TNAG-0788-FCO40-992-Development-of-social-policy-in-Hong-Kong-proposed-contribut-1978 — Page 34

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5.

Death benefit

1.A lump sum equal to 6 months' pay as defined above for sickness benefit, payable on the death of a member of the scheme before attaining age 60.

In estimating the contribution required to meet the cost of these benefits,

it has been assumed that contributions will be assessed on the same pay as that

ranking for benefit. On that assumption, the contributions required would range broadly from 2% if all employed persons elected to join (or if the age distri-

bution and incidence of sickness of those who join is the ouse wa for all employed persons in Hong Kong) to 13% if, in the main, those joining the sc

are the older and less healthy employees.

6. It therefore seems likely that some further benefits could be provided if the employers' contribution is 2%, but in view of the great uncertainties it is

essential not to grant benefita which may in the event prove to be too costly.

We consider, however, that it would probably be safe to extend the period of

sickness benefit to cover the fifth and sixth months of abuence, or to make it

more practicable, to pay benefit for the fifth to the 26th week of a period of

sickness. It is recommended that no further benefit improvementa be made initially. Within a few years, the age distribution of those who join the scheme

will be known and there should be enough experience of sickness claims to enable firmer estimates to be made. In any case it would probably be desirable to

require a minimum period of contributions before title is acquired to say long- term sickness benefit or to a lump sum at age 60 (other than that provided by

the return of the contributor's own contributions), so that a decision on whether

to provide such extra benefits can well be deferred.

Government Actuary's Department

London SW1

3 February 1978