Legco passes bill to scrap MPF offsetting mechanism
Legco on Thursday passed the government's bill to abolish the MPF offsetting mechanism after years of debate. The bill was supported by 72 members, while five voted against and 12 abstained. Officials expect the mechanism to be scrapped from 2025, meaning employers will no longer be allowed to use their mandatory contributions to workers' MPF accounts for redundancy and long-service payments. The government has earmarked HK$33.2 billion to pay for extra costs incurred by employers for 25 years. Liberal Party lawmaker Peter Shiu, who represents the wholesale and retail sector, expressed concern about the move, while Lo Wai-kwok from the Business and Professionals Alliance said criticism against the business sector on the issue has been unfair. Federation of Trade Unions legislators said they are happy the bill has finally been passed, as the current system is unjust. However, the group's Alice Mak said it is unreasonable that the mechanism won't be abolished until 2025. "The ordinance has already been passed and we look forward to the swift abolition of the mechanism," she said after the meeting. "We propose that before the effective date in 2025, the government should consider subsidising employees." Labour Secretary Law Chi-kwong said the passage of the bill is an historic moment and an important milestone in improving retirement protection for workers.  Law said it is unlikely that the offsetting mechanism could be scrapped any earlier than 2025 as the government needs to make preparations to set up a new MPF system. "To make full use of the e-MPF system is more efficient and a more effective way, and particularly it would reduce the complications the employers having to face two separate platforms. So one single platform, one entry and they will do all those things relating to MPF and the offsetting arrangement", Law said. He also dismissed suggestions that it was a bad time to pass the bill due to the Covid pandemic, saying there is never a perfect time to pass a bill as the economy can go up and down. The Federation of Hong Kong Industries said it was disappointed that the bill had passed and the new arrangement will bring a tremendous financial burden and stress to SMEs. It also warned that the move could slow down Hong Kong's economic recovery. These views were echoed by the Chinese General Chamber of Commerce which said the incoming administration should review the matter.  Chief Executive Carrie Lam welcomed Legco's move to pass the bill and thanked employers and employees for striving to build a consensus on abolishing the offsetting arrangement, adding that the concerns of the business sector had been addressed.