Should ‘illicit’ businesses provide pensions? It’s certainly a hot topic within the gambling industry.
Most of us get up in the morning, brush our teeth, and head off to work, not really considering our own retirement plans. But some people have jobs where a pension pot isn’t assured, and state benefits don’t cover them either. That’s why gambling hotspot Macau is urging its casino operators to join a pension plan. Gina Clarke finds out more.
Why is a new pension needed?
Well, a lot of the big firms have some sort of pension requirement already, but they come with caveats. Anything that warrants unfair dismissal, for example, instantly means that the employee loses everything. Whereas with a central provident fund, both the employer and the employee pay in and the money is looked after elsewhere, which means that it is assured. Neither party can access it until the employee turns 65.
This is by no means a new system, it works well in places such as the UK and other European countries, and the Macau government has been calling for it for around a decade. But, the fact that a significant number of gaming industry workers are coming up for retirement and that gaming licenses for gambling firms will soon be due for renewal, seems to have created a perfect storm that just might turn the tide.
Who’s calling for it?
It’s actually the government of Macau – one of the most significant gambling hotspots in the world – that has identified a need. This could be the first trickle behind a flood of similar rights for such workers, as new regulations are sure to follow.
It’s also quite a smart move, as current operator gaming rights are set to expire in both 2020 and 2022, so it will be interesting to see just what the government puts on the negotiating table.
They say that it would “help protect workers and give them better options for their pensions”. But the downside is that it would only be available once the employee reached the age of 65, as opposed to private pensions, which can be accessed at a younger age.
In Macau last week, attendees at a meeting of the “Health Development and Social Support for Gambling Practitioners”, heard that although the industry currently has a private retirement fund, there are insufficient guarantees for employees. One example given was hedging clauses, which can be used to deduct compensation from employers who do not understand the system.
It is hoped that the inclusion of pension contributions as part of the new gambling license will stimulate the participation of other industries.
How long will it take?
Although the operator gaming licenses are due for renewal as early as 2020, many experts believe it will take as long as a decade to implement fully.
The current system will need to be phased out, and an opt-in or opt-out process agreed between the government and the casino operators. Certainly, groups such as the Power of the Macao Gaming Association (PMGA), a Macau labor group, are worried about employees fully understanding their rights when it comes to pensions. Support and a media awareness campaign will have to be organized, and it couldn’t be rolled out until all of the operators have reached a license renewal phase.
At present, the Central Government Fund is non-mandatory, and the implementation of the review will be assessed after three years. By this point, all discussions with operators should have taken place.
If Macau succeeds in rolling the central pension plan out, it could affect workers in other countries who also struggle with their own retirement funds.