A careful analysis of a poster we received in the mail leads us to only one conclusion...

Jump for joy - MPF is taking more



Sometimes you have to wonder who comes up with such inanely crass advertising in Government. In the mailbox today comes a poster and a leaflet, featuring two men leaping for joy with a skipping rope (and about to trip themselves up, because they are out of sync with the rope). Why are they so happy? No, they have not just become HK's first gay marriage - that happy occasion will have to wait. They are elated about something else.

It's from everbody's favourite statutory body, the Mandatory Provident Fund Schemes Authority. One of the happy couple has greying hair, spectacles, a bow tie and suspenders - we are supposed to infer that he is Mr Boss. The other is Mr Yuppie - a young upwardly mobile professional, with rolled-up shirtsleeves and an open collar. He's the employee, you see.

Mr Yuppie is earning $30,000 per month - and he is joyful, because the MPF system is about to raise the "maximum relevant income" by $5000 and seize an extra $500 per month from what he would otherwise earn, and charge him 1.72% p.a. fees for the next 40 years for managing the savings before disgorging whatever remains. These are, of course, savings that he would probably have made anyway, or he might have used the money to pay off his mortgage sooner, which amounts to the same thing. He is particularly happy because the bank which manages his MPF savings is also his mortgagee, so he gets to pay them twice. He consoles himself with the thought that his MPF account probably has some shares in the bank - or maybe that's why his MPF performance has been so crappy since 2007.

And this increase is not news to Mr Boss - the Legislative Council quietly approved without objection on 17-Jul-2013 in the last session of the legislative year (Hansard debate, p16211-16217), after a submission from Government on 29-May-2013. But to avoid uproar the Government gave plenty of notice, so that Mr Boss in his annual pay reviews deducted the cost of the increased employer contribution from the salary increase that he was going to give Mr Yuppie.

Employers don't much care about the MPF games as long as the total cost of employment remains the same. So instead of getting a salary increase to $30,250 monthly, with take-home pay of $29,000 (net of MPF), Mr Yuppie's salary was only increased to $30,000, and from 1-Jun-2013, he will take home $28,500 per month (net of MPF). For Mr Boss, the total cost of employing Mr Yuppie will still be $31,500, of which $3,000 goes to the MPF.

People in HK, you see, can't be trusted to save for themselves, even if they are well into the top income quartile. Thank goodness that we have the Government to think on our behalf. So why are Mr Boss and Mr Yuppie so happy, despite the increase in MPF payments? There is only one possible answer: they work for an MPF fund manager. Jump for joy!

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