CONFIDENTIAL
3
7.
invested by the investment is
used
Members' contributions are managers of the fund and the return on to pay interest on members' accounts. Statutory provident funds are established either as departments of government or, more often, as statutory bodies over which a specified ministry, usually labour or finance, exercises general supervisory responsibility. day-to-day control is usually in the hands of a tripartite board representing the
the interests of employees, employers and the government. Investments are normally restricted
In
the
latter
case,
by the country's relevant trustee legislation and, in most Asian countries with statutory provident funds, are directed into government and government-guaranteed securities, though some countries permit investment of some portion abroad. Provident funds are a major source of funds to meet government borrowing requirements in many countries operating CPF schemes.
8.
The two most significant CPF schemes in terms of size - and the two which are most relevant for
purposes of comparison are those of Singapore and Malaysia. Levels of contribution to the Singapore CPF rose to an aggregate of 50% of earnings in 1985 (based on matched contributions of 25% of earnings from both employer and employee), but the rate of employer contributions has recently been reduced substantially (to 10% of earnings), bringing the aggregate contribution down to 35% of earnings.
9.
a
The Malaysian scheme is designed to provided lower level of benefit than the Singapore CPF and contribution rates are therefore significantly lower (an aggregate 20% of earnings consisting of a contribution of 11% from the employer and 9% from the employee).
Arguments for a CPF
10.
of arguments have been advanced in
A variety favour of establishing a CPF. is that such a scheme would their old age, a problem increasingly important as the aged 60 or over continues family ties tend to weaken. briefly, as follows:
(a) A CPF would remedy
our existing social burden on general
The principal one of these help people to provide for that is likely to become proportion of the population to grow and as traditional Other arguments advanced are,
certain deficiencies in
provision and provision and ease the by reducing the
revenue
number of claims under existing social
security provisions.
(b) By so doing, a CPF would improve Hong Kong's
international image.
CONFIDENTIAL