Provident fund call under fire
THE Legislative Council's call for a Central Provident Fund (CPF) is a backward step and not in the best interests of the community, according to the Hongkong General Chamber of Commerce and a leading insurer.
Both issued statements yesterday following the Legislative Council's vote on Wednesday in favour of a CPF after a motion debate lasting almost four hours.
The chamber's chief economist, Mr Ian Perkin, said: ''After years of debate on retirement protection . . . the resurrection of the CPF was a negative development.
''The 38-year-old 'Singapore solution' to retirement funding, which has proved so costly to that community, is no example for a forward-looking Hongkong to follow,'' he said.
''A fully-funded CPF is nothing more than an additional tax on employers and employees dressed up under another name.'' Mr Perkin said the Hongkong Government had rightly resisted calls for such a fund in the past.
''The introduction of a CPF would require government administration on a massive scale and lead to the creation of a huge and costly bureaucracy to manage it.
''The Government would also be faced with the prospect of topping up the CPF if it did not perform to expectations and this would be an additional burden on taxpayers,'' he said.
A vice-president of Manulife Financial Group, Mr Bob Duggins, said: ''A CPF would be a constant political football for politicians both now and in the future - not a comforting thought for people's retirement money.
''People should realise that an attitude of 'let the Government do it' is not in the long-term best interests of the citizens. Socialised programmes tend to have a negative impact on dynamic initiatives.'' Mr Duggins said that that Singapore's CPF had had a poor rate of return on funds.
The Legco debate came at the end of a three-month consultation on the proposed compulsory retirement fund plan.
An amendment moved by the chamber's Legco representative, Mr Jimmy McGregor, calling for a comprehensive social security plan, was defeated.
The administration has proposed compelling all employees under 65 to contribute about five per cent of their salaries to retirement schemes.