Felix Chung Says MPF Offset Needs Long-term Fix

The leader of the Liberal Party, Felix Chung, says the government's proposal to abolish the Mandatory Provident Fund offsetting arrangement is not a permanent solution.

The mechanism allowed employers to use MPF contributions to pay for severance and long-service payments.

Speaking on RTHK's Letter to Hong Kong, Chung said the proposal is complex, and would involve injecting HK$17.2 billion to help subsidise severance and long-service payments for businesses for 12 years.

Chung says businesses are worried this would lead to large-scale lay-offs when the 12 years are up.

He says a permanent solution would be to establish a "fund pool".

"If just one fund is to be set up for co-ordination, an increase of 1 percent for employers would amount to 6 billion dollars per annum to meet the overall offset mechanism.

"And the fund will be accumulating, to keep the scheme running, since the additional input of 6 billion per annum, on top of the government's subsidies, will make the total amount of fund pool to be around 23 billion in the first year.

"As long as the offsetting payment is around 4 billion per year, the new input of 6 billion per year will keep the fund in surplus, even on a long-term basis."