TNAG-2422-FCO40-3524-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 178

aefl.cp/84.1'/let2.3.4

HM Treasury

RESTRICTED

Parliament Street London SWIP 3AG Telephone 071-270

ET MON

4719

263

That is what his consultancy

was about

M

Done generally

white

WRON

HK on 6 April

Peter Ricketts Esq

Hong Kong Dept

Foreign & Commonwealth Office

LONDON SW1

Pa

3 April 1992

HKA 233/1

hmm.

614

Recidi

Lear Peter

HONG KONG:

CIVIL SERVICE PENSIONS

Mr Sitene

Mr Cox ol

1 Dft tel

ли

ды

6/iv

22/10 Thank you for copying to me Richard Margolis's final report to the

HKG.

The

I imagine that the HKG finds the report rather disappointing. bulk of it is taken up with exploring an option whose practicability the author doubts. Two possibilities which might be more feasible and which merit more thorough research, are touched on only cursorily at the end of the report.

You will want to consider how and when to comment on the report. We shall be grateful to be consulted. Given the interest on the part of HK civil servants in general in securing improved assurance of pensions benefits beyond 1997, it seems unlikely that the HKG will not wish to pursue the potentially promising avenues which Margolis has signposted. You may wish to encourage them in this direction.

Paragraph 10.1 of the report recommends further detailed investigations by an actuary and by experts from the derivatives and debt markets. What may be needed at the next stage, however, may be somewhat less elaborate investigations. The main priority is for HKG to identify financial institutions which would be prepared to offer reasonable terms on a group basis to HK civil servants. In essence, the Hong Kong Government should be looking for:

either

(a)

or

(b)

now,

the

an institution which is prepared to pay money

in exchange for

"pensions receivables" spread over a 10 year period in the future (or preferably longer);

an institution that is prepared to offer special group terms to individuals in the Hong Kong civil servants who wish to effect an exchange rate hedging mechanism.

The details of either scheme could be worked out at a later date. The important question is whether any institution, in principle, would be willing to undertake to provide such a facility.

Switchboard 071-270 3000

Fax 071-270 5653

Telex 9413704