Offsetting Mechanism Still Open For Discussion

The Labour Secretary Law Chi-kwong said on Thursday that there was still room for discussion on the details of the abolition of the MPF offsetting mechanism.

"The initial thought we have about how to remove the offsetting mechanism of the MPF and the severance payment and long service payment is very initial," he said.

"But these initial thoughts are based on the previous administration's decision and also the views that we have heard so far from unions and employers associations. Based on the views that we have obtained and throughout our analysis we come up to this initial thinking", Law added.

He went on to say: "We are determined to solve this issue and to deal with this "offsetting", to remove this "offsetting" mechanism within this term of government. This optimism I would say drives us to work hard to engage our stakeholders."

Under the government's plan to scrap the MPF offsetting mechanism, at least HK$17.2 billion dollars will be set aside to help businesses make long-service and severance payments for 12 years -- after the mechanism is abolished in 2022.

For the first three years after that, the government would shoulder half of the payment costs, but the amount of subsidy will be lowered from year 4 onwards.

Employers would have to inject the equivalent of one percent of each employee's pay into a "designated savings account", until the pot reaches 15 percent of the worker's annual salary.