TNAG-1520-FCO40-2081-Employment-in-Hong-Kong-1986 — Page 33

CONFIDENTIAL

The Implications of Establishing a

Central Provident Fund in Hong Kong

Introduction

The possibility of establishing a central provident fund (CPF) in Hong

Kong has been considered intermittently over a number of years. Two working parties, constituted in 1966 and 1975, considered CPF schemes in the context of the further development of the social security system

system and both recommended against the establishment of a CPF.

CPF. The report of the second working party was presented to the Executive Council

Council in November 1975 and the working party was subsequently reconstituted, with broader representation, to undertake a more detailed study. A further report, submitted to the Executive Council for information in August 1977, concluded that the balance of economic, social and political arguments did not favour the establishment of a CPF.

2.

In

Since 1977, there have been periodic calls from various quarters for the setting up of a CPF and a

CPF and a number of questions on the subject have been asked in the Legislative Council. Replies by the Secretary for Social Services (and later the Secretaries for Health and Welfare and for Education and Manpower) have emphasized that the Government's social welfare strategy was to help those least able to help themselves, by means of a non-contributory social security system based on the Public Assistance Scheme and Special Needs Allowance. November 1984, in reply to a point made in

in the course of the Policy Debate in the Legislative Council, the Secretary for Education and Manpower thought that both employers and employees were likely to have reservations about the

the levels of contribution necessary for a viable CPF scheme, but indicated that he would have no objection to further study of any scheme which

which seemed likely to attract widespread support and to offer the prospect of a worthwhile return without requiring a penal rate of

contribution.

3.

During the 1985 Policy Debate in the Legislative Council, and again during the recent Budget Debate,

recent

the Secretary for Education and Manpower advised Members that the Government was itself reviewing the whole issue. The present paper attempts to summarise the arguments both for and against the establishment of a CPF as a bas is further consideration.

for

CONFIDENTIAL