DESPITE its status as one of the world's leading financial centres, Hongkong lags well behind its counterparts in the West when it comes to pension planning. According to industry experts, only about one third of the territory's working population is covered by pension schemes provided by their employers. Many of Hongkong's small-to medium-sized companies do not bother with any type of pension scheme. It is estimated that there are only 12,000 registered pension schemes together with 20,000 so-called unapproved schemes (in which pension benefits are paid out of a company's current cash flow). This represents less than 10 per cent of all companies doing business in Hongkong. The present situation reflects the Government's laissez faire attitude towards the private sector. Employers are under no obligation to provide such schemes, so it is little wonder that so few have bothered to do so. However, after years of debate, change is finally in the air. Recently, the Legislative Council passed a revised Retirement Bill which requires all unapproved pension schemes to become registered and managed by an independent trustee. In effect, this means that pension liabilities met out of current cash flow will have to be handed over to third-party professional bodies such as fund management houses, banks or insurance companies. While this is a first step towards tackling the pension problem in Hongkong, there is still a long way to go before a general scheme can be implemented that would provide benefits for all employees. Under the new legislation, there is no obligation for companies to set up a pension scheme for their employees. And those companies operating unapproved schemes may simply opt to have them wound up rather than registered. These is also little incentive for companies to set up new schemes, bearing in mind the costs and liabilities involved. ''If they haven't thought about it, they won't do it - the new legislation will not force them,'' said Mr Desmond Chan, assistant director of Jardine Fleming Investment Services. The pension fund industry is hoping that some form of compulsory retirement legislation will come into effect by 1995, although this is still far from certain. If passed, a compulsory retirement scheme would force all private sector employers to provide pensions for their staff. A plan under discussion would require an allocation of 10 per cent of the company's pay roll each month into an independently administered scheme. A portion of this would be borne by the employer while the rest would be made up by the employee, via a deduction from his or her pay packet. According to Mr Chan, companies that already run pension schemes typically contribute five per cent of their monthly pay rolls. This is then made up to 10 per cent by staff contributions. However, the more generous employers can opt to pay the entire amount. There are a variety of pension funds available to companies operating these so-called defined contribution schemes, but most subscribe to pooled funds. As its name suggests, a pooled fund is simply a collection of contributions from various companies managed under one umbrella. The money is then invested in a range of equities, bonds and money-market instruments designed to achieve long-term capital appreciation. After 10 years, employees can redeem their share of contributions in a tax-free lump sum. However, the size of this sum will depend on several variables, including the level of an individual's contributions, how well the fund has been managed, and the timing of the redemption. Because of the exposure to equity markets, the value of a fund can take a sudden nose-dive in the aftermath of a stock market crash. This would clearly affect the proportion of retirement benefit received by an individual.