CONFIDENTIAL
an "hypothecated pension fund" scheme; and
(d)
partial funding of pensions.
XCCI(92)46
A brief current assessment of each of these is set out below.
Higher Commutation
5
There is presently a maximum commutation of 50% of pension benefits under the New Pension Scheme (NPS). One proposal would simply be to allow officers on the NPS who leave at the normal retirement age to commute a higher percentage of their pension benefits, say 75%.
6
However, if 75% commutation were introduced with effect from 1992/93, the additional cashflow by 1997/98 could amount to about $4 billion (an average additional cost of $645 million p.a.). Furthermore the number of officers who would benefit in the next few years is small. The vast majority of staff who still have some years to serve before retirement would not see higher commutation as an effective pension safeguard. Such a scheme might also be misconstrued by the Chinese as an inducement to retire.
Provident Fund Scheme
7
This would entail the establishment of a provident fund for the Civil Service to cover the future service of both serving officers and new appointees.
8
Assuming that past service would count for eligibility for withdrawal of benefits but would not count as qualifying service for determining Government's contributions under the Provident Fund Scheme, the estimate of the cashflow requirements for a Provident Fund Scheme would be some $6 billion over the first six years at 1991/92 prices.
Executive Council
No comments yet.
Private notes are available after approval.