Public Annuity Scheme?
Earlier this week, the Government announced Hong Kong Mortgage Corp’s HK$10 billion Public Annuity Scheme (“PAS“). People aged 65 or above can invest HK$50,000 to HK$1 million for monthly payments. A man investing HK$1 million will get monthly payments of HK$5,800. A woman, who is expected to live longer, will get HK$5,300. Rate of return for the principal (which will shrink over time) will be 3-4% per annum.
What about the MPF?
The MPF may be withdrawn when the employee turns 65. So the PAS and the MPF “overlap.” Though, PAS will be available to elders today who were not covered under the MPF or made little contributions to it. But the real question is – will the elderly actually take part in this scheme? If one has savings of HK$1 million, would he put all his cash into this scheme for a meagre HK$5,800 (half of which is part of the principal)?
PAS or POS (piece of shit)?
What if he has HK$5 million in cash, so he can afford to invest HK$1 million in the scheme? If he has HK$5 million, then he should probably invest the money in stocks or use it to buy property which will give him a higher yield than 3-4%. What if he only has HK$50,000, so he can “receive” HK$290 a month? Remember, about half of that is his own money. I think he should probably keep the HK$50,000 in his account, just in case.
There is no public pension scheme
The obvious conclusion is that the PAS isn’t a genuine pension scheme. The HKSAR Government has a huge surplus of public funds. But it has time over time refused to spend it on a universal public pensions plan because it says that this will completely drain its public coffers. This is bad economics, it argues. But public pension isn’t meant to be an economic issue. Taking care of the elderly is a moral issue. Get that straight.
The bottom line is that the Government has no incentive to help the elderly. The elderly as a group do not have a collective voice. They don’t have a functional constituency representing them. Nor do they have their own representatives who would vouch for them in the legislature. As a matter of fact, many elderly people whom I have come across are “passive” in politics. But until they are willing to come out and lobby their legislators (or become legislators), the Government will not care.