Hong Kong's debate on retirement protection has been "hopelessly inadequate" - as all intermediate options proven sustainable and agreeable in other places are being left out, according to Nobel laureate and social security expert Peter Diamond.

The US economist based at the Massachusetts Institute of Technology is a former advisor to the US government on social security. He addressed a packed hall of academics and students at the Chinese University of Hong Kong on Thursday - many of whom will soon become contributors to pension reserves.

Less than a month ago, the government presented two options on retirement protection for the six-month public consultation. The universal model advanced by some academics and advocates defines retirement protection as "a basic right, not a welfare benefit".

Diamond found the basic right rationale "a very odd statement". In Chile, the pension is designed to benefit three in five of its nationals. The Old Age Security pension in Canada pays out to all elderly people except the top 5 percent earners. Old age benefit in the US social security system is biased toward low earners.

"Other places have chosen different target populations and it seems to me you can't think of this as a universal basic right," he said.

But the alternative, in which "public resources should be targeted toward helping needy elderly", sounded no better to the economist. "If you're not really needy it's your problem, not ours. That seems to me not a proper stance for a government concerned about its population," he said.

Officials had openly doubted whether it was just to have young people support affluent elderly people. Diamond warned that could lead to an ill-informed debate. Elderly people, as ex-taxpayers, would argue they had paid for higher education for the youth.

"That's not a question you should be asking in isolation," he said. Similarly, assumptions that Hong Kong would lose its edge over competitors after a slight tax increase required proof.

In general, he described the official consultation documents as "hopelessly inadequate" for not addressing any possibilities in between the two extremes.

Should Hong Kong opt for a major expansion of pensions expenditure, Diamond assured his audience there were many variables to balance the financial drain of pension benefits, such as changes in contributions, payment levels and age eligibility. One-off seed money could also help stabilize returns.

kahon@chinadailyhk.com

Some elderly people have a rest in Sham Shui Po. The government presented two options on retirement protection for the six-month public consultation less than a month ago. Parker Zheng / China Daily

(HK Edition 01/15/2016 page7)