AN old-age pension scheme for Hong Kong could cost taxpayers about $13 billion in the first year of operation, according to government calculations. The figures assume the plan is introduced in 1994 and allows for everyone over 65 to receive $2,000 a month. The amount would inflate in subsequent years. About $3 billion is now spent each year on old age allowances and public assistance offered to the elderly, according to a government source. However, it is understood the Government does not see old age pensions as the answer for retirement protection. Legislative Councillor Jimmy McGregor, who had intended to move a motion in the council calling for the introduction of an old age pension, dropped his plan only a day before the motion was to be debated at today's Legco sitting. At present, the Government, with the help of a consultant, is studying various options for retirement protection, including a provident fund and a compulsory retirem ent scheme. The source said the Government would not depart from its long standing belief that public funds should be used to help the needy. Based on conservative estimates, officials have calculated that under a compulsory system with a contribution of 10 per cent of the employee's salary by employers alone or together with the employee would create $25 billion in assets in the first year. The amount would rocket to more than $2,000 billion in less than 20 years' time. The source also maintained that a compulsory system could solve all problems and added that other corresponding improvements to services for the elderly would also be needed. The central provident fund issue was expected to dominate the debate on Mr McGregor's motion as liberal party legislator Henry Tang Ying-yen originally intended to amend the motion to demand the Government introduce a central provident fund instead. Mr McGregor decided yesterday not to go ahead with the motion which asked for universal old age pension for people reaching 65 because he did not want it to be defeated. Nor did he want the focus of the debate to change. Both the 13 United Democrat and the 15 Liberal Party legislators have said they would not support the idea of an old age pension. Mr McGregor accused Mr Tang of being politically oriented in his support for a central provident fund. The Legco representative of the Hong Kong General Chamber of Commerce said he did not think it was good for Hong Kong to have a central provident fund and it was a view shared by the business community as well. Mr Tang denied that his amendment was to politicise the issue. He explained his move was to avoid giving the Government an idea that the council was split on whether to have a central provident fund or old age pension.