People have long complained their mandatory pensions will never be enough to retire on. That is true, but the flip side is that by contributing less than many comparable pension schemes overseas, local workers have more spending power in the present. There is always a trade-off.

Perhaps the Mandatory Provident Fund (MPF) scheme should be seen more as a financial cushion for a person at the end of their working life, rather than a nest egg. Still, the scheme needs to continue to keep up with, or at least not lag too far behind, the inflation-driven cost of living in Hong Kong.

The current minimum and maximum income levels for contributions – HK$7,100 (US$907) and HK$30,000 – have not been adjusted since the 2013-14 financial year.
MPF authority chairwoman Ayesha Macpherson Lau said the body had been consulting stakeholders and proposed raising the minimum and maximum contribution levels.

That is reasonable and likely necessary. Even so, there is room for discussion as to how much the increases should be. Most bosses will not like it, but people should not assume employees will want to pay more into their pensions either.

Currently, workers earning less than HK$7,100 a month are exempt from making contributions but employers still have to contribute their 5 per cent portion. Mandatory contributions for those making more than HK$30,000 are capped at HK$1,500, or 5 per cent of HK$30,000. People can, of course, put more into their pension, but their employer is not required to match it beyond HK$1,500.

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