XN000022-1987-05-13 — Page 31

29

WEDNESDAY, MAY 13, 1987

ANOTHER FACTOR WORTH CONSIDERING WAS THE IMPACT OF INFLATION ON WITHDRAWALS TO THE FUND. WHILE THE INVESTMENT PORTFOLIO COULD BE DIVERSIFIED FOR SECURITY AS WELL AS LIQUIDITY, IT MUST BE RECOGNISED THAT A DIVERSIFIED PORTFOLIO MIGHT HAVE TO SACRIFICE YIELD FOR QUALITY,

UPON WITHDRAWAL, THE RETURN ON INVESTMENT SHOULD BE AT LEAST EQUAL TO THE RATE OF INFLATION.

+IN THE EVENT THAT THE YIELD OF THE FUND DOES NOT MATCH THE RATE OF INFLATION, TO FORCE ALL EMPLOYEES TO SAVE INVOLUNTARILY BY LEGISLATION MEANS THAT THEY ARE FORCED TO LOSE OUT ON THE PURCHASING POWER OF THEIR HARD-EARNED SAVINGS, HE SAID.

↓

MR CHAM SAID THAT GIVEN THE RISK AND UNCERTAINTIES, HE SUPPORTED THE PROPOSAL TO SET UP A COMMISSION TO LOOK INTO THE ISSUES INVOLVED.

COMMISSION PROPOSED TO STUDY SOCIAL SECURITY SYSTEM *****

THE HON THOMAS CLYDESDALE TODAY (WEDNESDAY) SAID HE SUPPORTED THE CONCEPT OF AN IMPROVED SOCIAL SECURITY SYSTEM FOR THE ELDERLY BUT COULD NOT SUPPORT THE CONCEPT OF A CENTRAL PROVIDENT FUND AS A MEANS TO SECURING THIS END.

SPEAKING IN THE LEGISLATIVE COUNCIL DURING THE ADJOURNMENT DEBATE ON CENTRAL PROVIDENT FUND, MR CLYDESDALE SAID HE BELIEVED THAT GOVERNMENT INVOLVEMENT IN A CENTRAL PROVIDENT FUND SCHEME WOULD DISCOURAGE BUSINESS INVESTORS AND BUSINESS INVESTMENT BECAUSE BUSINESS, WHICH WOULD BE PAYING DIRECTLY INTO SUCH A SCHEME AND YET HAD NO CONTROL OVER ITS DIMENSIONS, WOULD SEE NO END TO POTENTIAL GRADUAL INCREASES IN COST.

HE SAID THAT APART FROM THE INCREASING BURDEN OF A SCHEME WHICH HAD TO DEAL WITH A HIGHER AND HIGHER NUMBER OF AGED PEOPLE RETIRING FROM THE WORKFORCE. THERE WOULD BE IMMENSE PROBLEMS IN DEALING WITH THE HUGE CAPITAL SUMS PAID INTO THE SCHEME FROM DAY ONE.

/HE NOTED