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CONFIDENTIAL
compétitive edge. It would also entail technical difficulties, e.g. whether the system should allow a participant to borrow against the accumulated funds for investment purposes, and what would happen if such an investment was lost. It is also questionable whether the entire working population needs mandatory protection, given the high savings rate in Hong Kong. The acceptability of compulsory savings also needs further examination.
(iii) On the other hand, voluntary schemes have many advantages: respect for the free will of individuals to decide upon the most appropriate scheme compatible with their own career plans and savings needs; minimal Government intervention other than monitoring and regulation of these schemes; and
and avoidance of the high administrative cost of running institutionalized mandatory schemes.
(iv) The Occupational Retirement Schemes Ordinance will be brought into force later in 1993. In time it will provide adequate safeguards for voluntary schemes. During the past five years the number of voluntary schemes has doubled. More employers are expected to establish voluntary schemes as a result of their desire to remain competitive in a tight labour market and the promotion by fund managers of pooling arrangements to cater for the needs of small establishments.
(b) Whether mandatory retirement funds should be managed centrally or by private investment agencies.
(i) Many political parties, labour and interest groups have called for the setting up of a central provident fund (CPF) for the main reason that a decentralised privately-run mandatory scheme as proposed in the Consultation Paper offers no
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