TNAG-2425-FCO40-3527-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 64

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(a) The

amounts

involved.

The total

potential

liability

as

at 1 July 1992 for 50% of accrued

pensions of officers

with 10 years or more

service and below 50 years of age by 1.7.97,

that is commutable into lump sums is over HK$20

billion. In order to offer enough officers the

to participate with a worthwhile

chance

proportion

the

of their future lump sum payments,

scheme would need to be able to raise at

least $5 billion as a start, rising to $10

billion over a 5 year period.

(b)

The need to fix interest rates. The object

of the scheme is to secure a portion of the

value of future lump sums against the risk of a

reduction in the value of the Hong Kong

serious

dollar.

It

The period of maximum risk is likely

to be the five years either side of 1997.

will be necessary to raise funds at fixed rates

for up to ten years.

which а serious

Any circumstances in

fall in the value of the Hong

Kong dollar took place would certainly involve

dramatic rise in Hong Kong dollar interest

rates,

· still

assuming that the link rate system were

functioning.

Even if the link rate

system

had given way under the strain, it is