XN000022-1994-09-01 — Page 2

THURSDAY, SEPTEMBER 1, 1994

1

-

GOVERNMENT RESPONDS TO ACADEMICS' COMMENTS

ON OLD AGE PENSION SCHEME

*

IN RESPONSE TO PRESS ENQUIRIES ON THE PRESS ADVERTISEMENT BY A GROUP OF ACADEMICS FROM LOCAL TERTIARY INSTITUTIONS REGARDING THE PROPOSED OLD AGE PENSION SCHEME, THE ACTING SECRETARY FOR EDUCATION AND MANPOWER, MR WOK

K LAM, ISSUED THE FOLLOWING STATEMENT TODAY

(THURSDAY):

"THE GOVERNMENT NOTED THEIR VIEWS WHICH WOULD BE TAKEN INTO ACCOUNT IN THE CONTEXT OF THE CONSULTATION EXERCISE.

"WE ARE VERY DISAPPOINTED, HOWEVER, THAT THEY HAVE CHOSEN TO IGNORE ALTOGETHER THE SERIOUS FLAWS OF PROVIDENT FUND SCHEMES, BE THEY CENTRAL, PRIVATE OR MIXED.

"COMPULSORY PROVIDENT FUND SCHEMES, AS PROPOSED BY THE ACADEMICS, DO NOT PROVIDE ANY COVER FOR HALF OF THE POPULATION WHO ARE OUTSIDE THE WORKFORCE. FOR THE REMAINING HALF, THOSE WHO ARE ALREADY MID-AGED OR ABOVE AND THOSE WHOSE EARNINGS ARE BELOW THE MEDIAN WAGE WILL NOT BE ABLE TO ACCRUE SUFFICIENT RETIREMENT BENEFITS. BUT THESE ARE THE GROUPS THAT HAVE THE MOST NEED FOR INCOME SECURITY AT OLD AGE.

"THESE SHORTCOMINGS ARE WELL DOCUMENTED AND HAVE BEEN EXPLAINED TIME AND AGAIN. IT IS SURPRISING THAT THEY HAVE NOT CHOSEN TO FACE THEM.

"OUR PROPOSED OLD AGE PENSION SCHEME ORIGINATES FROM THE GROWING COMMUNITY SENTIMENT THAT GOVERNMENT SHOULD ADDRESS AS EARLY AS POSSIBLE THE NEED TO PROVIDE A DEGREE OF INCOME SECURITY FOR OUR ELDERLY

AT THE PEOPLE, A CONSIDERABLE PROPORTION OF WHOM ARE LIVING MARGINS OF LOW INCOME. THE SIZE OF THIS GROUP IS GOING TO INCREASE RAPIDLY AS THE COMMUNITY REACHES ITS PEAK OF AGEING IN ANOTHER THREE TO FOUR DECADES. RELYING ON TAX REVENUE TO ADDRESS THEIR INCOME NEEDS WOULD IMPLY A TAX INCREASE OF 3 PER CENT TO 4 PER CENT IN BOTH INCOME AND PROFITS TAX. ANYONE WHO THINKS THAT GOVERNMENT CAN RESOLVE PROBLEM WITHOUT PAYING AN ALTERNATIVE PRICE IS BEING UNREALISTIC.

"WE ARE ALSO SURPRISED AT SOME OF THE CRITICISMS RAISED BY GROUP. THEY ARE NEITHER ACCURATE NOR FAIR.

THIS

THE

"WE HAVE TIME AND AGAIN EXPLAINED THAT THE PROPOSED OLD AGE PENSION SCHEME IS A SOCIAL INSURANCE SCHEME THROUGH WHICH THE PUBLIC INSURE FOR INCOME SECURITY AT OLD AGE, AT A MODEST AND AFFORDABLE PRICE. THE CRITICISM THAT IT HAS 'MIXED UP RETIREMENT PROTECTION WITH SOCIAL WELFARE' MISSES THE POINT COMPLETELY.

"CONTRARY ΤΟ WHAT THE ACADEMICS SAID, THE PROPOSED PENSION SCHEME IS NOT A UNIVERSAL PENSION SCHEME. NON-CONTRIBUTORS WILL BE SUBJECT TO ASSET DECLARATION AND THE RICH ONES WILL NOT BE ELIGIBLE. WE ARE OPEN-MINDED ON WHAT THE LEVEL OF ASSET DECLARATION OUGHT TO BE.

"OUR POPULATION AND LABOUR FORCE PROJECTIONS ARE BASED ON THE BEST PRACTICABLE MEANS OF PROJECTION ON THE BASIS OF UP-TO-DATE STATISTICS

THEY AND TRENDS. DESPITE THE ACADEMICS' CRITICISM, NOT COME UP WITH A MORE CREDIBLE SET OF PROJECTIONS.

HAVE

/"IT IS