Chief Executive has caused controversy over speculation that he plans to abolish the mechanism that enables employers to use their portion of MPF contributions to offset severance and long-term service payments.
Leung came under fire after failing to clearly explain his plan to make legal changes to stop employers dipping into their staff’s compulsory retirement fund, which came to light during a radio phone-in show on Radio Television Hong Kong earlier this week.
Defending himself against criticism for “failing to make good on his election promise” that he would plan to abolish the mechanism, Leung explained that his election manifesto had claimed that he would “adopt measures to progressively reduce the proportion” of accrued benefits attributed to employer’s contributions that can be used to offset severance and long-term service payments by the employers.
According to labour minister Matthew Cheung Kin-chung, the establishment of the fund in 2003 contained an agreement with employers to include the offsetting mechanism in order to help ensure their agreement to the fund. According to the SCMP, a total of HKD10.6 billion has been withdrawn early from MPF accounts since 2008 by employers due to offsetting.
Leung maintains that the dispute was a misunderstanding and that “alternatives” would be considered before a final decision is made on the matter. He said, "I would like to forge a consensus between employers and employees as much as I can before we announce (any action). After this policy address, I will continue with that consultation."
Whether he actually has enough time left within his term to implement the legislative changes required to reduce the amount of MPF contributions that can be used in this way, however, remains another issue.
Paul Arkwright
Publisher
