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MDHIA 1508
THE FUTURE FLOW OF LUMP SUM PAYMENTS, IS FOR THE PRESENT A NON- RUNNER. HIS PROPOSED 'RECEIVABLES' AND 'EXCHANGE RATE HEDGING' SCHEMES ARE VERY MUCH SECOND STRING IDEAS ONLY. THEY COULD NOT BE CONSTRUED AS A PENSION SAFEGUARD FOR THE CIVIL SERVICE AS A WHOLE, EVEN IF FINANCIAL INSTITUTIONS WERE INTERESTED, WHICH THEY ARE NOT. FOR GOVERNMENT TO PAY MONEY NOW TO EFFECT A HEDGING ARRANGEMENT WOULD BE SEEN AS A LACK OF CONFIDENCE IN THE FUTURE OF THE CURRENCY. SIMILARLY ON 'PENSION RECEIVABLES' IT WOULD INDICATE A LACK OF CONFIDENCE IN THE JOINT DECLARATION AND THE
FUTURE SARG.
5. WE HAVE THEREFORE LOOKED AGAIN AT THE OTHER PENSION
SAFEGUARD OPTIONS. WE HAVE CONCLUDED THAT A PROVIDENT FUND SCHEME IS OUT OF THE QUESTION BECAUSE OF THE MASSIVE UPOFRONT EXPENDITURE REQUIRED TO ESTABLISH THE FUND. PERMITTING OFFICERS TO COMMUTE A LARGER AMOUNT OF THEIR PENSION INTO A LUMP SUM HAS SIGNIFICANT FUNDING IMPLICATIONS AND WOULD ONLY BE SEEN AS A PENSION SAFEGUARD BY OFFICERS WHO ARE ABLE TO RETIRE AND GET THE COMMUTED PAYMENT BEFORE 1997. IN ADDITION THIS OPTION COULD BE SEEN AS AN INVITATION TO LEAVE AS EARLY AS POSSIBLE.
6.
THE ONLY OTHER PENSION SAFEGUARD OPTION WE HAVE CONSIDERED
IS A PARTIAL FUNDING PROPOSAL FOR A ONE YEAR ROLL FORWARD PENSION RESERVE FUND AT AN ESTIMATED COST OF ABOUT DOLLARS 7 BILLION BETWEEN NOW AND 1997. IT HAS VERY SIGNIFICANT DRAWBACKS WHICH WILL NEED CAREFUL EVALUATION. IT WOULD BE DIFFICULT TO JUSTIFY USE OF THE RESERVES IN THIS WAY WHILE OFFERING LITTLE PROTECTION IN PRACTICE IT WOULD APPEAR AS A TACIT ADMISSION THAT CONCERN ON
THE ISSUE WAS JUSTIFIED.
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ONCE WE HAVE FINALISED OUR POSITION ON GENERAL PENSION SAFEGUARDS IT WILL BE NECESSARY TO REVERT TO THE CHINESE (PARA 7 OF TUR) I HOPE THAT IN THE MEANTIME WE CAN TAKE THE STERLING SAFEGUARDS AND THE SPOS ISSUE FORWARD AS QUICKLY AS POSSIBLE IN ORDER TO ENCOURAGE A CONSTRUCTIVE ATTITUDE FROM THE HMOCS ASSOCIATION OVER CONSULTATION ON THE COMPENSATION SCHEME.
WILSON
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