葡萄牙和香港社會保障制度

根據2002年聯合國第二次會議的老齡化問題，60歲或以上的人口有期望占到總人口的22％，到2050年老齡化問題變得越來越嚴重。老齡化問題會影響到社會的各個方面。其中人們最關切的是，政府問題是現有的社會保障體系的負擔。一些發達國家，如美國，正在運行的即付即用即付（現收現付）系統，該系統主要用在有工作力支付的退休人員。這些國家的社會保障，影響政府的運作而增加財政支出。一些國家開始改革現行的社會保障制度，以滿足老齡化問題所帶來的影響。

與世界趨勢相吻合的是，澳門也經歷了人口結構的變化。年齡人口比例55或以上的隨時間增加而增加。另一方面，年齡人口少于15的在減少。將有更多的人一起退休，同時比較少的人進入勞動力市場。

Social Security Systems In Portugal And Hong Kong Economics Essay

According to the United Nations’ second meeting on the aging problem in 2002, there is expectation that the population aged 60 or above will account for 22% of the whole population in 2050. The aging problem becomes more and more serious. The aging problem can affect the society in different aspects. One of many issues that concerned by the governments is the burden of the existing social security system. Some developed countries, such as United States, are running the Pay-As-You-Go (PAYG) system which the existing working force pays for the retirees. These countries have an increasing fiscal expense on the social security, which affect the governments’ operation. Some countries start to reform the existing social security system to meet the impact brought by the aging problem.

Similar with the world trend, Macau also experiences the population structural change. As shown in figure 1, the proportion of population aged 55 or above increasing over time. On the other hand, the population aged fewer than 15 is decreasing. There will be more people retire together with fewer people enter into the labor force. The existing social security system is similar to the PSYG system in other countries. The government department will collect fund from different sources, then redistributes the fund to the retirees. The change in population structure can be an alarm for government to review the existing social security system, or reform the system in order to meet today’s situation. In 2009, Macau government announced a new social security system which is different with the old one to complete Macau’s social security system. Macau now is having a mixed system that combined by the old social security system (government department collect contributions and appropriations and reallocate to eligible citizens) and the new system (everyone has a saving account with the government department which takes responsibility to manage the funds). Since the new system is voluntary and not popular, the old one is considered as the main social security system that provided by the government.#p#分頁標題#e#

In this report, we are going to investigate the effect of the new social security system with reference to the situation in Portugal and Hong Kong. The following sections are: introduction and discussion about the social security system in Portugal; introduction and discussion about the social system in Hong Kong; introduction and discussion about the existing social security system in Macau and whether the new social security system should be voluntary.

I Portuguese Social Security

The Portuguese Social Security is under responsibility of Labor Affairs Ministry. It aims to improve the well-being of all Portuguese citizens and look for its future income sustainability. To do so, it is taxed a percentage of companies’ wage contributions and dependent and independent workers’ income. Thus, it is able to create a communitarian fund to underpin the pay-as-you-go pension and social security systems which include subsidies such as unemployment, minimum social income, health care and maternity.

In a pay-as-you-go pension system the current employed workers ensure the financing of retired workers’ pensions with their contributions and taxes.

A worker who earns a gross salary of EUR 1,000 a month has to pay EUR 110 to social security and EUR 200 of income tax. Moreover, the company that is responsible for, it has to pay EUR 237.5 to social security.

However, heavy taxes and contributions combined with other factors have helped the economy to loose competitiveness in the last decade. Along with lavish spending – payments from social security are 30% of the GDP – and aging population (the proportion of the population aged 65 and over is 17.9%, 2009), the social security deficit has increased dramatically over 3% of GDP in recent years. It has now compromising itself as well as the country’s public finances sustainability.

The current government has indeed increased the social security coverage, but as a result, the social security has now nearly 30% of population dependent on it to avoid falling under the poverty line.

As stated before, social security is responsible for 4 main subsidies: unemployment, retirement, minimum social income and health care and maternity.

II. A. Unemployment

For a worker who belongs to the first scale income (up to EUR 419.22 a month) has an unemployment subsidy up to 1.5 times the minimum wage which currently EUR 475 a month. For workers above the first scale income, receive a subsidy according to a percentage of their last salary. The unemployment subsidy can be extended up to 270 days if the unemployed is 30 years old or younger and to 900 days if the unemployed is older than 45 years old. Currently there are almost 700,000 people receiving unemployment subsidy which corresponds to an unemployment rate of 11%. The net replacement ratio forecasted for 2020 is approximately 73%.#p#分頁標題#e#

II. B. Retirement

There are currently almost 2 million citizens receiving an average retirement pension of EUR 404.61 a month. 11% have a pension for being incapable of working, 64% have an elderly pension (which means they are over 65 years old) and 25% have a survival pension. Those benefiting from survival pension are retirees over 65 years old who never paid to social security any kind of contribution. Most of them are former agricultures.

