CONFIDENTIAL
XCCI(93)34
Issues Under Examination
7
The following key issues are under examination by the Administration -
(a) Whether the system should be mandatory or voluntary
(i) There is considerable support, primarily from labour unions and welfare interest groups, for a mandatory retirement protection system. Their main argument is that many small employers would not have the incentive to join voluntary schemes. As a result, many employees, especially piece-rate workers and those in the lower income group, would remain uncovered. These groups need retirement protection most as they tend to be less capable of making financial provision for their own retirement. They therefore ask that Government should establish a retirement system through which all employees will be provided with a reasonable degree of financial security upon retirement. Many of these groups call for more comprehensive social protection in addition to that for retirement, but have asked that a mandatory scheme, preferably centrally run by Government, should be the starting point.
(ii) As stated in the Consultation Paper, a mandatory system has its advantages. It would provide employees with retirement benefits commensurate with their contributions. It should also help to enhance workers' (especially those in the lower income group) feeling of security about their future, hopefully leading to more harmonious labour relations and higher productivity. But it also has its disadvantages : it would reduce the flexibility of individual choice and cause economic disbenefits to individuals; there could be political pressure to increase the rate of contribution in time; and it erodes the sense of self-reliance which is important to HK's
Executive Council