XN000022-1995-03-08 — Page 19

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On the provision for the low-income group to opt out of the scheme, Mr Leung said it recognised the fact that the contribution might cause them financial hardship.

Refuting criticism that the MPF would not take care of those at the lower end of the economic ladder, he said it would provide a degree of income security upon retirement even to those employees who might not expect to participate in a voluntary occupation retirement scheme in the near future.

"It will also allow them to participate in an investment scheme where their contributions would be pooled together to yield a better return," he added.

Turning to the issue of preservation and portability of benefits, Mr Leung said that when an employee changed jobs, the accrued balance would be transferred from the scheme of the former employer to that of the new employer and the process would be repeated upon every change of job.

The retirement benefit payment would be made by the scheme of the last employer prior to retirement.

Mr Leung said the question of portability would be examined very carefully by a consultant.

On the question of how the MPF will relate to Long Service Payments (LSP) and Severance Payments (SP), he noted that off-setting provision already existed under the present voluntary system of occupational retirement schemes.

This is because SP and LSP are not designed as supplementary retirement schemes but are intended to be alternatives to these retirement schemes.

"We do not intend to change it under the MPF, although we will need to consider very carefully the effect of the MPF on both schemes." Mr Leung said.

The Secretary also categorically ruled out the possibility of a Central Provident Fund, saying it was not an option for Hong Kong.

"A CPF cannot work without Government funding, and this most definitely will not be forthcoming," he stressed.

Mr Leung also recalled the Government's attempts in the past three years 10 provide income security for the elderly.