Thought du Jour

The government of Hong Kong has at last agreed to demands for introduction of a universal age pension that is adequate to keep the elderly out of poverty. The Chief Secretary for Administration Carrie Lam Cheng Yuet-ngor, who chairs the Commission on Poverty, has commissioned Nelson Chow Wing-sun, a respected academic, to draft an appropriate plan. Chow (born 1947) is professor of social work and social administration at the University of Hong Kong.

In an exclusive interview with China Daily, Chow unveils his proposal, calling for a HK$4,000 [US$515] monthly pension for people 65 and above. …. He will submit his proposal, together with those from other organizations, to the government at the end of 2013. ….

At present, the government offers the [universal HK$1090] Old Age Allowance (OAA) and [the means-tested HK$2200] Old Age Living Allowance (OALA). …. Elderly people with significant assets or savings may be ineligible for the OALA …. People in that situation must rely solely on the OAA but the payment of $1,100 is hardly enough to provide for basic necessities.

Even senior citizens with over HK$200,000 in savings are afraid to use up their savings, in case they need the money for medical or burial expenses – recognizing that the price of a columbarium niche alone is well over HK$100,000.

“I propose a monthly pension of HK$4,000 for all people reaching 65, regardless of whether they have assets, have had jobs before or how much they earn. This amount is reasonable because if this is ‘universal’, it cannot be too big.”

“Given that there are nearly 1 million elderly aged 65 or above, the annual expenditure will be HK$48 billion, with the government bearing half of it, while employers and employees each contribute [a payroll tax of] about 2 percent. As the government now pays about HK$23 billion on all types of welfare payments, it will not spend much more than now. It is a more financially viable proposal. And with the government making such clear and firm commitment, nobody can say the government is iron-hearted.”

And if this new pension is introduced, he explained, it will supersede other welfare payments and save a great deal of administrative work.

Chow believes the HK$4,000 can support the basic living for the elderly, while retirees who have the additional retirement benefits and personal savings will feel more at ease. Though HK$4,000 may be small for a person who earns HK$50,000 before retirement, it will be good for a worker who earns the minimum wage of about HK$8,000 per month.

Chow is using the age criteria as eligibility of this new pension to eliminate means tests and other administrative procedures. “Even (Hong Kong’ number one tycoon) Li Ka-shing is eligible,” he mused, “but it’s up to him to apply or not.” ….

He stresses that the universal pension is following on the winds of change. Employers are resisting in the same way they opposed the minimum wage a few years ago, but they cannot escape it. ….

Nelson Chow Wing-sun is the chair-professor of the Department of Social Work and Social Administration at the University of Hong Kong. A well-known and highly respected academic in the field of social work, he is hailed the ‘Godfather’ of social welfare in Hong Kong. Over the years, he has held a number of posts in public service …..

Joseph Li, “A proposal for a universal pension“, China Daily, 18 April 2013.

Professor Chow’s proposed pension is larger than the HK$3,000 demanded by the Alliance for Universal Pension, and will be given to every legal resident from the age of 65, regardless of their employment history. Since there is no test of income or assets, a pensioner can continue to work, on a full- or part-time basis, without danger of losing the benefit.

The fact that Chow has the full confidence of the Hong Kong government is encouraging. The professor believes that it will be possible to introduce a universal pension by the year 2015, or 2016 at the latest. This is good news for the elderly of Hong Kong.

Professor Nelson Chow

Hong Kong seniors aged 65-69 with low incomes, and all elderly residents aged 70 and older currently receive a monthly Old Age Allowance of HK$1090 (US$140), commonly known as “fruit money”.

This month (April 2013) the government is rolling out a new, means-tested Old Age Living Allowance of HK$2200 per month for those aged 65 and older. For those who pass a means test, this allowance will replace the “fruit money” (HK$1090) or disability allowance (HK$1400) they currently receive.

This is the first time that Hong Kong residents older than 70 have had to face a means test for state benefits.

Here are highlights (with links) from news reports of the South China Morning Post.

The HK$2,200 new, means-tested old age living allowance will be made available … starting from April, the government said on Thursday. …. The payments will be retroactive to December 1, last year. ….

A single-person applicant has to have a monthly income of less than HK$6,880 and a total asset of less than HK$193,000. The total monthly income for a married couple cannot exceed HK$10,940 and their total assets have to be less than HK$292,000.

Lai Ying-kit, “New means-tested old age allowance to start in April“, South China Morning Post, 31 January, 2013.

Alliance for Universal Pension members protest at Hong Kong Legislative Council. Photo: Felix Wong

Financial support from relatives will not be counted as part of an elderly person’s income, but will be considered assets when assessing his eligibility for a new government allowance ….

Gold teeth and jade jewellery would not be counted, the department said. It will review the asset and income limits annually. ….

Ng Wai-tung, of the non-profit Society for Community Organisation, said the scheme, meant to alleviate poverty, was taking the right direction generally, but looser asset limits were needed.

The government estimated that 400,000 people would benefit, but Ng doubted if the number would be that high, given such tight asset limits.

The added complication of what counted as assets might deter some needy residents, he said.

“[The elderly and their relatives] may also worry about breaking the law, and relatives may end up giving their elderly less money,” he said.

Jennifer Ngo, “Relatives’ cash for elderly to be treated as assets in allowance plan“, South China Morning Post, 1 February 2013.

Residents who are eligible for the new elderly allowance are delighted to get some help to cope with the higher cost of living, but others with just a little too much money in the bank are not happy with the government’s stringent means test.

For Chou Shui, 88, the new HK$2,200 handout is double the original HK$1,090 in “fruit money” he has been receiving. Chou will use it to pay the medical bills of his wife, 77, who has been bedridden since a stroke three years ago, he says. ….

But Leung Wei-chun, 80, who also spends most of her money on medical treatment, has failed the means test. Her savings exceeded the HK$193,000 assets cap by a little, she said.

“You’ve got to understand us old folks; we’re used to being frugal,” Leung said. “I can’t just use up that money quickly just so I can get [the allowance].” ….

[Leung] was widowed 40 years ago, has no children, and could not even find someone to accompany her to hospital.

Most of her HK$1,400 handicap subsidy goes to her doctor’s visits – including paying for someone to visit the hospital with her. Such a trip costs her HK$500 and six hours.

“If I could get an elderly allowance, it’d be poured into my medical needs anyway.

“I guess it doesn’t matter any more,” Leung said.

Jennifer Ngo and Jolie Ho, “Elderly allowance is welcome help for some, but others are not so lucky“, South China Morning Post, 30 March 2013.