CONFIDENTIAL
CONFIDENTIAL
FM FCO
TO IMMEDIATE HONG KONG
TELNO 1144
OF 241425Z JUL 92
INFO ROUTINE PEKING, UKREP JLG HONG KONG
052677
MDHOAN 8062
1
YOUR TELNO 1935: HMOCS: PRIVATE SECTOR PENSION OPTIONS
1. MANY THANKS FOR THIS FURTHER ADVICE.
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2. IT HAS NOW EMERGED THAT BARINGS HAVE NEVER PROVIDED HM 10.4 TREASURY WITH WRITTEN ADVICE. THE TREASURY HAVE INSTEAD SENT US A COPY OF A RECORD OF A MEETING WITH BARINGS ON 28 FEBRUARY (COPY BY FAX TO PS/GH), AT WHICH BARINGS TOOK A GENERALLY CAUTIOUS LINE ON THE POSSIBILITIES (SHARING MUCH OF YOUR OWN ADVISERS' SCEPTICISM ABOUT MARGOLIS'S IDEAS). HOWEVER THEY DID CONSIDERA. THAT THE PRIVATE SECTOR MIGHT BE WILLING TO PROVIDE A MORE MODEST FACILITY, PROVIDING LOANS NOW AGAINST THE COMMUTABLE ELEMENT OF PENSION (OR ADVANCING A DISCOUNTED PART OF THE SUM ULTIMATELY 99 PAYABLE) FOR SAY UP TO 300 OFFICERS RETIRING BETWEEN NOW AND 403 2002. THEY GUESSED THAT THE RISK PREMIUM, PERHAPS INCLUDING A- LIFE INSURANCE ELEMENT, MIGHT BE 5. PER CENT PER ANNUM ON TOP-OF$ PREVAILING HONG KONG INTEREST RATES. THEY SUGGESTED THAT YOU±‡Ã ̈ MIGHT WISH TO DISCUSS THIS WITH LOCAL BANKS AND/OR INSURANCE?TÂR COMPANIES.
CKE CHIGA.
3. OUR VIEW HAS ALWAYS BEEN THAT ANY SUCH SCHEME WOULD BE WHOLEY INADEQUATE TO MEET OUR HMOCS OBLIGATIONS AND OBJECTIVES. IT WOULD BE ONLY A SHORT-TERM EXPEDIENT AND A FINANCIALLY UNATTRACTIVE ONE (IF THE LOAN INTEREST-RATE (OR DISCOUNT RATE) WERE FIXED .AT 12 PER CENT AND..THE AVERAGE RETURN ON THE INVESTMENT WERE 8 PER CENT, THE "OFFICER WOULD LOSE A SUBSTANT PROPORTION OF HIS ENTITLEMENT OVER TEN YEARS UNLESS THERE TO BE SOME GOVERNMENT SUBSIDY).
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4. HOWEVER, IN THE PRESENT FINANCIAL/POLITICAL CLIMATE HER WILL BE NECESSARY FOR US TO INCLUDE SOME SUCH OPTION IN THE OF COSTED: OPTIONS MINISTERS HAVE CHARGED US TO PREPARE DUR 1078). (REHEARSING THE POLITICAE UNACCEPTABILITY OF THE OF
EYES EVENS SUCHEM METERS
IT WOULD PURENU
CONTINGENT
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