CONFIDENTIAL
In
NOTE: In all the above options, 2011 is shown as the year in which pensions are due to reach a peak before declining. that year the value of pensions is estimated at HK $ 250 m. Thus, under Option A, if the Hong Kong dollar fell to HK$20 : £1, HMG would have to pay out £ (250/13.76) (250/20) m £18.17
£ 5.67 m. In 1998 the value of pensions
£12.50 m
<d
is estimated at HK $ 167 m. (Both estimates are maxima: actual figures are likely to be considerably lower.)
The figures are given in 1992 Hong Kong prices (salary levels), and at the maximum point of the grade the officer is currently in plus 15% to take account of future promotions. The real cost in UK terms will increase if Hong Kong salaries and pensions increase more rapidly than the UK RPI (see Option A*-F* below).
Options A*, B*, C*, D*, E* and F*:
As options A - F above, but with HMG safeguarding only a notional pension, corresponding to the pension payable in 1992 for the retirement rank, converted into sterling at the average 1991 exchange-rate (HK$13.76 £1) and upgraded in line with the UK RPI.
POTENTIAL ANNUAL COST:
As Options A to F above, except that the sums would be in 1992 UK prices rather than in 1992 Hong Kong prices.
Option G:
HKG/SARG to pay annual HMOCS pensions bill to HMG, which would pay individual pensions at a fixed rate as under Options A to F (or A* to F*) above.
POTENTIAL ANNUAL COST:
Maxima would be as under Options A - F or A* -F* above depending on the exchange-rate chosen, plus some extra administration costs; but these could be offset by savings in years when the Hong Kong dollar market value is higher than the safeguard rate.
Option H:
HMG to subsidise a private-sector scheme, providing an exchange-rate hedging mechanism for the full pension.
POTENTIAL ANNUAL COST:
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