TNAG-0608-FCO40-756-Planning-paper-on-progress-made-on-social-security-in-Hong-K-1977 — Page 82

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it would provide the only really reliable test of whether employees in Hong Kong were prepared to contribute towards the provision of improved social security. As such it would be of some value even if it did not prove to be popular.

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Main features of Scheme

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Details of the scheme would need to be worked out in consultation with employers' associations and employees. In particular, a proper actuarial costing would be required to determine rates of contribution and hence the benefits available under the scheme. The aim would be, however, to keep contributions low (of the order of 2% employees, 2% employers) with benefits pitched to correspond to the low rate of contributions. This should be possible, since the scheme is designed to provide protection during working life rather than a benefit for retirement. Informal discussions with employees and employers associations have indicated that the response to a voluntary contributory scheme would be non-committal (or it might even be welcome in principle) rather than hostile.

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It is suggested that the main features of the scheme might be along the following lines:

(a) Person able to join the scheme

(i) Any person in work, apart from the self-

employed, would be entitled to join in respect of that employment, unless he were working for a contracted-out employer.

(ii) An employer could contract-out of the scheme

if he could show that the benefits available as an occupational benefit to a particular employee or class of employees were at least as good as those provided under the scheme.

(iii) An employee could opt to freeze his membership

by ceasing to contribute to the scheme, If he did, he would cease to be eligible for benefit, apart from retirement benefit reduced in relation to his period of contributing to the scheme. Alter- natively, he could withdraw entirely from the scheme, in which case he would receive back his own contributions plus an allowance represen- ting an investment return for this period in the scheme. The details would require actuarial advice, because he would have already received the benefit of protection during his period of membership of the scheme. An employee could

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