Your ref: PD 512/80/03
Our ref:
5964/1
CONFIDENTIAL
GOVERNMENT ACTUARY'S DEPARTMENT
22 KINGSWAY LONDON WC2B 6LE
01-242 6828 Ext 215
TELEPHONE
7 September 1982
5
JD Hawkes Esq.
Pensions Department
Overseas Development Administration
Abercrombie House
Eaglesham Road
East Kilbride
GLASGOW G75 8EA
Dear Mr. Haw
Haykes,
HX
10.7
Hong Kong's future pension liability
Thank you for your letter dated 30 August 1982.
2. On the basis of the estimate of total personal emoluments of HK$6,653.65 million in 1982-83, the capital value at 1 October 1982 of the liabilities falling on the government in respect of those who are civil servants at that date, net of the income from the civil servants' contributions for widows' benefits, is approximately HK$65,000 million of which approximately HK$29,000 million is for past service benefits. In addition, on the basis of the estimated expenditure on pensions of HK$516.74 million net of the expendi- ture on gratuities for officers on contract, the capital value at 1 October 1982 of the liabilities falling on the government in respect of former civil who are in receipt of pensions at that date is approximately HK$6,000 million. Thus the total liability at the present time is of the order of HK$71,000 million of which about HK$35,000 million relates to benefits in respect of past service.
3. As a measure of the size of fund required, in addition to members' future contributions, to meet the pensions of existing staff and pensioners the above estimates are very crude. They are an up-date of the figures provided in 1976 allowing, as best we can, for the increase in the proportion of civil servants in pensionable jobs, for more cautious assumptions about the extent to which the investment return on the fund would exceed the rate at which the general level of salaries are increased and the rate at which pensions are increased
respectively and for the improvement in the factors for commuting one-quarter of the pension from 12 to 14.
4. To obtain a more accurate estimate, it would be necessary to collect data. However I am not so sure that an estimate of the liabilities assuming that current civil servants carry on in their jobs is all that relevant when considering what would happen if the colony of Hong Kong were taken over by the Chinese. Presumably, the civil servants would hope to receive benefits based on their service up to the date of takeover and their salary at the time, either commencing immediately or deferred to age 55, with the right to receive pension increases.