Hong Kong’s legislature is set to vote on scrapping the controversial Mandatory Provident Fund (MPF) offsetting mechanism, which allows firms to pay severance from an employee’s pension fund, with a lawmaker literally singing praise for the tabled bill.

Lawmaker Michael Luk from the Hong Kong Federation of Trade Unions singing in a Legislative Council meeting on June 8, 2022. Photo: Legislative Council, via video screenshot.

The Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022 was put to the Legislative Council (LegCo) for its second and third reading on Wednesday.

The bill proposed scrapping the MPF offsetting mechanism, which has come under fire for years from unions and fundholders themselves.

Michael Luk, legislative councillor from the pro-Beijing Hong Kong Federation of Trade Unions (FTU), burst into song in the legislature after calling the bill a “milestone for the labour sector’s fight for rights,” and a “key policy advancement.”

“Cancelling MPF offsetting is very exciting. Been fighting for it for 20 years, please pass it [the bill],” Luk sang.

Other lawmakers, including chairperson of the pro-Beijing DAB party Starry Lee, and the FTU’s Alice Mak, also expressed support for the bill. However, legislative councillors with business backgrounds voiced their concerns over the proposal, with some saying that they would abstain or object to the bill.

The DAB’s Kennedy Wong of the import and export functional constituency said that his sector could “hardly support” the government “passing the bill in a rush,” and that the current macro environment was “not suitable” for “such a controversial bill.” The lawmaker said he would abstain.

Lawmaker from the textiles and garment functional constituency Sunny Tan said he opposed the bill, and said that the offsetting mechanism was the reason that the business sector supported the MPF scheme in the first place 20 years ago.

Mandatory Provident Fund Schemes Authority. Photo: Mandatory Provident Fund Schemes Authority, via Facebook.

“It seems that the government has forgotten its promise to the industrial and commercial sectors and suggested scrapping the offsetting [mechanism], essentially asking the industrial and commercial sectors to foot the bill. We have to bear a greater business operational burden,” Tan said.

While the debate on scrapping the offsetting mechanism began soon after the scheme was launched in 2000, legislation efforts began this year after Chief Executive Carrie Lam included the proposal to axe it in her policy address last year.

According to the proposal, if the bill is passed, measures will be implemented as early as 2025, with the government providing gradually decreasing subsidies to employers for 25 years.

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Candice Chau

Candice is a reporter at Hong Kong Free Press. She previously worked as a researcher at a local think tank. She has a BSocSc in Politics and International Relations from the University of Manchester and a MSc in International Political Economy from London School of Economics.