9.
10.
11.
(c) Voluntary retirement benefit scheme
One of the difficulties of a voluntary scheme is that you may finish up with a scheme membership which does not represent a fair cross-section of the community. If this happened, there would be an unbalanced contribution or benefit structure. There is also the point, which of course has always been fully recognised in Hong Kong, that the particular circumstances of Hong Kong might militate against any successful launching of a voluntary retirement benefit scheme. The contributory sickness, injury and death benefit scheme set out in the Green Paper had been structured to get round this difficulty (so far as practicable) by offering attractions to the younger members of the workforce: for example, sickness benefit and a housing loan scheme. Once the sickness and death benefit elements are divorced from the retirement benefit element then it is going to be more difficult to make a go of the voluntary scheme, even if the housing loan proposal remains. That certainly does not mean it is not worthwhile considering the proposal; but it might make it more difficult to get off the ground.
III Other possible options
A major reason for seeking to explore further how to make the contributory scheme into a viable proposition is that once established it would offer the right structure for further develop- ments in social security if the Hong Kong Government later considered these appropriate. The alternative approach of dealing with each area of development separately and in a different way, which is now under consideration, clearly has its advantages. On the other hand,
it is desirable so far as possible to ensure that what is done now does not unnecessarily close the doors to future developments in the 1980s; and that is the main risk of the alternative approach. In particular, developing further help through employers must, looking at the overall picture, be regarded in the longer term as a blind alley as compared with developing further the social security system run by the Government.
If the major stumbling block to a compulsory contributory scheme is the position of the public service, an alternative to contracting- out might be to adapt arrangements that are used for the British public service. In the United Kingdom, a civil servant undertakes not to claim sickness benefit, although he pays national insurance contributions. In return, the civil service sick pay arrangements are not modified; but in calculating his pay during sickness, that part of his pay which is equivalent to sickness benefit is treated as being free of tax, as it would have been if it had been paid as sickness benefit. This system has worked well over the last thirty years. It could be adapted for Hong Kong in the following way. The Government could pay public servants an additional amount to cover their contribution to the sickness, injury and death benefit scheme in return for an undertaking that no claim would be made under it. The public service provisions for sick pay and so on would then continue unchanged, while the public servants net pay, assuming the contribution is paid out of pre-tax income, would remain constant. The cost to the Government of doing this as an employer might be recouped, in part or in whole, by modifying the Green Paper proposal that the Government should pay for the administration of the contributory scheme. The cost of paying the employees' contributions could be deducted from the sum that would otherwise be paid to cover the cost of administration or if greater it could simply be regarded