Families with an income per capita above EUR 750 a month, whose parents (retirees) receive a pension below the minimum wage, are obliged to pay between EUR 15 to 30 a month to their parents.

On the other hand, 3.7% of the total workforce is covered by occupational pension schemes supported by company benefit plans.

II. C. Minimum social income

Those incapable of working, or who never had a job or who are consider excluded from the society (immigrants for instance) are able to receive a minimum social income of EUR 235.72 a month. When the housing expenses are above 25% of the minimum social income, the house aggregate should receive an equivalent amount back. There are around 332,000 citizens benefiting from this subsidy. It was definitely able to take a lot of people out of poverty but on the other hand it is an incentive of laziness and country’s low productivity.

II. D. Health care and maternity

Workers have the right to absence its job for 30 days a year for each son in order to be able to take care of it. In case they have a son, they have the right of 120 days plus 30 more days if there are twins. The fertility rate (2009) in Portugal is nevertheless one of the world’s lowest, 1.32 births per women.

Regarding the health care subsidy, this is extended up to 1,095 days.

Mandatory Provident Fund Scheme (MPF) in Hong Kong

III. A. The geography situation in Hong Kong

With 0.97 children possessed by per mother, HK has one of the lowest fertility rates in the world. Moreover, HK has one of the oldest populations in Asia only after Japan and Australia. As shown in Figure 2, in 2009, the proportion of the population over the age of 65 was about 13 percent, and it is estimated to rise to 27 percent by 2038 [1] . As a result, the number of working age adults for each person over 65 will drop from around six now to two by 2038. [2] This ageing population means the working population of the future will have a much larger number of retirees to support.

III. B. The history of the Hong Kong social security system

The social security system of HK has just been established for a short period. Before 2000, the system is mainly based on a publicly-managed and tax-financed level, which aims at providing a social safety net for those who need it. Only a small part of it is based on the privately-managed level with a limited coverage. In the recent decade, a new system, which will be talked later, has been in operation. There 5 subsystems in the Hong Kong social security system, which are the Social Security Allowance Scheme, the Social Security Assistance scheme, the Normal Old Age Allowance, the Higher Old Age Allowance, the Civil Service Provident Fund scheme.

III. C. The introduction of the MDF system

There have been some calls to establish a central provident fund and heated debates among government, politicians and businessmen since 1960s. In 1994, the World Bank made a report titled "Averting the Old-Age Crisis: Policies to Protect the Old and Promote Growth", and listed three practical pillars of approaching, which are:

A publicly managed, tax-financed social safety net;

A mandatory, privately managed fully funded contribution scheme;

Voluntary personal savings and insurance.

The new HK pension system is based on the second pillar strongly, which is also called the occupational pillar. Such a new system is so called the mandatory provident fund scheme (MPF).

The MPF system is based on the personal defined contribution accounts. Participation is mandatory for the employees those are between 18 and 65 years old. Employers and employees contribute 5% of wages each, up to HKD 20,000 a month. The self-employed must also contribute 5% of the income. Casual employees need to contribute fixed amounts of money based on a contribution table, as do their employers. The legal retirement age is 65 for both male and female, and early retirement is only permitted after 60. The intended replacement ratio generated by the MPF is about 30% to 40%. The MPFs must be approved by the Mandatory Provident Fund Schemes Authority. With the MPF System put in place, now most of the employed populations are covered in the scheme, as shown in Figure 3.

III. D. The key features of the MPF

Mandatory contribution: each employee has to contribute 5 percent of the income monthly and the employer also has to pay the same amount for the employee. Such a regulation is not subject to those earn less than $5,000 HKD monthly, or $60,000 annually, while the employer still has to pay 5 percent of the employee’s income. The highest level of the income for contribution is $20,000 monthly. The employees and employers can make additional contribution other than the pre-determined minimum level.

Coverage: all the employees and employers aged from 16 to 65, except those are entitled to be exempt by the ”Mandatory Provident Fund Schemes Ordinance“. [3]

Benefit preservation: The contributions along with the benefits derived must be preserved until the members reach the retiring age of 65.

Tax deduction: The contributions of employees are tax- deductible, with a limit of $12,000 annually. Such a deduction is also subject to contributions made by employers unless they are not larger than 15 percent of employees’ incomes.

Transferability: The accumulated benefits of an employee can be transferred to the new employer’s scheme when the job change occurs.

III. E. Advantage of MPF

Effectiveness: As a privately managed fund scheme, the benefit generated is more than that of a centrally controlled pension. The average privately managed pension fund in the world earned a considerable rate of return during the last thirty years while the average public pension fund has a big capital loss. In addition, the cost could be reduced (e.g. the administrative fee) with the free competition under the HK market environment, which causes the effectiveness.

