Pension Reforms in Hong Kong: Using Residual and Collaborative Strategies to Deal With the Government's Financial Responsibility in Providing Retirement Protection

Abstract

ABSTRACT In 2000, the Hong Kong government introduced the first compulsory retirement saving scheme intended to protect the entire workforce, the Mandatory Provident Fund (MPF). Prior to the introduction of this scheme, the government's main measure for giving financial protection to retirees was the Comprehensive Social Security Assistance (CSSA) scheme, which is a noncontributory, means-tested financial assistance scheme. This paper studies the government's attempt to introduce the MPF on top of the CSSA scheme as a means to illustrate how governments might address their financial responsibilities in providing pension schemes by adopting both the residual strategy-centered reform approach and the collaborative strategy-centered reform approach. The former approach is concerned with developing noncontributory schemes using residual strategies, and the latter is concerned with developing contributory schemes using collaborative strategies. The paper shows the difficulties involved in carrying out these two reform approaches simultaneously.