$379m was not factored into the costs of voluntary scheme The Audit Commission criticised the Hong Kong government for not counting $379 million in pension payments as part of the costs of a civil service voluntary retirement scheme, when the legislature was asked to approve the funding in 2000. In the commission's latest value-for-money investigation report published yesterday, officials were also accused of failing to effectively manage the retirement scheme, in which a large proportion of the savings made were retained by various departments instead of being returned to the Treasury. Cutting costs in the public sector is a key component of the government's strategy in tackling the budget deficit. Since the $2.8 billion voluntary retirement scheme was launched in December 2000, more than 9,422 civil servants have left the service. The government is working on another round of voluntary retirements, in which it hopes 7,000 officers will take part, to fulfil Chief Executive Tung Chee-hwa's wish to reduce the civil service establishment to 160,000 by 2006-07. But the commission found that when applying for funding from the Legislative Council for the first round of the scheme in 2000, the annual cost was 'understated' by a total of $379 million. The sum involved was pensions of civil servants who took part in the scheme, but who were paid before they reached retirement age. Although the government said the money was due to the staff when they retired, the commission said it should have been considered 'extra costs' and the legislature should have been informed. The commission also criticised the government for being ineffective when implementing the scheme. A monthly $81 million in salaries could have been saved if staff approved for voluntary retirement had been released from their jobs earlier. The commission found 30 per cent of participants were only released from their work 12 months after the date of approval. The commission also said the government could have saved $61 million had it not used a double commutation rate to calculate voluntary retirement payments for staff who were employed under the old pension scheme. The report also questioned the utility of the scheme as a total of $1 billion, amounting to up to 71 per cent of the total money saved by the scheme, was retained by various departments and was not returned to the Treasury. Meanwhile, the commission said the government should step up monitoring of sick leave to prevent abuse. The average sick leave per officer had jumped by 20 per cent from four days in 1999 to 4.8 days in 2001. In 2001, a total of 82,000 civil servants took sick leave costing $718 million. The commission found that between October 2000 and June 2002, a total of 919 staff had taken sick leave for more than 91 consecutive days. A spokeswoman for the Civil Service Bureau said the reason for not including pension costs in the 2000 scheme was because the total sum was offset by savings in wage increments and accumulated benefits. She also said the average sick leave rate was low compared to Britain and the US.