XN000022-1995-03-08 — Page 35

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There have been suggestions that in the light of the rejection of the October 1992 consultation paper on retirement protection, and the divided views on the OPS, then Government should maintain the status quo, and continue to encourage the establishment of occupational retirement schemes on a voluntary basis. At present, about one-third of our workforce of 2.8 million is covered by some form of retirement scheme. If we simply maintain the present system, it has to be realised that while the number of employees covered by such voluntary schemes will continue to grow gradually, there will still be many employees, particularly in smaller businesses, who will be without retirement protection for the foreseeable future. Indeed it would be unrealistic ever to expect the entire workforce to be covered under a voluntary system.

The MPF

Submissions on the OPS indicated that there was now likely to be more public acceptance of a mandatory, privately managed provident fund system, particularly if it could be set up by 1997. Over the last few weeks, my colleagues have been seeking the views of community leaders on what is now the only remaining alternative for retirement protection. After nearly 30 meetings with Members of this Council, both individually and in groups, with trade union leaders and with representatives of the business community, we have gained the impression that the introduction of what we call a mandatory, privately-managed provident fund system (MPF) would be regarded as a practicable way forward to help our hard working labour force to look after themselves better in their retirement years.

Let me now describe the key features of the MPF as we see it at this point in time. The proposed MPF should include the following main features -

1)

2)

3)

it would be mandatory for every employer to establish a retirement scheme for his employees under the age of 65;

it would be a joint contribution scheme by both employees and employers;

there would be a statutory minimum contribution, of which the employer should pay half;

4)

there would be a minimum salary level, below which an employee might elect not to participate in a scheme;

there would be a maximum salary level above which statutory contributions would not be required;

5)

6)

there will be a requirement for preservation and portability of benefits until an employee reaches retirement age, except in specified circumstances such as death, total disability or permanent departure from Hong Kong,