New subsidy for the old to cost HK$6.2b in 2013, and may surge to HK$13.6b

Despite political parties demanding that the government exempt seniors from income and assets declaration to receive the proposed old age living allowance, which they want as a "stepping stone" for a universal pension scheme, the government on Tuesday stood firm and refused to grant the waiver on the grounds that the new scheme is merely to fill a gap between existing schemes for the needy.

The government said the proposed allowance of HK$2,200, which was promised by Chief Executive Leung Chun-ying in his electoral manifesto, is to alleviate poverty and supplement needy seniors' living expenses. The allowance is to bridge the gap between the existing "fruit money" scheme, which requires no means test for those aged over 70 to "express appreciation" to seniors, and the Comprehensive Social Security Assistance (CSSA) scheme, Secretary for Labour & Welfare Matthew Cheung said.

"Limited public resources have to be targeted to the needy. This is a pretty simple logic," Cheung said. "That's why you have to draw a line somewhere. You have to identify where this elderly group is."

Though Cheung agreed that the allowance will "optimize" social security for the retired, he refused to link it up with universal pension. "We cannot confuse the two matters today," he said. "Universal pension is complex and comprehensive. The society needs time to deliberate (it) using in-depth analysis."

In order to qualify for the new allowance, the monthly income ceiling for an individual and a couple will be fixed at HK$6,660 and HK$10,520, respectively. The asset limit for an individual and a couple will be fixed at HK$186,000 and HK$281,000, respectively.

The limits actually match those of the fruit money scheme, which requires asset declaration for recipients aged between 65 and 69. All levels are to be reviewed annually.

About 400,000 seniors in the city were expected to be eligible, including 290,000 fruit money recipients who had declared their assets before and they will be "upgraded" to the new scheme by default in February 2013, unless they choose to opt-out or report an excess of asset via the post.

The default conversion was justified, Cheung explained, as the savings of retired citizens tend to shrink over time. Nonetheless, they will be asked to declare afresh in 2014, or one year later than applicants with no records filed with the government.

People involved in deliberate cover-ups, if unearthed in random checks, will be prosecuted for fraud.

Upon a successful upgrade or application processed by 2013, each new allowance recipient will receive a one-off payment that backdates to October 2012.

However, the presence of a means test to qualify for the new allowance became the cause of disagreement in Legislative Council.

In an apparent lure to get lawmakers onto his side, Cheung said that the backdate promise will only be valid if the Finance Committee of the Legislative Council managed to approve the expense package on or before October 26. He claimed that no backup plan will be tabled if the proposal is voted down.

Cheung stressed that the proposal was as generous as the government could get. The current proposal was expected to incur an expense of HK$6.2 billion in the next year, but he suggested it might surge to HK$13.6 billion if all limits were lifted.

In trying to persuade lawmakers to accept the proposal, Cheung said, "If you don't let the plane fly, all the debate is empty-talk."

Few were buying Cheung's lobbying as of Tuesday. The Hong Kong Federation of Trade Unions was keen to waive the declaration for seniors aged over 70. Wong Kwok-kin, the union's chairman, said since they are seeing the old age living allowance as a stepping stone for a universal pension. He pointed out that its financial sustainability should not be a concern.

Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, urged the government to raise the needy person's asset ceiling to a whopping HK$300,000.

The two major pro-establishment parties were joined by the majority of the opposition, making a pass impossible at this moment.

Alliance for Universal Pensions, which managed to ambush the secretary before the press briefing, demanded the creation of a dedicated committee to review the city's pension schemes instead. The new allowance, in its view, shall only play a transitional role before the core problems of poverty are well addressed.

kahon@chinadailyhk.com

(HK Edition 10/10/2012 page1)