TREASURY AEF DIV
MEH1327
CONFIDENTIAL
INTERNATIONAL DIVISIONS
Telephone:
071-601 4265
Facsimile: 071-601 5561
Kevin Woodfield Esq
HM Treasury
Treasury Chambers Parliament Street London SW1P 3AG
Dear Kevin,
HONG KONG HMOCS: PRIVATE SECTOR OPTIONS
P.27
BANK OF ENGLAND Threadneedle Street
London EC2R 8AH
4 November 1992
Thank you for your letter of 20 October and its attachments. sorry it has taken a little time to respond.
I am
I assume that I am being asked for views only on the (fairly limited) proposal designed to afford retiring HMOCS officers a degree of exchange rate protection for the commutable portion of their HK$-denominated pensions against a fall in the value of the HK$ against sterling. What we are not looking at here is protection against default in the payment of pensions by HKG or
HKSARG.
The proposal is aimed at covering those officers retiring between, in effect, now and 2002. I presume that the year 2002 applies because after that date there are no more HMOCS officers left to retire (or is it determined by the likely 5-year maximum life of the proposed arrangement?). What happens to the sterling value of the HK$ pensions of existing pensioners is also left to one side here. All this rests on the general assumption, which I trust is correct, that the pension liability rests with HKG and subsequently with HKSARG and that any commutable portion (and indeed any
additional subsequent payment flows
here) is payable in HK$.
though they are not covered