Govt To Swell Planned Fund To Offset MPF Changes

Sources said on Monday that the government plans to set aside HK$17.5 billion to help businesses out when they are stopped from raiding workers' MPF accounts to make severance and long-service payments.

That is an increase of HK$2.5 billion on the figure earlier suggested and it is believed that the Executive Council will discuss the plan on Tuesday.

When the controversial offsetting mechanism is finally scrapped, employers will have to put a sum equal to one percent of each workers' salary into a separate account to fund future severance and long-service payments. This suggestion was put forward by business chambers.

The government money will be used to subsidise such payments to employees over a 12-year period.

In January last year, the then Chief Executive, CY Leung, proposed progressively abolishing the MPF offsetting mechanism, but he gave no timeline for the plan. His successor, Carrie Lam, said later in the year that working out the arrangements would be a major challenge.