CONFIDENTIAL
Option C:
HMG to under-write pensions at a discounted rate, eg HK $25 :
£1.
ANNUAL COST:
If HK dollar at or above this rate: Nil
If HK dollar became worthless (or if SARG defaulted):
in 1998: £
in 2010: £
(peak year)
Option D
HKG/SARG to pay annual HMOCS pensions bill to HMG, which would pay individual pensions at a fixed rate as under Options A, B or C.
ANNUAL COST:
Maxima would be as under Options A, B and C, depending on the exchange-rate chosen, plus some extra administration costs; but these could be offset by savings in years when the Hong Kong dollar market value is higher than the safeguard rate.
Option E:
HMG to subsidise a private-sector scheme, providing an exchange-rate hedging mechanism over 10 years.
ANNUAL COST:
In 1993/94:
In 1996/97:
In 2004/05:
In 2010/11:
CONFIDENTIAL
し
Treasy to calculate this option]