consist of a government-managed central fund, into which employees and employers paid a proportion of the employee's wage. be entitled to the balance on the account, and would withdraw it upon
The employee would retirement or departure from the territory.
Singapore, Malaysia and a number of other countries have central provident funds of this type. In Singapore the Central Provident Fund (CPF) was established in the 1950s, and all employees and employers currently contribute 16.5% and 22% of the employee's wages respectively, subject to a ceiling of S$1,400 (HK$6,400) per month. The Singaporean
may use his fund balance for certain approved purposes before retirement, including the purchase of a home. On retirement or departure from the country, the whole account balance becomes available to the citizen.
The CPF currently has a total balance in excess of S$30 billion (HK$138 billion) - Singapore having a population roughly half that of Hong Kong. The CPF's funds are invested mainly in Government and public sector securities, which have funded much of Singapore's infrastructure and government-led industrial development.
Would such a central provident fund scheme be suitable for Hong Kong? The advantage of a central provident fund compared with private sector schemes is that a worker's entitlement under such a fund is portable, ie he can take his accumulated benefits with him from job to job. Under a private sector provident fund scheme, a worker's entitlement is paid out to him when he leaves the company. It is difficult for accumulated benefits to be transferred from one private sector scheme to another. If the benefits are paid out in this way, they may well be spent before retirement.
Under a private sector scheme, a worker who leaves a company will usually lose a proportion of the employer's contribution. The worker would retain the benefit of his employer's contribution under a central provident fund. However, an employer arguably has a right to withdraw some of his own contribution to create an incentive for his employee to stay.
However, the Foundation sees the following disadvantages in a central provident fund:
o It does not help today's elderly
A central provident fund, like private sector provident fund schemes, does nothing to help those who are now old and in need. It is a form of assisted saving for those currently working: only workers benefit from it and they only to the extent that they contributed to the scheme. Even if such a central provident fund is introduced at once the full benefit will not feed through to the elderly population for a generation, until those who have completed a full working and contributing - life under the scheme start to retire.
o It is contrary to Hong Kong ́s laissez-faire spirit
The establishment of a central provident fund would be contrary to the laissez-faire spirit that has been the key to so much of Hong Kong's
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