XN000022-1987-05-13 — Page 24

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WEDNESDAY, MAY 13, 1987

SUPPORT FOR PRIVATE PROVIDENT FUND SCHEMES

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THE CONCEPT OF A CENTRAL PROVIDENT FUND OPERATED BY THE GOVERNMENT WAS COMPLETELY CONTRARY TO HONG KONG'S BASIC ECONOMIC PHILOSOPHY, THE HON DAVID K P LI SAID TODAY (WEDNESDAY).

HE SUGGESTED THAT THE GOVERNMENT SHOULD TAKE STEPS TO ENCOURAGE THE ESTABLISHMENT OF MORE PRIVATE SECTOR PROVIDENT SCHEMES TO PROVIDE FINANCIAL SECURITY FOR THE HALF A MILLION WORKERS WHO AT PRESENT HAD NO GUARANTEED FORM OF SECURITY FOR THEIR OLD AGE.

SPEAKING DURING THE ADJOURNMENT DEBATE ON CENTRAL PROVIDENT FUND, MR LI SAID THAT A CENTRAL PROVIDENT FUND WAS BUT ONE OF THE OPTIONS TO PROVIDE THE ELDERLY WITH GREATER FINANCIAL SECURITY.

ONE OF THE FACTORS THE GOVERNMENT HAD TO CONSIDER IN EVALUATING THE NEED FOR A COMPULSORY SCHEME WAS WHETHER OR NOT VOLUNTARY SAVINGS WERE SUFFICIENT TO MEET THE NEEDS OF SENIOR CITIZENS, HE SAID.

+HONG KONG'S SAVINGS RATIO OF 25 PER CENT IS AMONG THE HIGHEST IN THE WORLD. OUR HIGH VOLUNTARY SAVINGS REBUT THE ARGUMENT THAT MOST OF OUR WORKERS ARE NOT CAPABLE OF SAVING ON THEIR OWN.

+THE MAIN TASK OF THE GOVERNMENT IS TO TAKE POSITIVE MEASURES TO ENCOURAGE THIS HIGH LEVEL OF VOLUNTARY SAVINGS.

+THESE MEASURES COULD INCLUDE TAX CONCESSIONS FOR EMPLOYEE CONTRIBUTIONS TO PRIVATE PROVIDENT FUNDS AND IMPROVEMENTS TO THE EXISTING REGULATIONS FOR PRIVATE SCHEMES,+ HE SUGGESTED.

ON THE TRANSFERABILITY OF PENSION BENEFITS, MR LI SAID THAT IT WOULD ENCOURAGE WORKERS TO CONTRIBUTE TO PRIVATE SCHEMES, BUT IT MIGHT ALSO RESULT IN AN UNDESIRABLE INCREASE IN LABOUR MOBILITY.

THIS WOULD IN TURN DISCOURAGE EMPLOYERS FROM COMMITTING RESOURCES TO LABOUR TRAINING AND DEVELOPMENT WHICH WERE ESSENTIAL FOR THE TERRITORY'S INDUSTRIAL WELL-BEING.

MR LI FELT THAT IT WAS NECESSARY TO CONSIDER CERTAIN RESTRICTIONS ON THE TRANSFERABILITY OF PENSION BENEFITS SO AS TO ENCOURAGE EMPLOYERS TO PARTICIPATE AND TO MAINTAIN A REASONABLE STABILITY OF THE WORKFORCE.

HE SAID THREE TO FIVE YEARS MIGHT BE AN APPROPRIATE MINIMUM PERIOD OF SERVICE REQUIRED BEFORE PENSION BENEFITS COULD BECOME TRANSFERABLE.

MR LI ALSO NOTED THAT GREATER FREEDOM TO UTILISE THE FUNDS ACCORDING TO EMPLOYEES' OWN NEEDS WOULD MAKE PROVIDENT FUNDS MORE ATTRACTIVE TO CONTRIBUTORS.

/HE SAID