By Poyi (Natalie) Leung
The Social Security Fund will start to open non-mandatory central provident fund accounts for the 360,000 eligible Macau permanent residents today.
The central provident fund is part of the double-tier social security system the SAR government is going to introduce in order to support local residents’ retirement lives.
The administrative regulation regarding the general rules to open and manage personal accounts of the central savings system was gazetted yesterday, and will come into effect today.
Macau permanent residents aged 22 or above will automatically become participants of the savings system and are not required to go through any account opening procedure.
The Social Security Fund (FSS) will set up an account for each of the participants, and they must have to be in Macau for a minimum of 183 days in the past year in order to become eligible to receive the funding which will be injected by the SAR government into every account at a later time.
Yet, if eligible residents were outside of Macau because they had to pursue advanced study, were hospitalised, moved to the mainland at or over the age of 65, or were assigned to work abroad by local employers registered at the FSS, they will still be able to benefit from the scheme.
Secretary for Economy and Finance Francis Tam Pak Yuen had said last month that around 360,000 permanent residents were estimated to have central provident fund accounts opened for them in the first round.
All the personal accounts will also be managed by the FSS.
Meanwhile, the administrative regulations states that in normal circumstances, only participants after reaching 65 years old will be allowed to withdraw all or part of the savings from their personal accounts.
Participants who wish to withdraw from the accounts before 65 years old have to prove that they are or will be shouldering massive medical expenses due to severe injuries or sickness; or have been receiving disability pensions for over a year; or the request is based on humanitarian grounds or reasons with “appropriate explanations”.
Each participant can only apply for a withdrawal once a year.
If an account holder passes away, the savings will be included as part of his or her legacy.
On the other hand, the amount which will be deposited into each eligible personal account from the SAR government’s surplus is calculated by dividing the total funding by the number of participants on the confirmed name list prepared by the FSS.
In mid-September the Secretary for Economy and Finance said in an Executive Council press conference that the bill to revise the existing social security system – which will form the first tier of the double-tier social security system – had already been drafted and will strive to be presented to the Legislative Assembly for discussions this month.
Francis Tam said that the first tier social security mainly aims to provide basic protection to employees such as when losing the jobs or suffering from illnesses, and also to provide basic retirement protection to all local permanent residents.
In the meantime, the second tier, the non-mandatory central provident fund, is to encourage residents and their employers to accumulate savings through monthly contribution, in addition to the government’s funding, so as to allow the residents to enjoy a greater extent of protection in their old age.
The bill proposes to extend the current social security system to all non-employee Macau permanent residents at the age of 22 or above.
A standard contribution period of 30 years is also proposed and contributors will collect their pro-rata senior pensions according to the number of years they have contributed to the social security fund.
In regard to the central savings, Francis Tam said when the system is activated the SAR government will inject start-up capital into eligible personal accounts. After that, the government will decide whether or not to make further injections by taking into consideration its annual financial condition and the socio-economic situation.
In addition, the secretary said that after the government closes the public accounts in the fourth quarter of this year, it will be able to propose an amount which is going to be put into each of the eligible personal accounts.
As for the part concerning employers and employees’ contributions and voluntary contributions for the central provident fund, Tam said that separate regulations are being drafted at the moment and once it is done, a complete central provident fund system will be formed.