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Non-mandatory central pension scheme bill passed

However, legislators representing different parties voiced their concerns and debated the pension scheme

The plenary session at the Legislative Assembly (AL) yesterday passed the final readings of three bills – fiscal exchange, control of the cross-border transport of cash and bearer negotiable instruments, and non-mandatory central pension scheme.
Of the three bills, the bill for non-mandatory central pension scheme raised most issues leading to voting being prolonged after the regulated time.
In particular, Kou Hoi In, who had voted against all Articles of the bill, expressed strong objections to the absence of an offset mechanism within the bill, pointing out that local SMEs (Small and medium size enterprises) would as such not be encouraged to participate.
The bill proposed by the MSAR Government instead suggested the attribution of rights and interests.
The offset mechanism enables employers to use the deposit for the central pension to offset the amount paid for the dismissal of an employee.
Meanwhile, the representatives of the labour group including legislators Ella Lei Cheng I and Lam Heong Sang were not satisfied with the pension to be deposited based upon basic wages not remuneration.
However, legislators such as Fong Chi Keong and Zheng Anting pointed out the instability when the deposit of pension is based upon remuneration, given that remuneration includes commission, subsidies and other kinds of benefit offered by the employer.
In addition, the unionists were worried about the termination of the deposit by employers at will.
Secretary for Social Affairs and Culture Alexis Tam Chon Weng, together with the president of the administrative committee of the Social Security Fund, Iong Kong Io, expressed that the passing of the bill would be the first step to making the introduction of a mandatory central pension scheme possible.
Tam added that the previous two public consultations had shown that the majority of society is in favour of the scheme, pledging that reviewing will be performed after the law is implemented and will further upgrade details in accordance with future conditions.
Yong also responded to the matter of the scheme’s termination at will by employers, saying that the government had considered the conditions when companies face serious financial crisis, noting that evaluation over whether to approve termination would definitely be performed by the government.
In order to attract companies to participate in the central pension scheme, Yong assured that the government is ready to preserve MOP383 million (US$47.73 million) for taxation rebate for companies.
Another hotly debated area was the ratio of attribution of rights and interests, with workers only able to claim 30 per cent of the amount after working for the same employer for three years.
Legislator Ella Lei pointed out that workers who engaged in flexible industries such as construction usually work less than three years in the same company.
As such, the Articles relating to the aforementioned issues were being requested to be voted upon individually and were accepted by AL president Ho Iat Seng despite legal consultants from both the government and AL explaining the consequences if related Articles were not passed.
The individual final reading was passed despite a few legislators voting against. The law for the non-mandatory central pension scheme will become effective on the first day of 2018.