TNAG-0788-FCO40-992-Development-of-social-policy-in-Hong-Kong-proposed-contribut-1978 — Page 33

Hong Kong Proposed Sickness. Injury and Death Benefit Scheme

Report on the cost of the proposals, by the United Kingdom

Government Actuary a Department

1. This Department was asked to report on the proposals for a sickness, injury and death benefit scheme contained in Chapter 8 of the Green Paper "Help for those least able to help themselves" and, in particular, to say what benefits could reasonably be promised in return for the joint contribution rate of 4% of earnings, which under the proposals would be payable in equal shares by the employee and his

employer.

2.

There is one aspect of the proposals that has important financial consequences. Membership of the scheme is to be voluntary and there will be an option open to a contributor at any time to withdraw from the achame with a refund of his own contri- butions plus interest. This makes it necessary to assume that employees' own contributions would effectively form a type of provident fund, from which the accumulated total of each contributor's contributions, plus interest, would be returned to him on withdrawal from the scheme, or at age 60. The employees' contri-

The benefits butions would thus not be available to provide the scheme benefits.

during sickness and on death would therefore need to be met by the employers'

contributions.

3.

4.

It is very difficult to estimate the cost of these benefits for two reasons:-

(a) The cost will depend very much on the age distribution of those

who elect to join the scheme. The scheme is likely to appeal more to older people, for whom the chance of claiming benefit is greater than for younger people.

(b) No information is available to give guidance on the rate of sickness claims; as membership of the scheme is voluntary, persons with poor sickness 'records may be more likely to juin than those in good health. In the absence of info.mution, it has been asıumed that claims, age by age, would be at the bane level as in the United Kingdom social insurance scheme.

·

The benefits have been assumed to be as follows:-

Sickness and injury benefits

A cash benefit of half the average monthly pay in the (welve months prior to the onset of sickness, payable during the second, third and fourth months of a spell of sickness or injury.