would provide a more comprehensive system of
of retirement provision (for
(for those able to contribute over an extended period) without the adverse effect upon labour mobility inherent in provisions linked to length of service with a single employer.
in
The concept of a contributory social security scheme could be said to be accord with a general policy of encouraging self-reliance. It could be argued equally, however, that the compulsory nature of a CPF discourages self-reliance by removing the individual's freedom of choice in providing for his future needs.
A CPF could provide source of funds to meet Government's borrowing requirements, but there is no need for such a facility and its existence would be a disadvantage if it created pressure to finance less worthwhile projects.
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In certain circumstances, Government might find itself under pressure to 'top up the benefits available from a CPF or subsidise its operating costs.
to
The balance of the economic
arguments is against the introduction of a CPF. The immediate result would be to increase employers' labour costs and to reduce employees' take-home pay, the effect being the same as an increase in the rates of profits and salaries tax. This would have an adverse impact (the extent depending upon rates of contribution and the circumstances
of individual employers and employees) upon levels of economic activity and employment and upon business confidence generally. The immediate adverse effects may tend to work themselves out over time, but the transitional period would be lengthy and the setback to economic growth might never be recovered.
(h) The introduction of a CPF would have a major impact on financial markets in Hong Kong. If a sizeable proportion of the fund were to be invested in foreign currency assets, there could be considerable disruption to the foreign exchange and money markets. This would take the form of unsettling pressures on the exchange value of the Hong Kong dollar and on interest rates and
and might
CONFIDENTIAL