Scrapping MPF Offset Will Cost 'at Least' HK$15bn

The government warned on Friday that the HK$15 billion set aside in its new budget to abolish the controversial MPF 'off-setting' arrangement is likely to be the minimum amount necessary for the move, and declined to explain the jump in the expected cost.

The previous administration had approved a HK$7.9 billion subsidy over ten years for employers, in return for phasing out the much-criticised practice of subtracting their MPF contributions to staff in making long service and severance payments.

But the plan was never implemented amid strong protests from both workers and employers, and the Secretary for Labour and Welfare Law Chi-kwong admitted that a new 'preliminary package' has yet to be finalised.

However, he said discussions with employers and labour groups are continuing, and he is optimistic that a proposal can be unveiled some time over the next three months.

"What we have to do is try our very best before making the preliminary decisions that due considerations are made on all different fronts... that takes time", Law said.

"The 15 billion dollars... this is the ballpark amount that the financial secretary set aside to deal with the cancellation of the offset mechanism. We haven't yet finalised our preliminary package, but I would expect that that would be not the maximum, and likely the minimum."

However, Law declined to explain why it will cost so much or whether the entire sum would be spent on subsidising employers, saying only that many details have yet to be worked out.