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THESE COULD BE VERY SUBSTANTIAL AND COULD HAVE REPERCUSSIONS ON PENSIONS AND BENEFITS POLICY GENERALLY. THERE WOULD ALSO BE THE QUESTION OF THE SIGNAL ANY SUCH MOVE WOULD GIVE TO THE MARKETS ABOUT HMG'S CONFIDENCE IN THE FUTURE OF THE HONG KONG ECONOMY. THESE CONCERNS WILL NOT BE EASILY OVERCOME. IT FOLLOWS FROM ALL THIS THAT, IN ADVANCE OF MINISTERIAL CONSIDERATION OF THE STERLING SAFEGUARDS ISSUE, IT WOULD BE WRONG TO MAKE ANY PRESUMPTION ABOUT THE ATTITUDE THAT MINISTERS MIGHT TAKE, EITHER NOW OR IN THE FORESEEABLE FUTURE. YOU SHOULD CERTAINLY NOT
COUNT ON AGREEMENT BEING FORTHCOMING.
4. IN THIS CONTEXT, WE HAVE BEEN CONSIDERING OTHER WAYS OF TACKLING THE PROBLEM. WE HAVE SKETCHED OUT BELOW ONE OPTION WHICH WE THINK COULD HAVE ATTRACTIONS. IT NEEDS A GOOD DEAL OF FURTHER WORK AND REFINEMENT BUT IN OUTLINE IT WOULD INVOLVE INDIVIDUAL HMOCS MEMBERS BEING ABLE TO TAKE THE VALUE OF THEIR ACCRUED PENSION RIGHTS FROM THE HONG KONG GOVERNMENT AT ANY TIME BETWEEN NOW AND 1997. THE TRANSFER VALUE WOULD BE USED TO PURCHASE A DEFERRED ANNUITY OR PERSONAL PENSION FROM A PRIVATE SECTOR PROVIDER. ALTHOUGH IT WOULD PROBABLY BE REASONABLE TO STIPULATE THAT THE TRANSFER VALUES MUST BE USED TO PURCHASE BENEFITS PAYABLE IN RETIREMENT, EACH INDIVIDUAL WOULD BE FREE TO CHOOSE HIS OR HER OWN INSURANCE COMPANY OR OTHER PENSION PROVIDER, BASED IN HONG KONG OR ELSEWHERE, AND WHETHER THE BENEFITS WOULD BE PAID IN HONG KONG DOLLARS, STERLING, OR IN SOME OTHER CURRENCY. THOSE WHO FEAR FUTURE CURRENCY DEVALUATIONS WOULD HAVE THE OPTION CHOOSE TO CONVER THEIR PENSION VALUE TO STERLING OR ANOTHER HARD CURRENCY AT ANY TIME THEY WISHED.
5. WE RECOGNISE THAT FOR THE HONG KONG GOVERNMENT THIS APPROACH ENTAILS BRINGING FORWARD PAYMENTS TO MEET PENSIONS LIABILITIES FOR HMOCS. BUT THESE LIABILITIES OF COURSE ALREADY EXIST AND WOULD HAVE TO BE FINANCED BY THE HONG KONG GOVERNMENT OR THE SARG IN DUE COURSE AS THEY EMERGE. THOUGHT WOULD NEED TO BE GIVEN TO HOW THE AMOUNTS OF THE TRANSFER OF THE LIABILITY PAYMENTS SHOULD BE CALCULATED TO REFLECT THE BRINGING FORWARD OF THE LIABILITY. THERE MIGHT ALSO NEED TO BE A CONTRIBUTION BY HMG TO DISCHARGE OUR OWN EXISTING LIABILITY FOR INDEX LINKING THE HMOCS PENSIONS WHICH THE HONG KONG GOVERNMENT AWARDS. THESE ASPECTS WOULD NEED FURTHER DETAILED DISCUSSION.
ARRANGEMENTS OF THIS KIND SHOULD HELP TO OBVIATE THE NEED FOR A STERLING SAFEGUARD AND THE SUBSTANTIAL PROBLEMS ASSOCIATED
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