TNAG-2671-FCO40-3868-Future-of-Hong-Kong-Sino-British-Joint-Liaison-Group-retirem-1993 — Page 7

CONFIDENTIAL

XCC(93)171

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(b)

any compulsory savings scheme would take 30 to 40 years to mature before meaningful benefits could be paid. It means that for at least another 30 years, the problem of making some reasonable financial provision for old age for the bulk of the population would not be resolved. Even after the maturity period, half of the population could still not aspire to a minimum financial cover for old age since they are outside the workforce.

It is also the Administration's assessment that, even if we were to heed the majority call by the Legislative Council to set up a CPF, the Administration would continue to come under high political pressure to move on to the second stage of their agenda i.e. to make provision for a universal old-age pension which is the eventual aim of many political parties, including the United Democrats of Hong Kong (UDHK), Meeting Point, the Hong Kong Democratic Foundation, and the Democratic Alliance for the Betterment of Hong Kong.

A Universal Old Age Pension

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To address the weaknesses of the compulsory savings schemes, many submissions have suggested that Government should introduce a universal pension system for the aged so that all eligible citizens would be entitled to a reasonable amount of regular pension, as a means of providing a reasonable degree of financial security for old age and a gesture of community respect to our senior citizens. They have suggested that recipients should not be subject to means-testing which many old people might regard as humiliating, though some of them see no objection to some form of income declaration.

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Under our present social security system an old age allowance is already payable to senior citizens. Those aged between 65 and 69 may receive $450 a month subject to a simple income declaration. Those aged 70 or above receive $510 on application. Funding of a substantially enhanced level of old age pension could be achieved either by contributions from, for example, employers, employees and Government, or by Government alone from general revenue.