The Government has no plan to change the current pension-increase policy and mechanism or introduce any related amendments to the pension-increase legislation, Financial Secretary Henry Tang says.

Speaking in the Legislative Council today, Mr Tang said the current pension-increase policy and mechanism are prescribed in the pension-increase legislation, which provides that pensions and dependent pensions shall be increased with reference to the increase in the annual average monthly Consumer Price Index (A) of one financial year over that of the preceding financial year.  

He said the Government conducted a review on the pension-increase policy and mechanism in 2000, concluding that there were strong justifications in principle and in practice to maintain and re-affirm the prevailing pension-increase policy and mechanism.

Such justifications include the following:

* any attempt to alter the pension-adjustment mechanism, including those which represented a fundamental change to the long-established pension-increase policy and practice, would be perceived by pensioners and serving civil servants as an erosion of their statutory rights and would meet with their strong objection; and

* more than 50% of pensioners received monthly pensions of less than $5,000, which were in many cases the sole or main source of income to support their living.

He said, through the concerted efforts of the management and staff, the Administration has progressively reduced its expenditure on civil service emoluments, both in absolute terms and in terms of its proportion to the Government's overall operating expenditure. 

Civil service spending falls to 31% of operating budget

In 2005-06, the estimated staff-related expenditure on the civil service is about $65.3 billion, or 31% of the Government's annual operating expenditure, down from $71.3 billion, or 36% of the Government's operating expenditure in 2001-02.