Recently, pan-democratic parties opposed the HK$6000 handout announced in the 2011 Budget, and advocated the establishment of a Universal Pension. We are appalled at their recommendation. Modelled after pension plans in Europe and the USA, to fund a pension for every citizen aged 65-year and over, Hong Kong would need to substantially increase the current tax rates, and those who pay the most taxes, younger generations and middle class professionals, would pay dearly out of pocket.

The pan-democratic parties have labeled the pension plan the “universal retirement protection” scheme. No details have been offered thus far, but to mislead the public that the universal pension system was a panacea for the sake of votes. However, Hong Kong’s situation provides many challenges to universal retirement savings:

(1) The current population aged 65 and over now stands at 900,000 residents. If the government sets the pension at HK$4000 per month, totalling over 40 billion every year.

(2) Because the baby boom generation is retiring, in the next thirty years the percentage of elderly in Hong Kong’s population increases, while the number of working taxpayers decreases.

(3) In 2030, the number of elderly aged 65 and over is expected to reach 2.1 million. The total pension expenditure will then jump to over HK$100 billion. This is equivalent to one-third of today’s recurrent revenue .

(4) The funding for this program isn’t yet allocated, but the only solution available to the Hong Kong government is to increase salary and income tax substantially.

The devil is in the details. Regardless of the name, “Universal pension” or “Universal retirement protection,” while both are beautiful and appealing, it is our money that pays for these politicians to “buy” votes. The politicians will be past their prime, and it will be the taxpayers who need to take care of the mess they leave behind.

Slogan can be very beautiful. However, we need to open our eyes, and demand clear answers from the pan-democratic parties in the media. Do not trust the rhetoric from these political frauds.

Recently, political parties, labour unions and members of the Legislative Council rallied against the Government budget, demanding the establishment of a “Universal pension” plan to provide pensions for the elderly. Supporters of the Universal pension believe that the plan ensures the elderly are supported, and will be free from poverty and live with dignity.

The MPF scheme in Hong Kong became a tool to convey the interests of the financial industry; workers have already paid a heavy price for this. If Universal pensions are implemented, workers will shoulder an even greater burden.

The population aged over 65 now stands at nearly nine hundred thousand. If the Government must support a pension of four thousand HKD per person a month, the total expenditure will be huge, at least forty-two billion HKD per year. We must ask – where will the money to fund the pensions come from?

In the next thirty years, a rapid increase in the number of elderly is expected to reach 2.1 million by the year 2030, more than double the current figure. The Government will have no choice but to increase taxes if it implements the Universal pension, an expenditure of more than a hundred billion a year by 2030. Wage earners and the middle class will fall into a bottomless pit to support the pension plan, and Hong Kong’s competitiveness will suffer as it turns into a welfare state.

The Universal pension is a sugar-coated poison; taxpayers will have to support not only those poor, but also the wealthy. The pension is attractive to retirees and people who are retiring soon, and politicians will benefit from gaining more votes. However, today’s youth and middle-class professionals, who pay the most tax, will pay a heavy price to support the pension plan.

We must take a stand against those politicians who chant slogans for the sake of a vote, and at the same time, ignore the fact that Universal pensions have caused sovereign insolvency in Europe and the USA. Lion Rock challenges those members of the Legislative council who support Universal pensions. Rather than chanting slogans, The Lion Rock Institute asks these legislators to debate, and allow the public to make an informed choice about the Universal pension plan.