Replies to LegCo questions

LCQ20: Financial security for elderly

Following is a question by the Hon Frederick Fung and a written reply by the Secretary for Health, Welfare and Food, Dr York Chow, in the Legislative Council today (December 13):

Question:

Regarding financial security for the elderly, will the Government inform this Council :

(a) of the latest work progress, the preliminary findings and the anticipated completion dates of the two relevant studies currently undertaken by the Central Policy Unit, namely, the study on "Sustainability of the Three Pillars of Retirement Protection in Hong Kong" and the "Household Survey on the Financial Disposition and Retirement Planning of Current and Future Generations of Older Persons", as well as the government departments responsible for following up the findings of the studies;

(b) whether it will consider providing more financial assistance to the elderly in need, for instance, by relaxing the asset limit for the elderly to apply for the Comprehensive Social Security Assistance (CSSA), raising the amount of CSSA payments for the elderly, relaxing the permissible periods of absence from Hong Kong under the CSSA Scheme and the Social Security Allowance Scheme, and extending the coverage of the Portable Comprehensive Social Security Scheme so that the elderly who have retired in places other than Guangdong and Fujian provinces can also apply for and receive CSSA payments;

(c) whether it will consider providing more comprehensive retirement protection for the elderly, for instance, by implementing a universal retirement protection scheme, so that low-income labourers and housewives, who are currently not protected by the Mandatory Provident Fund Scheme, can enjoy a financially-secure life in their old age; and

(d) whether it will consider adopting measures to increase the elderly's income, for instance, by allowing elderly property owners who have handed over their properties to non-governmental organisations for management on a trusteeship basis to apply for public rental housing units for residential purpose and use the rental income from their properties to meet daily expenses, and studying the introduction of reverse mortgage schemes so that the elderly owner-occupiers can mortgage their properties to obtain cash income?

Reply:

Madam President,

(a) The study on "Sustainability of the Three Pillars of Retirement Protection in Hong Kong", which assesses the sustainability of the three pillars of retirement protection (namely the Comprehensive Social Security Assistance (CSSA) Scheme and Old Age Allowance (OAA), a Mandatory Provident Fund (MPF) Scheme and voluntary private savings) in the next 30 years, is underway and expected to be completed in 2007. The Government will consider the findings of the study before deciding on the future course of action.

(b) The CSSA Scheme is set up by the Government to provide assistance to meet the basic needs of those who cannot support themselves financially. It takes special care of the needy elderly through the provision of higher standard rates (ranging from $2,150 to $3,885 per month per elderly person), special grants (including payments to cover glasses, dentures, removal expenses, fares to hospitals/clinics, burial grant, medically-recommended diet, medical and health care appliances) as well as an annual long-term supplement. For instance, the average monthly CSSA payment for a single elderly person is about $3,700. Under the CSSA Scheme, the asset limit for the elderly is higher than that of the able-bodied adult. For example, the asset limit for applying CSSA for a singleton elderly is $34,000, and the value of an owner-occupied residential property is totally disregarded for elderly cases. As the average CSSA payments and asset limit for elderly recipients are already set at a higher rate than those of general CSSA recipients, we have no intention to change them at this moment.

With regard to the proposal for further relaxing the permissible limit of absence of the Social Security Allowance (SSA) Scheme, the Government has already relaxed the permissible limit of absence from Hong Kong under the SSA Scheme from 180 days to 240 days a year since October 1, 2005. According to the prevailing policy, the permissible limit of absence from Hong Kong under the CSSA Scheme for elders is 180 days a year. These measures, which were introduced in response to the requests of some elderly, allow them to spend more time to travel or visit their relatives and friends outside Hong Kong or take up short-term residence, while on the other hand ensures that public funds are spent on Hong Kong residents who based their long term residence in the territory. We believe that the measures have struck a reasonable balance between the two considerations. As far as we know, for those elderly who choose to retire permanently in the Mainland, they have to take into account a number of factors such as their family and social ties in the Mainland and Hong Kong, their adaptability to the life style and the health care system in the Mainland. Relaxing the permissible limit of absence from Hong Kong under the SSA Scheme does not constitute a significant consideration for them.

As for the Portable Comprehensive Social Security Assistance (PCSSA) Scheme, it has been relaxed since August 1, 2005 to allow the elderly who have received CSSA for not less than one year to retire permanently in Guangdong Province or Fujian Province. At present, the PCSSA Scheme covers only Guangdong Province and Fujian Province for the reason that they are the places of origin for the vast majority of elderly CSSA recipients, accounting for about 95% of the total number of elderly CSSA recipients. As at the end of October 2006, there were a total of 3 230 PCSSA recipients, of which 3 131 and 99 elderly recipients have retired permanently in Guangdong Province and Fujian Province respectively. We believe that the existing Scheme has fully addressed the needs of the vast majority of elderly CSSA recipients.

(c) The current approaches adopted by Hong Kong in providing financial assistance to the elderly are the three pillars mentioned in part (a). The Government has also built up a vast safety net, providing special care and heavily subsidised services to the elderly in medical and housing policies. The elderly also enjoy various transport concessions. When the study in part (a) is completed, the Government will draw reference from the study result and consider other factors, such as safeguarding the traditional family values, maintaining overall economic competitiveness and a simple tax system, and ensuring the sustainable development of the existing social security system so as to enable the needy elderly (including low-income labourers and housewives) be provided with financial assistance to meet their basic and special needs.

(d) Under the prevailing policy of Housing Authority (HA), an applicant for public rental housing (PRH) flat and his/her family members must not own or co-own any domestic property from the time of registration up to the time when a tenancy agreement is signed upon allocation of a PRH flat. HA does not consider that there is adequate justification for exempting or relaxing the ownership restriction for elderly property owners such that they may apply for subsidised PRH flats. To maintain a rational allocation of public housing resources, HA must continue to give priority to the housing needs of some 100 000 applicants (including over 5 000 elderly persons) on the PRH waiting list. HA therefore cannot accept the proposal. However, in an effort to address the housing problems of the elderly property owners, HA has exercised flexibility and introduced an ex-gratia arrangement to allow needy elderly property owners to move into Housing for Senior Citizens (HSC) on a licence basis upon recommendation by the Social Welfare Department for Compassionate Re-housing. For those elderly property owners who are found unsuitable to live in HSC for any particular reasons, discretionary arrangements will be made for them to move into self-contained PRH flats on a licence basis so as to better cater for their daily needs. In addition to meeting all the eligibility criteria of Compassionate Re-housing, these elderly property owners must have owned and lived in private dilapidated buildings without lifts for 10 years or more, and the applicants and all the family members living with them must be aged 60 or above.

According to the advice of Financial Services and Treasury Bureau, In general, there should be market demand for reverse mortgage products in a society with an aging population. In the case of Hong Kong, residential properties owned by elderly people who may be interested in reverse mortgage are generally very aged, and the market values of which are relatively low. In addition, the expected average life expectancy of Hong Kong people has reached 80 years. Assuming a borrower joins a reverse mortgage scheme at the age of 60, the reverse mortgage term is still rather long and will result in limited monthly payments. As such, a commercially viable reverse mortgage product is unlikely to be attractive to elderly people in Hong Kong.


Ends/Wednesday, December 13, 2006
Issued at HKT 15:15

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