- Category: Investment and Wealth
- Thursday, 24 November 2016 16:24
2016 could be remembered as the year of retirement protection discussions in the territory. Hong Kong will soon become a ‘silver hair city’.
In about 20 years, almost one in every three Hong Kong people will be aged 65 or above. While there is a consensus that assisting people to save sufficient pension incomes is essential to a happy retirement life, how to achieve this goal is subject to debate. A number of scholars and pressure groups support the idea of a universal pension system. However, the government prefers a means-tested public pension scheme. Despite the rigorous debate between different parties on the ideal pension scheme, the gender perspective has not been accorded sufficient attention.
Women in general live longer than men. Female retirees thus need more financial resources than male retirees to support their livelihood. However, it is more challenging for women to save sufficiently for their future than men for a number of reasons.
Before 2000, the most important scheme providing older people financial support was the Comprehensive Social Security Assistance (CSSA), a non-contributory government-funded benefit scheme. Its aim is to provide a safety net to all those who cannot support themselves financially. Then, in 2000, the Mandatory Provident Fund (MPF) was introduced. Almost all full-time employees between the ages of 18 and 65 and their employers are legally obliged to contribute 5% of the employees’ relevant income to a private provident fund each month.
Analysts and the government point out that employees cannot save enough to support their retirement life unless they can work and save through the MPF scheme for more than three decades. Hence, there is no guarantee that those with low pay and interrupted work histories are able to secure a reasonable standard of living in retirement even if they have the opportunity to join the scheme.
Women aged between 25 and 29 years have the highest labour force participation rate, indicating that relationship status and children have important implications on their career development. This point is confirmed by the fact that there are 525,000 female homemakers aged 30-59, which accounts for 84% of the economically inactive female population aged 30-59. Disrupted career development undermines women’s chances of earning as much as men do. As a result, there is a wide wage gap between male and female workers. Further reducing women’s chances of saving sufficiently through the MPF scheme is the poor performance of the financial institutions responsible for managing the MPF investments . In theory, economically disadvantaged female retirees can apply for CSSA. However, the financial assistance offered under CSSA is constantly kept below a level at which recipients could enjoy a decent standard of living. In other words, instead of taking female recipients out of poverty, CSSA keeps them in poverty.
In order to increase women’s chances of saving an adequate amount for their future, it is necessary to review and revise Hong Kong’s family policy measures. The government should consider the following suggestions:
1. to strengthen the daytime childcare services so that women can develop their career;
2. to lengthen the paid maternity leave so that mothers can care for their newborn child for a longer period of time and keep their jobs;
3. to give full-time family carers tailor-made pension schemes so that they do not need to join the work-based MPF or rely on CSSA for support; and
4. to significantly increase the benefits provided by CSSA with reference to the financial needs of females (and males)
These suggestions imply that discussions on retirement protection issues should not be gender blind. In order to ensure that women have the opportunity to enjoy a happy retirement life, it is necessary to develop women- and family-friendly policies.
(Source of photos: Wikimedia Commons)