8
raised
The principal arguments
against compulsory measures were that they could be economically damaging; would run directly counter to Hong Kong's usual 'freedom of choice' approach to economic matters; and would in any case be an inadequate solution to the basic problem of security in old
age.
9
thereby
weakening
their
Any compulsory savings scheme, whether centralised or run individually, would, at least initially, have adverse economic consequences in terms of reduced current take-home pay for workers and increased production costs for those producers who have not already provided retirement schemes voluntarily,
external competitiveness. The fact that small firms rarely had provident funds for their staff suggested that small employers were more concerned about the possible cost impact than larger employers, and that they were likely to be less able to absorb that impact. Eventually, the cost burden would probably be shifted entirely to the workers, but for economy as a whole the loss in business opportunities and jobs and the reduced rate of economic growth in the interim might never be fully recouped.
the
10
Compulsion would also cause monetary problems. Fund managers would have to adjust their portfolios to continuously-changing investment opportunities, particularly those available overseas. The consequent movement of large sums would impose significant strains on the local money market and the linked exchange rate. These strains would intensify as the contributions from the workforce grew year by year to make provident funds an increasingly importänt component of the financial assets of the local community.
11
The argument was not that compulsory retirement schemes would certainly lead to economic disaster; but that there was a distinct risk of adverse consequences, which could be serious. A compulsory system could not lightly be abandoned once it was introduced, and it would therefore be unwise to risk an experiment in this direction.
12
a
The short-term impact on individuals and firms of compulsory contributions may be likened to the imposition of tax on current income, given that such contributions could only be redeemed after a protracted period. While some individuals would be able to convert part of their regular voluntary savings into such contributions, those saving little at present would have to consume less in order to make up the contributions fully.
13
A compulsory savings scheme benefits most those who have been in steady employment with good earnings, i.e. those already in the best position to save voluntarily. It benefits least those who have not had steady work, or whose earnings have been low. Therefore as a solution to the financial problems of the less well-off elderly, a compulsory savings scheme is clearly inadequate.
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