Elderly Commission Chairman Alfred Chan suggests the government to raise the retirement age to fortify the rapidly depleting working population and to improve retirement benefits.

Chan is also a chair professor of gerontology at Lingnan University. Referring to the latest census findings, he noted elderly people aged 65 and above will account for 30 percent of the local population to 8.47 million in 2041. People will also live longer, with the life expectancy of men rising to 84.4 years and women to 90.8 years.

"Our healthcare and social security systems could hardly sustain if the retirement age remains at 60," Chan told China Daily. "As a retired person will enjoy welfare benefits for 24 to 30 years, while health costs will escalate due to chronic diseases such as dementia."

"The aging population problem must be handled properly, or it will affect society severely," he said. "The government is aware of the problem. In recent years, it has introduced measures to improve the physical agility of the elderly and fortify them against illness."

The government, however, has no immediate plan to raise the retirement age. But in the private sector, flexible retirement is more common.

"In a knowledge-based economy, people over 60 are more experienced and confident," said the scholar. "If half of the 20,000 retirees each year do part-time job, they can pass their experience to young people, yet without obstructing the path to promotion."

Chan cited one example as civil servants, who may apply for retirement at 50. "This has in recent years resulted in departure of senior officials," he noted. "With less experienced middle officials promoted to higher positions, there have occurred policy blunders. Only (Chief Secretary) Carrie Lam stays behind, but for how long will she stay on?"

Chan said the Mandatory Provident Fund scheme (MPF), inaugurated in 2000, is barely sufficient to provide retirement protection for elderly people. "With employers and employees each contributing just 5 percent of salaries, the MPF is merely a substitute of social security allowance."

In his view, the Singapore model is ideal. Apart from employer and employee's combined contribution which is 28 percent of the salary, the Singapore government could top it up to a total of 35 percent of the salary. That provides a better protection to the retirees.

"Small and medium enterprises in Hong Kong can still afford an increase of 2 to 5 percent, but the government needs to compensate them with tax concessions." he suggested. "If employer and employee's MPF contributions rise to 15 percent of their salaries and the government also top it up when it has a surplus, this would really return wealth to the people and is more meaningful than giving HK$6,000 to all."

joseph@chinadailyhk.com

(HK Edition 08/17/2012 page1)