2
J
In addition there are, as you know, other political objections to a
compulsory scheme, and it would seem best not to adopt it at the present time.
6.
Both GAD and yourself have advised that welfare benefits (i.e. disability and old age allowances) should not be reduced on account of benefits received under a contributory scheme. However, we are worried by the implication that public assistance payments should take such benefits into account, for the reasons given in my preceding paragraph. No doubt this is logical in an income maintenance scheme, but our fear that the public here would consider it unjust and that this might jeopardise general acceptance of a contributory scheme. Perhaps part of the benefits received under the voluntary scheme could be disregarded for the purpose of assessing entitlement to public assistance? What problems for the PA scheme would you foresee if we proceeded in this manner?
Contracting-out
7.
The administrative complexities of allowing contracting-out, to which GAD has drawn attention, is a worry shared by many employers. In the light of comments so far, we have concluded that this is not a price worth paying and that no contracting-out should be allowed. This prohibition will have to apply to the Civil Service to avoid public criticism. However, we feel that it would be fair, at least ir principle, to permit those employers who already run private schemes to adjust their benefits to take account of any additional commitments arising from the centrally administered scheme, if they so wish. This applies particularly to Goverment servants, for whom generous sickness, injury, death and retirement payments are already available. There may be practical difficulties since private schemes may be subject to restrictive trust terms.
8.
We propose to allow an employer to elect to enter all his employees in the scheme, if he pays both the employer's and the employees' contributions. Thereafter, the employee, like any other voluntary member, would carry his account with him on leaving that employment. There is nothing new in this, but it may be a useful PR point.
Sickness Benefit
9.
We note GAD's advice that it would probably be safe to extend the sickness benefit to cover the 5th and 6th months of absence. However, we are not sure whether GAD is aware that not all workers are entitled to 36 paid sickness days under the Employment Ordinance, since the length of paid sickness leave depends on length of service. The earning rate is one paid sickness day for each completed month of service. We see no need to link the two entitlements and accordingly propose that benefits under the voluntary scheme should begin from the second calendar
/month