TNAG-2671-FCO40-3868-Future-of-Hong-Kong-Sino-British-Joint-Liaison-Group-retirem-1993 — Page 9

CONFIDENTIAL

(b)

(c)

(d)

(e)

contributors under existing voluntary schemes would not be allowed to opt out of an old age pension. They would regard this as an additional burden and might choose under certain circumstances to liquidate their existing schemes;

the rate of contribution will have to go up in time as the proportion of the working population to the elderly declines;

it would incur administrative costs for setting up and operating the system, although these would be less than the likely costs of running a CPF or a RPS; and

enforcement of contributions could be problematic, given that the eventual benefit is not related to the level of contribution.

25

(a)

(b)

(c)

(d)

But there are clear advantages

it covers the entire population (although this may be redundant for those who can care for themselves);

it provides immediate benefits to the aged as soon as it is implemented;

it guarantees a minimum amount of provision which might be pegged to inflation or wages; and

the rates of contribution for employers and employees are likely to be lower, compared to a RPS or a CPF, at least in the initial years.