TNAG-0789-FCO40-993-Development-of-social-policy-in-Hong-Kong-proposed-contribut-1978 — Page 67

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CONFIDENTIAL

compulsory central provident fund scheme. However, if the

scheme is limited to shorter term benefits (i.e. excludes

retirement, and possibly death, benefits), it would avoid

the political objections referred to above.

15.

Employers generally feel that to be successful,

any contributory scheme must be made compulsory. On the

other hand, a compulsory scheme might undermine the well-

established Public Assistance scheme, under which the poorest

benefit on a non-contributory basis, and might lead to public

accusation that the Government was seeking to reduce public

expenditure by transferring a proportion of Public Assistance

clients to a compulsory contributory scheme.

16.

In weighing up the case for and against a compulsory

scheme, the following considerations are also relevant:

(a)

(b)

(c)

a compulsory scheme would provide the most effective

social security coverage and would simplify the

administration for both employers and the

Government;

since the age structure and numbers of participants

could be determined fairly accurately at the start,

it would enable a choice to be made between

providing higher benefits at the same

contribution levels (2% each side) or the same

benefits at half the contribution rates (1%

each side instead of 2%). This is based on

actuarial advice from GAD;

as with a semi-voluntary scheme, employers would

be permitted to take account of the provisions of

the new scheme in defining the scope of any

employee benefits scheme of their own, if legally

feastb

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/(a)