Employers have taken out more than HK$12 billion from employees' MPF accounts to make severance and long service payments, legislators were told yesterday. The revelation sparked calls from lawmakers to scrap the policy that allows money in the retirement accounts to be used for such payments.
Under the Mandatory Provident Fund Schemes Ordinance, an employer can use the accrued benefits derived from its MPF contributions to offset severance or long-service payments.
"This twists the policy objective of the MPF scheme, which aims to provide financial security for a worker in his retirement years," Lee Cheuk-yan, a legislator and general secretary of the Confederation of Trade Unions, said.
"A worker may end up getting almost nothing in his MPF account when he retires, if he got fired three times after serving in each of three companies for 10 years," he said.
"It's because his employers will clear their contributions for those payments."
The criticism came after the government told lawmakers HK$12.07 billion had been withdrawn from employees' MPF accounts to offset such payments between July 2001 and September last year.
The MPF scheme was introduced in 2000. An employee and employer are each required to contribute at least 5 per cent of the employee's monthly income. At the end of last year, the total net asset value of all MPF plans was HK$308.87 billion.
"The amount withdrawn from MPF accounts is huge. The government should review the policy," Li Fung-ying, another legislator and unionist, said.
But Professor Chan Ka-keung, the secretary for financial services and the treasury, said the government had no plan to review the policy.
"It was only after extensive consultations and careful balancing of all relevant considerations that this long-established offsetting arrangement was extended to cover MPF Schemes," he said.
SCMP.com - Employers tap HK$12b from MPF