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From..
(72)
CONFIDENTTAL
MEMO
Secretary for the Treasury
To
FIN CR 1/4366/81 (90) Pt. VI
Ref.
.in.
810 2286
Tel. No.
9 January 1992
Date.
Secretary for the Civil Service
(109)
AP 295/5-C (90) IV
Your Ref.
in
19.12.1991
dated
Pension Safeguards
Hypothecated Pension Funds
Please refer to your memo of 19 December 1991 seeking our
comments on the preliminary report prepared by Mr. Margolis entitled "Possible Loan Against Pens in Scheme for Hong Kong
Government Servants".
5
Because the report is preliminary one the extent to which there could be problems has not yet been fully established. For example it is noted that the acquiescence of the Inland Revenue Department will be required for the granting of a lien over future pension receivables. On this, however, the Commissioners views have yet to be sought.
2.
3*
With regard to the suggestion made in paragraph 7.31 that funds could be raised by issuing six month paper on a rolling basis, the proceeds of which would be converted into US dollars. We are particularly concerned with the subsequent suggestion that, in the event of the Hong Kong dollar interest rate on the borrowings exceeding the US dollar yield on the investment, then the Hong Kong Government should guarantee to absorb the excess costs of the borrowings. Clearly we cannot contemplate entering into an open ended commitment where the potential liability is unquantifiable.
Clearly if this means of funding is to be contemplated, Mr. Margolis should contemplate other ways of covering the risks that do not involve the government.
4.
G.F. 73C
(WP4744b)
dor as, wit
as.uil.
(Mr. J.A.S. Wilson)
for Secretary for the Treasury
CONFIDENTIAL # 機密
on the for the the the Mothe
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