CONFIDENTIAL
106203
19
MDLOAN
WOULD BE NECESSARY. WE RECALL THAT YOU TOLD THE CHINESE SIDE OF THE JLG ON 10 JANUARY 1991 THAT YOU FORECAST TOTAL PENSIONS EXPENDITURE IN 2004/05 OF ABOUT HKD 18.7 BILLION IN MONEY-OF-THE-DAY PRICES:
IF DEFLATED AT 9 PERCENT PER ANNUM THIS
IS UNDER HKD 5 BILLION IN 1992 PRICES. IF IT WERE REASONABLE TO GUESS THAT LUMP SUMS WOULD AMOUNT TO A MAXIMUM OF 50 PERCENT OF THE ANNUAL OUTGOINGS, THEN THE FUND WOULD NEED TO BE ABLE TO GENERATE ONLY HKD 2.5 BILLION (1992 PRICES) IN THAT YEAR IN ORDER TO COVER THE COMMUTABLE ELEMENT: AS SEEN FROM HERE THAT LOOKS MANAGEABLE. (WE APPRECIATE THAT THE PROFILE OF THE CIVIL SERVICE MEANS THAT THE PENSIONS LIABILITY WILL RISE FURTHER AFTER 2004/05, SO IT WOULD PROBABLY BE NECESSARY TO KEEP TOPPING UP THE FUND FOR SOME TIME.)
5. ON FURTHER REFLECTION WE WONDER WHETHER IT MIGHT BE BETTER FOR CONFIDENCE IF ANY SUCH TRUST FUND WERE BUILT UP WITH THE AIM (INITIALLY AT LEAST) OF COVERING THE NON-COMMUTABLE ELEMENT OF
PENSIONS.
CHALKER
YYYY
MAIN
39
DISTRIBUTION
39
.HER MAJESTY'S OVERSEAS
.CIVIL SERVICE RESTRICTED
HKD
LEGAL ADVISERS//MISS BROOKS
FED
NEWS D
RAD//MR WYE
OVERSEA PENSIONS/ODA//MR FISH
PS
PS/MR GOODLAD
PS/PUS
SIR J COLES
MR HUM
MR KERBY
RMD
NNNN
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CONFIDENTIAL