FCR(98-99)42

For discussion
on 13 November 1998

ITEM FOR FINANCE COMMITTEE


HEAD 46 - GENERAL EXPENSES OF THE CIVIL SERVICE
New Recurrent Account Subhead "Rent Allowance Scheme"


    Members are invited -

  1. to approve the creation of a new Recurrent Account Subhead "Rent Allowance Scheme" under Head 46 General Expenses of the Civil Service to be controlled by the Director of Accounting Services with supplementary provision of $400,000 in 1998-99; and

  2. to note the financial implications of the new Rent Allowance Scheme.

PROBLEM

We need to introduce a new time-limited rent allowance for all new recruits appointed on agreement terms under the Common Terms to remove the existing variations in housing benefits between local and overseas conditions of service.

PROPOSAL

2. The Secretary for the Civil Service proposes the creation of a new Recurrent Account Subhead "Rent Allowance Scheme" (RAS) under Head 46 General Expenses of the Civil Service to be controlled by the Director of Accounting Services for payment of rent allowance to eligible agreement officers appointed under the Common Terms.

JUSTIFICATION

3. At present, officers on or above Master Pay Scale (MPS) 34 on local or overseas agreement terms are provided with different housing benefits. Overseas agreement officers are entitled to the Accommodation Allowance for renting accommodation throughout their employment in the civil service, whereas local agreement officers are provided with the home financing allowance under the Home Financing Scheme (HFS) for a maximum of 120 months to purchase property. Members approved, vide FCR(90-91)62, the creation of new Recurrent Account Subheads "Home Financing Scheme" and "Accommodation Allowance Scheme" respectively under Head 46 General Expenses of the Civil Service for the purpose.

4. On 29 September 1998, the Executive Council approved a proposal to implement a common set of terms of appointment and conditions of service (Common Terms) for all future appointments to the civil service. The proposed Common Terms introduce a unified set of terms and conditions for all new recruits to the civil service. In particular, all agreement officers on or above MPS 34 appointed on Common Terms will be provided with the same housing benefits : either they may apply for a fully accountable rent allowance under the RAS to lease accommodation or, if they wish to purchase their own property, they may opt irreversibly to join the HFS instead of the RAS. The maximum period of entitlement to housing benefits, i.e. either RAS or HFS or both, will be 120 months. The Accommodation Allowance Scheme (AAS) will cease to be offered under the Common Terms. The scale of rate of RAS to be granted will be pegged to the prevailing Home Financing Allowance and will be fixed for individual officers throughout their agreement period. In line with the usual practice, we propose the creation of a specific Recurrent Account subhead for accounting for expenditure on the RAS.

FINANCIAL IMPLICATIONS

5. The proposal will not incur any net additional expenditure as the RAS rates are pegged to HFS rates which are currently lower than the AAS rates. Assuming that all the nine officers on or above MPS 34 expected to be appointed on agreement terms under the Common Terms in January to March 1999 will take up RAS, the estimated expenditure in 1998-99 under the new subhead for the RAS is $400,000. This will be more than offset by reduced expenditure under HFS and AAS which the agreement officers would otherwise be entitled to receive.

6. In the long run, we expect some savings to accrue from implementation of the new scheme as unlike the existing AAS which provides the benefit to overseas officers during their entire tenure with the Government, the rent allowance under the RAS will be limited to 120 months. The quantum of savings will depend on a number of variables and is going to be insignificant because of the small number of non-local appointments now.

BACKGROUND INFORMATION

7. At present, new recruits on local permanent and pensionable (P&P) terms or local agreement terms on or above MPS 34 are entitled to the HFS while those below MPS 34 may apply for the discretionary Home Purchase Scheme (HPS). New recruits on overseas agreement terms are entitled to the AAS irrespective of their salary point. Overseas P&P terms have ceased to be offered to new recruits since 1985.

8. Under the HFS, officers are granted a monthly allowance for a maximum of 120 months to enable them to acquire their own home. In addition, P&P officers may also apply for a downpayment loan secured on their pension gratuity. HPS is similar to HFS but is quota-limited to 1 800 places per year and is allocated according to the applicants' priority. Under the AAS, officers are provided with a monthly allowance to rent accommodation. The AAS is non time-limited. The current rates of allowance for HFS and AAS are at the Enclosure.

9. The proposed Common Terms introduce a unified set of conditions of service for all new recruits. Under the Common Terms, new recruits on P&P terms on or above MPS 34 will, as a condition of service, be entitled to receive the HFS while those below MPS 34 may apply for the HPS. New recruits on agreement terms on or above MPS 34 will be entitled to the RAS or the HFS as an option while those below MPS 34 may apply for the HPS.

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Civil Service Bureau
November 1998



Enclosure to FCR(98-99)42



Rates of Allowance
Civil Service Housing Benefits


Salary Points
DPS/MPS or
equivalent
HFS
$
(1 April 1998)
AAS
$
(1 April 1998)
D6 - D10
$162,650 - $216,650
56,310 69,180
D2 - D5
$116,650 - $154,150
42,230 51,890
MPS 45 - D1
$76,485 - $104,250
37,530 46,130
MPS 41 - 44
$65,490 - $73,815
26,580 37,460
MPS 38 - 40
$57,525 - $62,780
23,470 37,460
MPS 34 - 37
$47,970 - $55,000
20,340 37,460
MPS 30 - 33
$40,500 - $46,485
- 22,680
MPS 25 - 29
$32,190 - $38,695
- 22,680
MPS 22 - 24
$28,075 - $30,785
- 22,680
MPS 17 - 21
$22,075 - $26,805
- 22,680
MPS 1 - 16
$8,625 - $21,010
- 22,680

Legend : DPS = Directorate Pay Scale
MPS = Master Pay Scale
HFS = Home Financing Scheme
AAS = Accommodation Allowance Scheme