in the paper.
Some economists suggested that employees might tend to nullify the benefits of a CPF by borrowing to pay for additional consumption against their entitlement to eventual payments from the fund. Others felt that ageing of
of the population and increasing political pressures would make improved provision for the elderly inevitable and that a CPF might provide the least expensive solution (for Government) to the problem.
Other comment
8
Of the
the proposals for a compulsory provident fund scheme put forward by other interested parties, the most significant are those from the Hong Kong Federation of Trade Unions and the Joint Conference for the Establishment of a Central Provident Fund (a grouping
(a grouping of 60 labour and social groups) and from Mr William Turnbull (Chairman of the Employers' Federation but expressing his personal views). The schemes proposed by the FTU and Joint Conference provide for a compulsory but decentralised scheme involving private
private funds approved and regulated by a tripartite authority. There would be a Government guarantee of the security of funds invested, a guaranteed rate of return and contribution by Government behalf of the lowest paid.
9
on
Mr Turnbull also advocates
a compulsory and decentralised scheme involving private provident funds. These would have standard terms and conditions approved by Government, including portability of benefits. He also envisages an eventual rate of contribution equivalent to 10 per cent of salary by both employers and employees: other schemes envisage a contribution rate of 5 or 6 per cent.
10
Mr Turnbull differs from employers generally in recommending a compulsory scheme. The main employers associations and industrial groups have come out against the idea. The Federation of Hong Kong Industries in particular has prepared a detailed position paper taking up many of the points made in the review paper and arguing against the imposition of additional costs on industry at a time when many of Hong Kong's competitors are moving in the opposite
direction.
11
Views reported in the press reflect the basic division between labour and social groups, who in general favour some form of provident fund arrangement on a compulsory basis, and employer representatives, who do not object to provident funds as such but argue that participation should be
CONFIDENTIAL