Equitability: For every member in the scheme, the amount of accrued benefits is on the basis on the contribution has been made without any unfairness. Such equitability could assure the members to make contributions voluntarily to earn more after-retire benefits

Risk-reduced: The personal retirement account encourages the diversification of pension fund investments and guarantees a pension floor, which could typically reduce the risk.

Need-met: As a well-established market and society, HK has the need for a social security system with more specific regulations. Such an effective and secure privately managed system could meet the need.

III. F. Disadvantage of the MPF

Non-liberty: Individuals and firms are forced to the schemes in which they could have made better if making the decisions alone.

Tax- evasion: Employees are able to avoid taxation by changing jobs frequently for the reason that it cannot be captured in the current MPF network.

Limited protection: Although claimed to consolidate the foundation of an enjoyable retiring life for the retired people, the scheme actually only provide limited protection or even worse to the low-income and no-income people. Most low- income people only earn about $10,000 and even below per month, which could just cover the monthly expense. After many years’ contribution, they receive only $2,000-3,000 per month, which means that they are not well funded by the pension. The situation is worse for the elderly, unemployed and housewives, since it is stated in the scheme that only the employed and employers can be guaranteed. Now there are 25 percent of people aged 60 and above living under the poverty line with a monthly revenue of $2,500.Table 5: The current revenue of Social security fund#p#分頁標題#e#

Table 5 above shows the current revenue of the Social security fund. Nowadays, the monthly contribution for every beneficiary is MOP$45 (employer contributes MOP$30 and employee contributes MOP$15). The amount of contribution is fixed regardless of beneficiary’s salary level. As shown in the table, the total contribution account for a small portion of the total current revenue of the Social security fund. The major revenue is the transfers from government’s 1% revenue. The main revenue for Macau government is the gaming tax revenue. Since the prosperity of gaming industry and the large amount of tax revenue from the gaming industry, the Social security fund can operate smoothly even if there is only little contribution from the employers and employees. And the proportion of total contribution is decreasing over time. However, the Social security fund’s operation will highly depends on the performance of gaming industry which is affect by the Chinese economy and policy.

The new social security system in Macau – double tier social security

In 2009, the chief executive announced the new social security system, namely, double tier social security system in order to compete Macau’s social security system. The double-tier social security system gives two levels of protection to beneficiaries. The first tier is mandatory and has come into force in January 2011. The first tier is the amended social security system from the previous one, which mainly provides basic protections including pension, disability allowance, unemployment allowance, sickness allowance, birth allowance, marriage allowance, funeral allowance. Pension will be received once beneficiaries reach 60 instead of 65. The amendments also extend first tier coverage to all employed and unemployed permanent residents who meet Macau’s domicile requirements, as well as those are aged 22 or above. New law also ensures the registration and contribution of employers and employees under the previous system of Social Security Fund will be transferred into the new system and continue to be valid without requiring new registration. Interests of beneficiaries in the previous system will not be affected. What is same as before, contributions for each citizen were set at MOP 45, while employers should pay MOP 30 and employees should pay MOP 15.

Based on this guaranteed social welfare, there is second tier for the purpose of better retirement live standard. The second tier is the central provident fund. Everyone will have an account which will be created automatically once the citizen becomes eligible. All Macau permanent residents aged 22 or above will be covered in this central provident account. At the beginning, government will inject some money into the eligible people’s accounts as the initial capital and whether there are further money injections from government in the future is uncertain. It will be based on the government finance in every year as well as the economic conditions. In the other words, the main contribution should come from the citizen. At this stage, contributions from employer and employee are voluntary. Government has not yet decided whether employers and employees are strictly required to contribute certain amounts to the accounts in the future or the contribution ratio between employer and employee. All the complex issues will be discussed in the future and not yet entered into the legislative stage.#p#分頁標題#e#

On the other hand, Macau Government has not yet set any interest rate can be earned from the money in the central accounts. Citizen can withdraw the money from the account when he or she retires or is injured and has to bear large amount of medical expenses. The accounts are managed by the social security fund, but the authority can be delegated to private fund managing company.

VI. A. Feasibility of the new system

To discuss the feasibility of this new social security system, we should concern following aspects: residents’ willingness to join, government financial ability to support the system, stability and sustainability of the system in the future.

As Macau is experiencing rapid economic growth in these several years, more people are demanding better live quality. Sharing economic growth with every person becomes more hopeful towards Macau Government. One way for government to better protect Macau citizens is the improved social security system. That is why the double tier system came out. However, how the eligible people are willing to participate in the non-mandatory central account is doubtful. Since contributions to the account are not set by government, it is hard to reach consensus about the ratio between employers and employees. Even though Macau Government said it will set up guidance for residents to join, there is no incentive encouraging them to join. In addition, no interest can be earned from the deposit in the central account. Under the high inflation environment, the purchasing power of the account balance will just keep on decreasing. The attractiveness of contributing to the account is skeptical. Moreover, if the account only relies on the injection from government, how large effects would bring to retirees’ living standard?

