Pension funds change horses

四月 7, 1995

Three Hong Kong universities are racing to avert a cash crisis involving their multi-billion dollar retirement funds after the government introduced new regulations on pension plans.

The rules have infuriated academics, who stand to lose up to 10 per cent of their pensions.

Last week 500 lecturers at the Hong Kong Polytechnic University jostled the institution's council chairman as he arrived for a management meeting on how to amend its retirement scheme.

Earlier in the week the Chinese University of Hong Kong decided that it would have to sell its prestigious Royal Hong Kong Jockey Club corporate membership and one of its academic buildings, as well as borrow money, to cover an anticipated shortfall of almost HK$500 million (Pounds 41 million).

The third institution to be affected, the University of Hong Kong, will decide what to do later this month. The new rules require that all pension schemes be fully solvent by October when they must be able to pay all staff's entitlements at once.

The existing Polytechnic University scheme is only 90 per cent solvent, while the University of Hong Kong's pension plan is 97.2 per cent solvent.

Last week, Polytechnic University staff protested at the management's proposal to convert their benefits-guaranteed scheme to one which depend on investment fund returns. Staff were unhappy with the university's final decision on the scheme. Retiring employees will receive fewer benefits when they leave but will be reimbursed later, without interest, when surplus funds are available.

Earlier in the week, 78 per cent of Chinese University staff voted to accept amendments to their retirement scheme to make it financially viable. A university spokesman said that the scheme's liabilities had outstripped its assets due to double-digit growth in salaries in recent years and because many staff members were promoted just before they left.

The university has agreed to inject HK$467 million into the new scheme. According to a university source, HK$100 million will come from the sale of the university's Royal Hong Kong Jockey Club corporate membership and by transferring the ownership of its continuing studies building to the fund.

The remaining HK$367 million will come mainly from a bank loan which the university will repay at about $33 million each year over a 20-year period.

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