TRUE, BUT
LET'S NOT
RUB IT IN
PRIORITY
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. Placing the individual's pension value in private sector hands and on a funded basis would protect against a liability on HMG for default on payment. 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 there should be no argument that these
OF COURSE
liabilities, already exist and would have to be financed by the
2 Hong Kong Government or the SARG in due course as they emerge.
ER THOUGHT WOULD NEED TO BE GIVEN TO There might be some 66ope for discussion about 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.
ASPECTS WOULD These issues will need further detailed discussion.
6.
•
WOULD HELP TO ADDRESS, IF NOT OBVIATE, Arrangements of this kind obviate the need for a sterling
L safeguard and the substantial problems associated with it not
DESCRIBED ABOVE Least in securing Ministerial agreement). The arrangements will need to be worked through carefully with the Hong Kong
BETWEEN OUR RESPECTUÉ EXPERTS Government: but we think that the option described offers sufficient promise for it to be pursued with vigour.
EXPERTS SHOULD MEET AS JOON AS PODDIBLE
We wout d propose that the Hong Kong Government and HMG should work together to see how an acceptable version of this scheme might be developed.
WE SUGGEST
7. GRATIFUL FOR YOUR PRELIMINARY VIEWS ON THE PROPOSAL OUTLINED ABOVE AND FOR AN INDICATION
WOULD
OF WHEN
TO COME TO LONDON FOR TALKS.
IT AMET BE CONVIDIVENT FOR
YOUR EXPERTS
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