YOUR correspondent Mr Tim Moore (South China Morning Post, December 8) asserts that ORSO (Occupational Retirement Scheme Ordinance) will discourage the continuation or establishment of defined benefit schemes.
Our statistics show that, by December 9, 566 defined benefit schemes (covering 285,844 employees) have applied for registration under ORSO, of which 104 are new schemes (that is, schemes established since the commencement of ORSO on December 15, 1993).
In fact, Mr Moore generalises from a particular, that is, from 'our scheme', which is the University of Hong Kong occupational retirement scheme. His remarks are therefore totally without foundation.
Solvency is not simply a 'technical measure based upon a fiction'. It is the bare minimum required to ensure that all benefits can be paid. In practice, a scheme should always maintain an excess over this minimum to ensure that short-term fluctuations in asset values will not harm members' vested interests. A solvency calculation is simply a snapshot of a scheme's assets on a particular day.
A scheme that seeks to remain permanently '90/95 per cent' solvent is, quite simply, insolvent and is heading for disaster.
Mr Moore refers to a proposal for a joint pension scheme for the universities. We have not yet been informed of any such proposal and so cannot comment. However, in principle, there would of course be no objection to such a scheme. I see no reason why the Hong Kong University scheme should be treated any differently from any other scheme registered under ORSO. The problems faced by this scheme in the past have nothing to do with the ORSO requirements.