When setting up the central account in the first year, government would deposit certain amount into the eligible residents’ account. For example, there are MOP$10,000 and MOP$6,000 deposits in each account in 2010 and 2011 respectively. The money injection in 2010 has totally amounted for 3.3 billion patacas. This initial deposit is highly depended on the economic condition in Macau and so does the ability to pay by government. Before this central account is proposed, the spending by FSS in 2010 Budget is estimated to be 3.77% (MOP$1,750,488,700) of total government spending. In 2011 budget, however, it is estimated that FSS spending would rise to 8.65% (MOP$4,582,792,200). Government revenue in Macau is mainly from gaming tax and this revenue keeps on increasing in past several years. This has strengthened government’s capability to increase spending in different area. But, who to guarantee the government revenue will not drop in the future? No one can guarantee government can handle the increasing spending of social welfare.

Many legislators has pointed out the ageing problem is threatening Macau’s social security system and they are worrying the sustainability of the system. In the first tier of new system, the coverage is even large and the spending is increasing substantially. Many people claimed that government considered short-term social opinions, but without long-term preparation for future financial burden brought from ageing problem. For the second tier, although Macau Government has undertaken the management responsibility and injected money to support participants, it is lack of motivation in implementing the new system.#p#分頁標題#e#

VI. B. Fairness

As what have mentioned before, the double tier social security system has extend to more residents. Both permanent and non-permanent residents are included in the system. For the first tier, contributions are mandatory for all eligible residents, regardless of permanent or non-permanent. However, new allowance of disabled people and free health care services are excludable to non-permanent residents. For the central provident fund, non-permanent residents are welcome to join as well. But, government contributions are only offered to permanent residents’ accounts.

Since contributions to central provident fund are not mandatory, government must do something to attract people to join. One of the suggestions is to provide tax benefit to participants. But the point is that low income group originally has less possibility to pay tax, tax benefits may not be attractive to me. On contrast, high income group can enjoy more tax benefit when joining the program. In sense of resolving disparity between rich and poor, it seems unfair and inefficient.

VI. C. Effects on saving pattern

First tier benefit is defined in law and the required contribution is still small. There is no significant change of effect on people’s saving pattern after the shift of the system. Many experts have criticized the old-age pension is too little and actually living standard would not be well protected if elderly only relies on that little sum of money. Macau Government is now proposing to increase the pension per month. This requires government to give more supports to FSS as well as modifying regulation to increase the mandatory contributions, in order to prevent FSS from insolvency [6] . The schedule of increase in pension is uncertain in future and people receive no commitments from government. This would lead people to plan their future without relying on government. In addition, since central provident fund offers no interest to the account’s owner, people may choose to save by their own rather than putting money into the account.

For those who are worrying ageing problem may save more now, if they have ability to do so. There is no doubt that the financial burden of FSS is continuously rising as the proportion of old age population in Macau keeps on going up. And, government transfer to FSS is depending on its revenues, or say, the development of gaming industry. No one would have full confidence towards the global economy as well as Chinese economy. This should be another anxiety to people’s future welfare.

VI. D. What if the central provident is mandatory?

As what has mentioned before, non-mandatory central provident account may have limited impact on people’s saving behavior. The purpose of the double tier system is for retirees’ better living quality. It seems, however, that non-mandatory system cannot arouse people to early plan their retirement life. What’s more, non-mandatory system cannot help FSS to reduce the burden of the ageing problem. That is why it is a must to transit the voluntary system to mandatory. For sure the transition schedule should follow the public consultation and shifting to mandatory can effectively reduce the dependency to government and also the contributions from labor force.#p#分頁標題#e#

Undoubtedly there are many concerns should be considered before mandatory provident fund is introduced. The most basic consideration is the role of government. Referring to Hong Kong MPF, it is regulated by Hong Kong Mandatory Provident Fund Schemes Authority and managed by private fund management companies. At this point it is often complained that the management fees are too high. Whether government should set some constrains on it is another concern. On the other hand, the contribution ratio between employer and employee is important as well. And not all eligible citizens are required to join the system. It should be regarded to the income level and ability to save. Furthermore, the investing activity of the fund management company is highly related to risk taking and corresponding return. It is important for government to pick up the monitoring responsibility towards the investment. All of these points may only represent part of the decision making process and Macau Government still has long way to run. It is better to compare different systems in comparable areas so that to reach a great mandatory provident system in the future.