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CONFIDENTIAL
HKA 233/1
File nate Noted. Achen taken
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Mr. Stone
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Mr Patten.
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From: N J Cox
Hong Kong Dept
Date: 22 June 1992
Cc:
HONG KONG PUBLIC SERVICE PENSIONS FUNDING
1.
Mr Hum
Mr Broadbent
Mr Ricketts
Mr Fifoot
Mr Fish, ODA
395
When I was in Hong Kong on 19/20 June I discussed this subject, on which the most recent telegrams are FCO telno 957 and Hong Kong telno 1647.
405
2.
The Governor said that Civil Service Branch had given him a paper on this subject, but he would prefer to leave me to discuss it with the experts. His impression was that none of the safeguard proposals (for public service pensions generally, ie not our HMOCS proposals) was feasible: a roll-over fund would seem to recognise that there was a problem without doing anything serious to address it. I agreed that as seen from London too, without the benefit of expert advice, the roll-over idea seemed to have this disadvantage: that was why we had proposed a long-term partial funding option. The Governor affected uncertainty about what this option would entail, so I summarised it again. Mr Hoare said that we had so much án our plates with the Chinese already that he wondered whether it was right to go to them with this. I said that we should not assume that the Chinese had come off their idea of a HK $15 bn set-aside fund; they would no doubt dust off this bid on the reserves when they saw fit; we would do better to come up with a constructive counter-proposal. The Governor indicated agreement that we would have further problems with the Chinese on this (and on the Exchange Fund) but showed no enthusiasm for our idea: however he said that I should talk about it with the experts (a move forward from when Mr Fish and I saw him five weeks ago).
3. Accordingly on 20 June I called on Mr John Wilson in Finance Branch. He had not seen the telegrams in which we had sketched out our idea but said that the position of the Financial Secretary and Secretary of the Treasury was that they did not wish to make any further inroads on the fiscal reserves. I said
CONFIDENTIAL
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