TNAG-2446-FCO40-3562-Political-parties-in-Hong-Kong-1992 — Page 37

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income of HK$1,118 per month, or around 22% of the average wage. although meagre, would enable the purchase of many of the necessities of life. However, less than 10% of the over-65s are in receipt even of this modest sum. The Public Assistance Scheme is no substitute for comprehensive provision for the elderly.

o Private sector provident fund schemes

At present an employer is not compelled to set up a provident fund for his employees. It is estimated that only one third of the workforce are beneficiaries of such schemes. Some 10,000 private sector provident fund schemes have been approved by the Inland Revenue Department, while an estimated further 20,000 have not been approved. Many of the latter are not separately funded, meaning that in the event of the employer's liquidation the workers' entitlement would not be protected. Regulation of the retirement sector is almost minimal, although it is understood that the Government intends to introduce an improved version of the aborted Occupational Retirement Benefits Bill to remedy this.

The Foundation welcomes the Government's announced commitment to make private sector provident fund schemes compulsory for all employers. The Foundation's detailed recommendations for such schemes are set out in (6) below. However it must be recognised that a provident fund scheme is really only a form of assisted saving for those currently in work. Most provident fund schemes - those for the Civil Service excepted - provide a worker only with a lump sum on retirement, not an income that will sustain him thoughout his old age. And only workers benefit from from the scheme. Provident funds do nothing to help those who have not contributed to such schemes, and this includes virtually all of those now over 65.

The Foundation therefore presents its proposals for an old age pension in section (5) below - as the only means of addressing the needs of today's elderly.

o Long service payments

The Employment (Amendment) Bill expected to come into force this month will improve the benefits for long-serving workers, in cases where the employer has no properly funded provident fund scheme. The new regime is an improvement on the old where only workers over 40 with 10 years service could expect any payment. Now workers of all ages may benefit, the amount depending on their period of service.

However, benefits under the new Bill are less secure than under a separately funded provident scheme. The benefit is also only a lump sum, not a regular income. The long service payment regime, even with the proposed improvements, is no substitute for comprehensive retirement provision.

(4) Disadvantages of a central provident fund

Many supporters of better provision for the elderly have asked for the establishment of a central provident fund. This would presumably

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