Time not right for mandatory provident fund, Ao Ieong says

It is not the right timing to turn the Non-Mandatory Central Provident Fund System into a Mandatory one, the Secretary for Social Affairs and Culture, Elsie Ao Ieong said in reply to an inquiry by lawmaker Lei Chan U.

Ao Ieong’s response came during a session at the Legislative Assembly yesterday, dedicated to the Policy Address for 2024 for Social Affairs and Culture.

Lei noted that at the time of the establishment of the non-mandatory system, the government had established a timeline to turn the system into a universal mandatory one.

The Secretary noted that according to the latest evaluation, it has been recommended to postpone turning the Provident Fund System into a mandatory one for a few years, taking into account the effects of the pandemic that lasted for about three years.

“We will review it again next year to see if SMEs are in a position to  fulfill the requirements of a mandatory system, but at the moment is too early to tell,” Ao Ieong said.

In the last review made in 2021 in the middle of the pandemic, the study ordered by the government from the University of Macau concluded that due to “the emergence of Covid-19 impacts on Macau economy, it is recommended that the SAR government set 2021 to 2023 as the three-year observation period, and depending on the economic recovery, set up two plans with a five-year and a seven-year preparation period, and implement the Mandatory Central Provident Fund System in 2026 or 2028.”

Without specifying a potential date for the implementation of a protection system for all residents with access to pension plans, Ao Ieong left all the revelations for “after the new review report.”

Currently, only a few companies (as private funds), as well as the government, offer this type of safety net for their workers, with both the companies and the workers contributing a monthly installment to the fund. Workers from other companies that are not taking part in the system or individuals who are self-employed are allowed to participate but must make personal contributions to the fund.