TNAG-0698-FCO40-848-Policy-and-commitment-on-pensions-for-public-servants-in-Hon-1979 — Page 21

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5 Another practical reason why the civil service scheme in the UK has not been funded is that pension provision grew from small beginnings, when the concept of funding had not been thought of, and that to establish a fund at some stage after the beginning would have required large amounts to be found from revenue. This would certainly apply in Hong Kong now.

6 In the context of Hong Kong, the main advantage of funding would be to make the security of future pensions less dependent on the economy of Hong Kong and on its future existence; however this advantage would be gained only if it is practicable to invest outside Hong Kong. The main disadvantage is the probable large extra amounts to be found from revenue immediately, and for a number of years ahead, to build up the reserves required to provide future pensions of current active staff and pensioners, seeing that no such reserves exist now.

Yours sincerely

Milde

R C GILDER