(d) We had assumed that death benefit would be six months' pay without any
adjustment for other benefits received. We agree that death benefit ought to be paid if membership has been frozen but contributions have not been withdrawn. A waiting period for death benefit does seem necessary in a voluntary scheme, and 6 months does not seem unreasonable. It seems an unnecessary complication to have a further waiting period for full benefit; if you decided on a maximum benefit of 12 months' pay it would seem reasonable to pay this once the 6 months period had elapsed.
(f)
We see no objection to a requirement of 3 months notice before contribu- tions are withdrawn. As you have probably gathered, we do not greatly like the refund of contributions option, though we understand it is regarded as necessary for acceptance of the scheme, and anything that limits it or makes it more difficult to exercise seems a step in the right direction.
(g) We need only comment on the final sentence. What we meant was that if,
say, a member contributed from age 45 to age 50 and then withdrew his contributions but became a contributor again at age 55, he would at age 60 receive a refund of his contributions from age 55, i.e. the contributions that had not previously been refunded. Perhaps it would have been been clearer had we said "if they have not previously been refunded".
(h)
There is a good case for providing that persons may not join the scheme after a specified age, which might well be 50 or 55, but we think this limit should only apply to those who could have joined at an earlier age. In particular, we doubt if any age limit other than 60 should be applied to those wishing to join the scheme in its first year of operation. One would, I think, have to be careful about allowing sickness benefit to be payable after age 60, first because sickness rates increase rapidly with age and also because after that age it becomes increasingly difficult to decide whether or not a person is fit for work.
(i) We can confirm that an increase in the earnings limit to $3,000 would not
affect our estimates.
(j) We have nothing on which to base estimates of administrative costs, but we would not expect that it would prejudice the viability of the scheme if those costs were to be charged to the scheme. Nevertheless it is unusual to find a social insurance scheme to which the Government does not make some contribution, if only to meet expenses.
I trust you
I am copying this letter to those to whom your letter was sent. enjoyed your stay in London and that you had a good journey back to Hong Kong.
With best wishes,
Yours sincerely,
L V MARTIN
mc
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