3.
3.1
3.2
CONFIDENTIAL
The Feasibility Study
The study broke down into the following principal sub headings:
(a) The Actuarial aspects, i.e. the work involved in calculating prudent borrowing amounts, based on an actuarial assessment of likely rates of promotion, of inflation, length of service and so on.
(b) The Investment aspects, most notably the likely level of fees for managing the investment funds, and the probable rate of growth of such investments.
(c) The Legal aspects, i.e. the potential problem created by the Inland Revenue's regulations prohibiting the use of future pension entitlements to obtain disguised benefits.
(d) The Borrowing aspects, including:-
The practicability of borrowing substantial amounts of Hong Kong dollars at fixed rates for long maturities.
The likely appetite for Hong Kong dollar fixed rate instruments.
The pricing of China sovereign risk.
(e) The Monetary aspects, notably the effects on Hong Kong dollar exchange and interest rates of moving substantial sums into foreign currencies, together with the possible effects on the money supply and inflation of the raising of substantial amounts of Hong Kong dollar debt for this purpose.
Interviews were conducted with a series of individuals who could be expected to contribute expert opinions and advice to determining the feasibility of the proposals. They were selected primarily for their expertise in one of the above five sub-headings; however, many of those interviewed contributed views on more than one subject. Those consulted were:-
Actuarial
Monetary
Stuart Leckie Managing Director, The Joseph Yam Deputy Secretary for
Wyatt Company (Hong
Kong)
Monetary Affairs
Chris Pavlou Head of Treasury,
Hongkong and Shanghai Bank
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