XN000022-1987-11-11 — Page 22

WEDNESDAY, NOVEMBER 11, 1987

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ARGUMENTS WEIGH AGAINST COMPULSORY PROVIDENT FUND

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ARGUMENTS FOR AND AGAINST COMPULSORY SAVINGS HAVE BEEN DISCUSSED IN GREAT DETAIL AND AT GREAT LENGTH, WITH THE BALANCE OF THE ARGUMENTS QUITE. HEAVILY AGAINST COMPULSION, THE SECRETARY FOR EDUCATION AND MANPOWER, THE HON RON BRIDGE, SAID IN THE LEGISLATIVE COUNCIL TODAY WEDNESDAY).

SPEAKING ON THE SUBJECT OF A CENTRAL PROVIDENT FUND DURING THE RESUMED DEBATE ON THE GOVERNOR'S POLICY SPEECH, MR BRIDGE SAID PROFESSIONAL ECONOMISTS SUPPORTED THE VIEW THAT THE INTRODUCTION OF A COMPULSORY SAVINGS SCHEME WOULD INCREASE PRODUCTION COSTS AND WEAKEN HONG KONG'S EXTERNAL COMPETITIVENESS.

"OUR ECONOMY DEPENDS ON OUR EXPORTS. IT THEREFORE SEEMS PARTICULARLY UNWISE TO DO ANYTHING THAT COULD PUT OUR COMPETITIVENESS AT RISK," HE SAID.

MR BRIDGE POINTED OUT THAT WHILE A COMPULSORY SAVINGS SCHEME WOULD PROVIDE A REASONABLY ADEQUATE RETURN FOR THOSE WHO HAD BEEN IN STEADY EMPLOYMENT EARNING GOOD WAGES, THOSE EARNING LESS THAN THE AVERAGE WAGE, OR CONTRIBUTING FOR LESS THAN

40 YEARS, COULD EXPECT FROM THEIR COMPULSORY LIFETIME SAVINGS A RETIREMENT INCOME BELOW THE PUBLIC ASSISTANCE THRESHOLD.

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MOREOVER, BY COMPULSORY SAVINGS, IT WOULD MEAN THAT EMPLOYERS WOULD BE FORCED TO SET UP RETIREMENT SCHEMES; AND EMPLOYEES WOULD FORCED TO JOIN, AND TO CONTRIBUTE FOR THEIR ENTIRE WORKING LIVES.

"I DO NOT BELIEVE THAT SUCH EXTENSIVE GOVERNMENT INTERFERENCE IN THE FINANCIAL AFFAIRS OF SO MANY INDIVIDUALS WOULD IN PRACTICE BE POPULAR, MR BRIDGE SAID.

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"WE HAVE THEREFORE REJECTED COMPULSORY SAVING SCHEMES; BECAUSE THEY WOULD BE AN INADEQUATE SOLUTION TO THE PROBLEM OF PROVIDING FOR THE NEEDY ELDERLY: THEY WOULD BE UNPOPULAR WITH A CONSIDERABLE PROPORTION OF THOSE AFFECTED; AND THEY WOULD PUT OUR ECONOMY AT RISK."

MR BRIDGE SAID A MUCH MORE APPROPRIATE SOLUTION TO THE PROBLEMS OF IMPROVING THE FINANCIAL SITUATION OF THE ELDERLY WAS FOUND IN THE LONG SERVICE PAYMENT (LSP) SCHEME.

THE LSP WAS INTRODUCED IN JANUARY 1986 AS A MEASURE TO PROVIDE SOME PROTECTION FOR ELDERLY EMPLOYEES WHO WERE DISMISSED; AND LEGISLATION TO EXTEND THE SCHEME TO COVER RETIREMENT THROUGH OLD ACE OR ILL HEALTH WOULD BE PUT TO THE LEGISLATIVE COUNCIL SHORTLY.

MR BRIDGE SAID THAT THE LSP HAD THREE ADVANTAGES : IT WAS NON- CONTRIBUTORY; IT WAS BASED ON FINAL SALARY AND IT WAS RETROACTIVE.

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