TNAG-0789-FCO40-993-Development-of-social-policy-in-Hong-Kong-proposed-contribut-1978 — Page 22

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b)

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administratively burdensome under a

voluntary one.

In short the exclusion of the Civil Service and employees already covered by the terms of their employment appears to torpedo the concept of a compulsory scheme.

Even if the objections in a) could be overcome, and a compulsory scheme were introduced from which at least 400,000 of the 1.6 million eligible were excluded, the administrative expense and burden of payment recording and policing of about 1.2 million contributions of employers and employees per month would have to be faced. The question arises whether all this would be justified for the coverage of the numbers likely to be eligible and not otherwise covered. We reckon that sickness benefit for the latter would involve not much more than 27,000 payments a year (say $15 million) and for death benefit about 5,000 payments at a level to be fixed somewhere between say $2,000 and $6,000. For such figures a compulsory contributory scheme would appear to be a sledgehammer to crack a nut.

7. Of course the situation would be quite different if retirement pensions were included. But in the circumstances of Hong Kong today on a compulsory basis this would at least be highly controversial and could be seriously disruptive. Theoretical uncertainty about the future of Hong Kong would give anyone who did not want to contribute an excellent case for refusing to do so, and you can imagine the sort of controversy that the newspapers would whip up. I am therefore opposed to a retirement contributory scheme except on a voluntary basis.

8.

I am not even very keen on a retirement scheme on a voluntary basis, as proposed in the Green Paper, because of its administrative complications, and because I do not think many people would be very interested in it. If this turned out to be the case it could be represented as a vote of no confidence in Hong Kong's future. However there would be presenta- tional value in the existence of such a scheme, and it might prove more popular than I had supposed.

9.

Experience with the Singapore Provident Fund

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/ has