PENSION PROTECTION FOR HONG KONG HMOCS
Scenario (a)
PI in UK < PI in HK
but exactly offset by weaker HK$
SPOS costs for current pensioners unchanged
SPOS costs for new pensioners
Costs of safeguarding
BP + PI
Trigger Actual
HK$
HK$
26
28
22
28
16
20
Capitalised Present
Values in £ million
43
say 0
net of SPOS
14
0
51
8
65
22
Scenario
(b)
Note: 1. Costs depend on difference between trigger and actual HK$
2. Assuming that current SPOS can be used to offset safeguard supplement because trigger level weaker than exchange rate at retirement.
PI in UK = PI in HK
but HK$ becomes worthless (or nearly so) SPOS costs for current pensioners
SPOS costs for new pensioners
Costs of safeguarding
80
??
3388
net of
SPOS
200
120} +
236
156} -
324
244}
BP + PI
Trigger
HK$
26
22
16
Scenario (c)
PI in UK > PI in HK
and HK$ strengthens
SPOS costs for current pensioners
Say 48
SPOS costs for new pensioners
??
Nil costs of sterling safeguard