It is therefore free from the problem of adverse selection that would characterize a true MPPF with voluntary annuity plans.
Moral hazard actually is likely to be less serious under UFFP than under a MPPF that exempts the poor young from payment and makes transfers to the poor old.
To the extent that low income people have to struggle to survive, a MPPF that does not provide for public subsidization of contributions and does not exempt the poor from contributions may push the poor people to earlier death.
Unlike the laissezs faire regime or the pure MPPF, the UFFP pools longevity risks and minimizes cost.
As a fully-funded scheme, the UFFP, like the MPPF, is free from the risks associated with changes in the dependency ratio and from the political risks of participants trying to extract a larger payout, which may affect a Pay-as-you-go Pension Plan especially if the government is made an automatic contributor along with the employer and the employee.
Thus, the inability of the MPPF to provide universal, basic support for the elderly means that there will be demand for an extra tax-financed pillar for the needy.
(However, motions passed in the Legislative Council in Hong Kong represent only recommendations that need not be implemented by the government.) The coexistence of a heavily regulated MPPF with a public pension scheme is, however, administratively demanding.