The decade-old Mandatory Provident Fund has been a bonanza for the fund management industry. Unfortunately, its long-term benefits, especially for low-income workers, will be meagre by the time they retire. But what is less known is that the fund has also been used as a perfectly legal, if indirect, subsidy to bosses who sack staff. According to government figures released to the Legislative Council, companies have dipped into the fund to the tune of HK$12.07 billion in the last decade to help pay for long-service and severance payments required by law. In most jurisdictions, such raids would land bosses in jail - not so in Hong Kong.

Under local laws, companies can use their contribution to an employee's MPF account for such purposes. This saves them great expense, but rather defeats the whole purpose of the scheme. The fund is set up in such a way that workers cannot easily take money out during the course of their active working life. The rationale is that they need to be forced to save, accumulate and invest a part of their salaries for retirement. But this restriction does not apply to bosses, at least when it comes to handing out pink slips. This unequal treatment of bosses and workers not only makes the scheme inherently unfair, it also seriously erodes the value of the MPF accounts of those unlucky enough to be given the boot several times during their careers.

Yet it appears the government sees nothing wrong with this arrangement and has no plan to review it. Professor Chan Ka-keung, the secretary for financial services and the treasury and a former finance academic, said it was the outcome of a careful balancing of interests and considerations. But whose interests does it serve?