Today (June 13^th), the Social Security Fund (abbreviated to FSS in Macao) held a press conference to present to the media the contents of the draft law on non-mandatory central provident fund system and at the same time respond to public opinions and recommendations about the draft law.  The central provident fund system is an important social policy.  The FSS values different voices and hopes that the system can be implemented more smoothly through communication.  The FSS also encourages the public to learn more about the contents of the system in the future so as to increase awareness about individual protection of old age.  

Iong Kong Io, President of the FSS Administrative Committee, said in his speech that the Executive Council has recently completed the discussion on the draft law on central provident fund system, which has now been submitted to the Legislative Assembly for discussion.  The major difference between the draft law and the consultation proposal in 2014 is that the draft law now uses the minimum wage as a reference for the upper and lower limits on contributions paid by employers and employees in the joint contribution scheme and it takes the option of vesting to calculate the accrued benefits that the employee can get from the employer’s contributions upon termination of labour relations.  

Many opinions and recommendations were given by members of the public with regard to the contents of the draft law, which include the desire of mandatory implementation of the system as soon as possible, agreements or disagreements with the option of vesting, as well as a concern about whether part-time workers can receive adequate protection under the central provident fund system.  Iong said that in its first phase, the central provident fund system will be implemented on a non-mandatory basis, mainly on account that Macao’s economy is currently in an adjustment period, small and medium enterprises (SMEs) encounter difficulties in operation, mandatory implementation of the system will impose a huge burden on SMEs.  The purpose of establishing the central provident fund system is to protect employees and individuals so that they will have better protection in their retirement.  From this point of view, the government considers that the option of vesting would be more in line with the legislative intent.  As for part-time workers, the government understands that individual sectors have their uniqueness, but at this stage it hopes that the central provident fund system can be implemented as soon as possible and it will design a sector scheme suitable for part-time workers after the part-time work system is introduced in the future.  

Iong said that there are now about 40% of local employees being covered by private pension scheme.  The average return on total assets of private pension scheme between 2009 and 2014 is about 3.68%.  The government will strive to encourage employers who have already set up private pension scheme to join the central provident fund system.  Whether the early implementation of the system on a non-mandatory basis can effectively attract SMEs to join the system or not, Iong believes that if employers join the system, in addition to tax concessions, in the context of manpower shortage today, enterprises that provide better employee benefits, like the coverage of central provident fund system, will have an advantage in the labour market, which forms a healthy competition among the enterprises, thus encouraging more employers to join the system and the central provident fund system can also provide an example and assistance for them to set up the system.  

At the press conference, Ieong Iun Lai, Head of the Social Security Department, also presented details about the central provident fund system, which include the composition of provident fund individual accounts, the management of contributions and its investment, as well as the way of linking private pension scheme to the central provident fund system.  

Non-mandatory central provident fund system is an important policy of the pension system.  It relates to the pension welfare of Macao residents.  The FSS hopes that members of the public can pay more attention and learn more about the system in order to increase awareness about individual protection of old age.