NOTE FOR THE FILE
HKA 233/1
FILE
3
(109
HMOCS: TREASURY MEETING ON 6 MARCH
1. The main focus of the meeting was for the Treasury to
discuss with Baring's the hypothecated loan scheme. Two
people from Baring were present, two from the Bank of
England, Mr Fish, myself and about 1800 from the Treasury.
2. Baring's started off by implying that they thought that
this scheme would not/not be a runner. This was on the
basis that we were considering all pension entitlement would be covered (ie not only just the commutable part) and that
it would be open to a large number of individuals having retirement dates spread over a wide period of time
post-1997.
3.
They took a very different view however when it was suggested that the scheme might be limited to the commutable part of the pension only and that it might somehow be targeted to reduce the number of people. In these
circumstances, they thought that institutions might well be
interested in the scheme.
will mea to be
changed
to make мор
Serve: see later inclosure.
16/3
4.
"
They thought that institutions would be prepared to "for
the deduction they would require from a lump sum being available in the year X for up to about 10 years.
ie They
would have a time horizon which would go up to about the year 2002. Thus, people who were retiring up to 2002 could expect institutions to "something approaching a reasonable figure. off the top of their heads, Baring's thought that
the banks would require a rate of 12%. (sorry I can't remember the technical word for it.) This would mean, for
example, somebody taking up this option in 1992 and retiring in the year 2002 would suffer 10-12% reductions from his
eventual lump sum. (ie 100 divided by 1.12. Then that
figure divided by 1.12 etc etc for 10 times.) The rather
measly sum that would result and be in the officers hand in
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