TNAG-0788-FCO40-992-Development-of-social-policy-in-Hong-Kong-proposed-contribut-1978 — Page 294

CHAPTER 9

PROTECTING THE VALUE OF BENEFITS

Protection against inflation

9.1

To be satisfactory to the beneficiary, the benefits of a social security scheme should maintain their real value, while they are being built up and while they are paid. A scheme which does not offer protection against inflation is inferior to one which does.

9.2

The need for protection of social security benefits against inflation has been widely recognised in recent years. The problems to be overcome in providing it vary with the type of scheme and benefit. They are more acute in contributory, funded schemes (i.e. where contri- butions go into a fund which is invested) than in non-contributory or non-funded schemes. If, for example, benefits are paid from a fund into which contributions are paid, the value of benefits is determined by the scheme's success in obtaining a real return on the money invested by the fund.

Position in Hong Kong

9.3

With the public assistance and welfare allowance schemes, it is necessary to ensure that the value of the benefits is maintained, both when they are first paid and during payment. By contrast, the benefits paid under the accident compensation schemes are in lump sum form (apart from the interim adjustment grant which continues for up to 3 months), so that it is only necessary to ensure that their value at the time of payment is maintained. Statutory occupational benefits are either in lump sum form or paid for a short period. Non statutory benefits, such as retirement benefits, are either in lump sum form or paid periodically. In the latter case, the arrangements for protecting the value of the benefits are the responsibility of the employer and scheme authorities concerned.

Public assistance scheme

9.4

When the public assistance scheme began in 1948, help was given in the form of cooked meals. In 1951, dry rations were issued, as an alternative to cooked meals; and from 1962 rice was also provided. The provision of cooked meals ended in 1969; and the supply of dry rations and rice ended in 1971. Cash assistance was introduced in 1967, as an alternative to help in kind for those unable to travel to the distribution points for cooked food or dry rations. The conversion to cash assistance was completed in April 1971, when the public assistance scheme assumed its present shape.

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