CONFIDENTIAL #
9
would be very
difficult
to
justify setting aside funds on
this scale for the benefit of a small section of society.
Also, in practice the reserve fund should never be used and
it is uneconomical to tie up funds unnecessary.
23.
An alternate
proposal to scale down the pension
reserve fund to cover one year's pension expenditure has been
carefully
considered but cannot be supported.
An estimate of
the costs of a one-year roll forward fund is at Annex D.
24.
Besides the disadvantages mentioned in paragraph
22, a one year reserve could be exhausted quickly and may not
effective buffer in lean years. A one year
serve as an
pension reserve
cannot meet deep seated staff concerns about
The staff unions will instead
the security of pensions.
press for a three or five year roll forward fund which we
cannot afford.
ASSESSMENT
25.
Having
considered the financial and political
constraints, it is recommended that none of the pension
safeguard options should be further pursued at present and
the Chinese should be informed.
G.F. 326
CONFIDENTIAL # 3
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