Jake's View | High management charges are the real weakness of the MPF
The offsetting process is not the primary weakness of the Mandatory Provident Fund scheme, as some claim. But abolishing it would help us rid ourselves of something that truly is unfair
Any analysis of the Mandatory Provident Fund (MPF) Scheme has concluded that its primary weakness is the offsetting process. This offsetting seriously dilutes MPF savings for many employees.
Letters to the editor,
Victor Apps, chairman, Study Group on Retirement Protection
No, the offset is not a weakness at all. But we should indeed be rid of it as an obstacle to reforming the real weakness at the heart of the MPF, to wit the high management charges that have made the MPF a pot of gold for the likes of Mr Apps’ former employer, Manulife.
First, that offset. The idea here was that long service employees suddenly left in the lurch when their jobs vanished should have their employers give them a cushion payment calculated on a formula based on their years of service. This was done.
Then along came the MPF and the employers argued that if their share of the MPF contributions at any time exceeded this cushion payment then they should not have to pay double for this cushion. They should be allowed to offset it against their MPF contributions. This was also done.
And I just cannot see the injustice that so many other people find here. The purpose of the cushion payment is still upheld. Employees who are let go still collect as much in severance payment as they previously did. Nothing that they had before is taken from them. But in order to curry popular support for his non-election five years ago, our former chief executive Leung Chun-ying promised to get rid of the offset and his inability to do it offered a perfect opportunity for sniping at him. I’m happy. Let us not, however, confuse the target and the occasion for the target shooting.