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Tuesday, January 10, 2017, 00:49

Unions open to MPF offsetting mechanism

By Joseph Li
Unions open to MPF offsetting mechanism
Lawmaker Aron Kwok Wai-keung, from the Hong Kong Federation of Trade Unions, said the unions can be flexible on the issue of dropping the Mandatory Provident Fund offsetting mechanism. (Parker Zheng / China Daily)

HONG KONG - Lawmaker Aron Kwok Wai-keung said he will consult with the trade unions on government proposals on the Mandatory Provident Fund (MPF) offsetting mechanism once these are unveiled.

Chief Executive Leung Chun-ying is expected to announce interim measures on the MPF offsetting mechanism and the retirement protection scheme in his final Policy Address on Jan 18.

Lawmaker Aron Kwok Wai-keung hopes employers can reach a consensus with unions on the MPF offsetting mechanism

Kwok, from the Hong Kong Federation of Trade Unions (FTU), hopes employers can reach a consensus with unions. Otherwise, the controversy will affect CE candidates and the next government, he predicted.

The media reported that the government will propose a cut-off date with regard to the offsetting of severance and long-service payments with employees’ MPF contributions.

For employment contracts signed after a certain date, employers are not allowed to offset severance and long-service payments with MPF contributions. They will be required to settle these payments themselves.

As for severance and long-service payments related to contracts signed before the cut-off date, the government will meet these costs via a special fund. But the amount of settlements will be reduced from two-thirds to 50 percent of staff wages.

Kwok said: “We are flexible. We will give consideration to the idea of cut-off date and consult the unions, while reduction of the ratio to 50 percent is also open to negotiation.

“Yet we are afraid the business sector will resist this,” he added.

Kwok said the fund should operate for at least 10 years. So far, about HK$26 billion have been offset since the inception of the MPF scheme in December 2000, equaling HK$1.7 billion each year.

“Objectively speaking, at least HK$17.6 billion should be provided for the establishment of this fund,” he proposed.

Kwok believes the proposal requires amendments to both the Employment Ordinance and MPF Schemes Ordinance. However, the amendments are not complex as long as employers and employees agree. Kwok believes there is still enough time to complete legislative procedures before July 2017.

But he worries the opposition camp will filibuster and delay the amendments, arguing that the new proposals are not the ultimate cancelation of the offsetting mechanism.

Kwok believes the government will not introduce the “universal retirement protection regardless of whether retirees are rich or poor”.

According to the version revealed by the media, the government intends to add a new allowance for elderly people. Presently, the Old Age Living Allowance is HK$2,200 per month; the asset limit is HK$219,000. If a new allowance is introduced, elderly people will receive a larger amount of HK$3,500. The asset limit will be reduced to HK$140,000.

“This is only very minor improvement and still it does not serve the purpose of retirement protection. We are not opposed to a higher allowance but it cannot replace a retirement protection scheme,” he said. “Compared with the more progressive method for dealing with the offsetting, this is rather disappointing.”

Kwok said it is unlikely both issues will be settled within the government’s current term.

Discussing the CE election in March, Kwok says candidates should promise to look after workers with viable measures. If they don’t, they risk losing support of the FTU - which has over 60 voters in the Election Committee.

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