7.
8.
9.
(b)
(c)
Assumptions
GAD would decide on suitable assumptions about the economic and demographic factors which influence the future payments of scheme benefits. The starting point would be similar assumptions to those adopted for previous reviews by GAD, but modified to reflect any changes appropriate since 1984. Unless specifically requested to do so, GAD would not undertake a detailed analysis of the demographic experience of Hong Kong civil servants in recent years.
Calculations GAD would then undertake the calculations to project the annual expenditure on members' pensions, retirement allowances, and widows' and children's pensions from 1997/98 onwards. If it would be helpful, the projections can be summarised for different groups of staff (eg local staff, overseas staff, pensioners). The results would also be shown separately for existing employees, and for an assumed pattern of future recruits.
If it would be helpful, an indication can be given of the sensitivity of the projections to different assumptions, or to any major changes which might be anticipated around 1997.
In addition to the basic projections outlined above, it would be helpful to calculate a capitalised value for all pension liabilities in respect of commitments already entered into. This calculation will be carried out on the same basis as used for the projections, so that consistent results will be obtained.
It is difficult to give a precise estimate of the fees involved, without knowing more about the scope of the review envisaged by Hong Kong, and having confirmation of the form in which the data will be provided. However, on the basis of previous work for Hong Kong and other recent similar investigations by GAD, we would anticipate that the cost for this exercise would likely be in region of £8,000.
Actuarial Investigation
If it is envisaged that a full actuarial investigation should be carried out, then additional work would be involved. For example, an analysis of the demographic experience of Hong Kong civil servants over recent years could be undertaken. The actuarial calculations might include an assessment of contribution rates required to purchase future benefits, and consideration of steps required to alter the financing mechanism from the current pay-as-you-go basis. Furthermore, all these calculations could be done separately for the widows' and children's pension scheme and for the main pension scheme.
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