-ying announced in his third Policy Address that HK$50 billion would be earmarked for “retirement protection”, and a consultation would be held later on how this protection should be implemented.
Somewhat optimistically, Leung looked forward to “rational and pragmatic discussions with a view to arriving at a community consensus”.
Unfortunately this is a recipe for continuing inaction. ….
Employers will inevitably voice their vigorous opposition to any sort of proper pension scheme, with universal liability to pay and universal rights to receive.
Of course, they will not put it quite like that.
The message will be that universal pension schemes are what ruined the finances of European countries, that any scheme will be a financial millstone because people are living longer, and that such plans are a socialistic blemish on Hong Kong’s tradition of small government, likely to see us demoted in meaningless rankings produced by distant free-market ideologues.
The European point is nonsense. Greece has a pension scheme. However so does Denmark, widely regarded as providing the peak of happiness to which all developed countries should aspire. The demographic problem is genuine, but not insoluble. Most people, given the chance, show a preference for later retirement these days. The tradition of small government should not be an excuse for offering Victorian standards of social welfare.
A more interesting objection is that a universal pension can be claimed by paupers and millionaires alike. Some of the money will go to people who do not need it. The obvious answer to this objection is that because of Hong Kong’s growing wealth gap the millionaires are increasingly outnumbered by the needy. And after all they do pay taxes.
Connoisseurs of social welfare reform will also note that means-tested benefits are cheaper not only because they exclude the rich, but because they exclude large numbers of other people who are too shy, too proud or too disorganized to make a claim, even though they do need the financial support.
Tim Hamlett, “No easy answers to the retirement questions“, China Daily, 16 January 2015.