NOTE FOR THE FILE
HMOCS: TREASURY MEETING ON 6 MARCH
Pa
HKA 233/1
ß 16/3
1.
The reason for the meeting was for the Treasury to discuss with Baring's the hypothecated loan scheme. Two people from Baring were present, two from the Bank of England, Mr Fish, myself and about 1800 from the Treasury.
2.
Baring's started off by implying that they thought that this scheme would not/not be a runner. This was on the basis that we were considering all pension entitlements would be covered (ie not only just the commutable part) and that it would be open to a large number of individuals having retirement dates spread over a wide period of time post-1997.
3.
They took a very different view, however, when it was suggested that the scheme might be limited to the commutable part of the pension only and that it might somehow be targeted to reduce the number of people. In these circumstances, they thought that institutions might well be interested in the scheme.
4.
They thought that institutions would be prepared to quote for the deduction they would require from a lump sum being available in the year X for up to about 10 years. ie They would have a time horizon which would go up to about the year 2002. Thus, people who were retiring up to 2002 could expect institutions to quote something approaching a reasonable figure. Off the top of their heads, Baring's thought that the banks would require discount rate of 12%. This would mean, for example, somebody taking up this option
YETAEA/1
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