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I should stress that preservation by itself is not the answer. This was pointed out to us very clearly in submissions on the October 1992 RPS, which warned of "loss" benefits, and a multiplicity of small accounts leading to unnecessary administrative work for employers. Preservation and portability must therefore go together.
H
I welcome Members' general support for the residual pool scheme which we have proposed in this MPF system. As I said in my main speech, we expect the majority of employers to be able to find a scheme administrator in the private sector by themselves. Those who for one reason or another cannot do so, will be able to participate in the residual pool scheme. Again, this is an area where we need to work very closely with the insurance and the fund management industries.
I should like also to respond to a point made by some Members on the relationship between the Long Service Payment (LSP), Severance Payment (SP) and the MPF. Members will be aware that these were designed at a time when there was very little retirement protection. We were concerned about the difficulties that workers, especially elderly ones, might face in finding another job. These measures were introduced to help them over such difficulties. At the same time, we tried to encourage the provision of voluntary occupational retirement schemes. There is already provision in the Employment Ordinance to allow for the setting off of an employer's benefit payments under a retirement scheme by the amount payable for Severance Payment or Long Service Payment. Mr President, it is not our intention to change this arrangement, but we will seek our consultants' advice to examine this relationship between the two systems and the proposed MPF.
I think Members are aware that the MPF will have an impact on existing schemes both within the civil service and other statutory schemes. Again this is an area we will have to need to find our consultants to look at the technical points in more detail and come back quickly with answers to these impact on these problems.
I take Members' points that the MPF will be, as they said, meaningless without for those on a low income. But I do not agree with them. We are providing those employees on a low salary with an opportunity to participate in an investment where their contributions will be pooled together to provide a meaningful return. We must not look at investments over the short term, but over a longer time-frame, and we may expect contributors to benefit accordingly.