aef1.1g/kw/2.2.3
Mrs Brown
HMT
Mr Rayson
CONFIDENTIAL
Mr Brancen
Mr Woodfield
Mr Stone
FCO
Mr Fish
ODA
Mr Raikes
Bank of England
Mr Dobney
Mr Norris
Barings
Mr Best
Carbon.
MEETING WITH BARINGS ON HONG KONG HMOCS
PENSIONS SAFEGUARD ON 28 FEBRUARY 1992
Mrs Brown invited Mr Norris to comment on the possibilities for a
private sector solution to a sterling safeguard for the value of HK HMOCS pensions. Mrs Norris said that a private sector scheme
could only involve a relatively small group, such as HMOCS;
including Hong Kong nationals would put the scale of monies involved beyond the private sector. Secondly, someone would need to take a view of the exchange rate risk following the handover to
China. If the government were to do SO by discounting an
actuarially assessed capital sum now and putting it across the exchanges, it would be relatively simple to purchase an insurance plan or pension. If the government were not prepared to do this, it would be difficult to see what combination of private sector
parties would assume the risks involved. He outlined the risks
as:
actuarial; which could be increased or reduced;
default risk: the post 1997 certainty of pension plans;
assumptions used in the
discount rate to reflect
inferred earnings rates in the HK economy post 1997.
Someone with a presence in HK would be best placed to appraise the
Even so, it was not clear whether there would be
sufficient interest in HK to price such risks.
risks.
CONFIDENTIAL
Page 45Page 46