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CONFIDENTIAL
HONG KONG: HM OVERSEAS CIVIL SERVICE:
OPTIONS FOR HMG-FUNDED ARRANGEMENTS
STERLING SAFEGUARDS FOR PENSIONS
Option A:
HMG to under-write pensions at 1991 average exchange-rate (HK $13.76 : £1 )
£1), ie HMG would pay supplements if the Hong Kong dollar fell below this level.
ANNUAL COST:
If HK dollar at or above this rate: Nil
If HK dollar fell to HK $20 : £1 :
in 1998: £ 3.79 m
in 2011: £ 6.01 m
If HK dollar fell to HK $24 : £1 :
in 1998: £ 5.18 m
in 2011: £ 8.22 m
If HK dollar became worthless (or if SARG defaulted):
in 1998: £ 12.14 m
in 2011: £ 19.26 m
Option B:
HMG to under-write pensions at "historic" rate of HK $16:
£1.
ANNUAL COST:
If HK dollar at or above this rate: Nil
If HK dollar fell to HK $20 : £1 :
in 1998: £ 2.09 m
in 2011: £ 3.31 m
If HK dollar fell to HK $24 : £1 :
in 1998: £ 3.48 m
in 2011: £ 5.51 m
If HK dollar became worthless (or if SARG defaulted):
in 1998: £ 10.44 m
in 2011: £ 16.56 m
CONFIDENTIAL