HK$17.2 billion MPF subsidy offered as Hong Kong officials push to ditch controversial offset mechanism

Chief Secretary Matthew Cheung and Secretary for Labour and Welfare Law Chi-kwong try to drum up support from business sector and workers’ representatives for new proposal

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The MPF is meant to give workers a nest egg for retirement. Illustration: Martin Chan

Published: 3:15pm, 29 Mar 2018Updated: 11:21pm, 29 Mar 2018

Top officials have started to lobby support for a long-awaited move to stop Hong Kong employers from dipping into workers’ pension funds for severance and long-service payments, with a commitment of HK$17.2 billion (US$2.2 billion) to help ease the burden on small businesses for 12 years.

The proposal was put to business and labour representatives in closed-door meetings on Thursday as Chief Secretary Matthew Cheung Kin-chung and Secretary for Labour and Welfare Law Chi-kwong tried to win support from both sectors.

Hong Kong Chief Executive Carrie Lam has pledged to scrap the MPF offsetting mechanism within her term. Photo: Xiaomei Chen

However, some business representatives remained sceptical about the government proposal on scrapping the much-criticised Mandatory Provident Fund (MPF) offsetting mechanism, saying its implementation would be too complicated for small and medium-sized enterprises (SMEs) to handle, and that they would bear a heavy financial burden after the subsidy period expired.

Chief Executive Carrie Lam Cheng Yuet-ngor said on Tuesday the offsetting mechanism had been undermining retirement protection for employees, defeating “the very purpose of setting up” the scheme.

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Speaking after the meetings on Thursday, Law reiterated the government proposal was still preliminary and subject to changes.