XN000022-1995-02-23 — Page 3

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Mr Hui Yin-fat: Government plans to move a motion debate in LegCo on March 8th, on a mandatory Provident Fund Scheme and if the Scheme won the obvious support in LegCo then our Government will consult the Chinese Govemment and appoint a consultant to work out details of the Scheme. I think the working procedure is absolutely correct but at the same time Government had said that she will not guarantee for any investment risk nor can she be specific about implementation date. Governor, how can we as LegCo Members recommend to the general public a retirement scheme which cannot immediately provide for their retirement benefits and which cannot guarantee any investment risk? And if the Govemment scheme cannot get obvious support from LegCo, does it mean that the retirement scheme will be shelved for ever? Thank you Sir.

Governor: I hope we'll have a chance of a few exchanges on this issue because it's an extremely important one. I'll answer the points which the Honourable gentleman has made but I hope we have some other questions on this important matter as well.

First of all, I don't think that it would be remotely right, remotely sensible for the Government to offer taxpayer guarantees against investment risk. I think that would be an astonishing way of behaving. It would encourage fund managers to behave recklessly with the money that was in their care. I'm sure it's right for us in devising a scheme to guard against fraud and related problems and to ensure that in its financing the scheme does that and provides us with some protection, some insurance. But I don't think that any responsible or prudent Government would seek to place on the taxpayer the liability for mistakes made by fund managers or by financial advisers in the private sector.

On timing, I guess, we've been talking about this for 30 years I understand, I guess that if the debate continues much as it has for the last three years or 30 years we could go on talking about it for 300 years. That's perhaps a conservative estimate. I just remind the Council what the position is. In 1992, we put forward for discussion proposals for an RPS which were strongly criticised, partly criticised on the grounds that they didn't deal with immediate need, that they didn't deal with the problems of the lower paid, that they didn't deal with the problems of housewives. So we went back to the drawing board and we tried to come forward with a scheme which met all those problems while remaining financially prudent and we put forward our Old Age Pension Scheme. I've looked at all the editorials and media coverage of the Pension Scheme and in case Honourable Members forget, it didn't receive an enthusiastic thumbs up from the media. It didn't actually receive an enthusiastic thumbs up from Chinese officials, from the business community or from this Council.