Chief Secretary Carrie Lam delivered a speech two months ago that effectively “killed any hope for a universal pension”. Michael Littlewood, from the University of Auckland’s Retirement Policy and Research Centre, wrote a letter in response, addressed to the editor of a major Hong Kong daily.
Chief Secretary Carrie Lam Cheng Yuet-ngor … said such a [universal pension] scheme would cost HK$22.6 billion a year, raising questions of sustainability and equity, and much has already been done to support the old. She also said the cost was HK$2,395 billion over 50 years. That kind of projection is statistically irrelevant; the annual cost is the only one that matters.
HK$22.6 billion is just about 1 per cent of Hong Kong’s 2015 gross domestic product. So cost, sustainability and equity seem not to be the real issues. Policy inertia and vested interests are the more likely explanations. ….
Poverty amongst the old needs immediate attention [in Hong Kong].
Here is a suggestion – abolish tax breaks for retirement saving. Tax breaks for the compulsory Mandatory Provident Fund seem particularly unnecessary. If they don’t actually work (given that a saver’s tax break is a taxpayer’s tax cost), the amount saved will more than pay for a truly universal pension.
Michael Littlewood, “Hong Kong should abolish tax breaks on MPF to fund universal pension scheme“, South China Morning Post, 1 May 2016.
The Chief Secretary reports to the Legislative Council, and is the most senior principal official of the Government of the Hong Kong Special Administrative Region.
There is much more of interest in the published column. Click on the link above to read the full, ungated letter.