CONFIDENTIAL # 3
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can be supported.
- 7
17.
The
proposal for Government to require that at
least 50% of the assets of private sector occupational
retirement schemes be held in HK dollars would be criticized
'as a form of exchange control and as a crude attempt by
Government to protect civil servants' benefits at the expense
of private sector employees.
18.
Even if the funding problems
the consultant
associated with a
hypothecated pension scheme could be resolved, it would be
difficult to achieve over the years an average rate of return
higher than the cost of borrowing long term money. This led
to propose that Government should provide an
guarantee to cover interest rate risks on
HK dollars) exceeding the yield on investments
An interest rate guarantee would
subsidy of the scheme and cannot be
interest rate
borrowing (in
(in foreign
amount to
supported.
currency).
Government
19.
There
are
also serious doubts about the
receivable purchase scheme.
Ani
practicability of a
illustration given by the consultant shows a shortfall of
$230 million in a ten-year period for a receivable purchase
scheme which would cover 50% of a civil servant's entitlement
to pension
gratuity.
Such a scheme would not be attractive
G.F. 326
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