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Expanding on some of the features of the MPF, Mr Cartland said the Government considered the minimum obligatory contribution from employer and employee essential.
He said it was because the Government believed that the purpose of a mandatory retirement protection system should be to ensure that all those in the workforce had adequate basic financial protection upon retirement.
By requiring a minimum obligatory contribution from both parties, Mr Cartland said the Government would ensure that even those at a relatively low income level were protected.
Other essential features of the scheme would include a benefits-qualifying age of 65, preservation of benefits until the qualifying age and the portability of benefits from one employer to another.
"As you may appreciate, the main object of any system of retirement protection is to provide workers who have reached a certain age with a reasonable level of financial security.
upon
"This can be achieved only if there is preservation of retirement benefits change of job, and an arrangement for transfer of accrued employee benefits from one scheme to another."
Mr Cartland said to cater for the large numbers employed by small-scale employers and the self-employed, the Government also intended to establish residual pooling arrangements.
"A competitive, private-sector, solution with sufficient participation to minimise administration costs, is being sought to provide for these groups," he said.
On the issue of a Government guarantee, he said the Government's role under the proposed MPF would be to ensure prudential supervision and regulation of scheme administrators, and to minimise risk due to fraud or other unlawful activities in connection with the operation of these schemes.
"Within the MPF, we are considering the development of a scheme that would compensate for benefit losses due to fraud or other unlawful activities.
"A Government guarantee for investment management is not appropriate because it could encourage aggressive or imprudent fund management. It would also produce an immense contingent liability for the taxpayer," he added.
End/Thursday, March 23, 1995