TNAG-2426-FCO40-3528-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 74

HONG KONG: HM OVERSEAS CIVIL SERVICE:

OPTIONS FOR HMG-FUNDED ARRANGEMENTS

STERLING SAFEGUARDS FOR PENSIONS

Option A:

HMG to under-write pensions at 1991 average exchange-rate

(HK $13.76: £1 ), ie HMG would pay supplements if the Hong Kong dollar fell below this level.

ANNUAL COST:

If HK dollar at or above this rate: Nil

If HK dollar fell to HK $20 : £1 :

in 1998: £ 3.8 m

in 2011: £ 6.4 m

If HK dollar fell to HK $24 : £1 :

in 1998: £ 5.2 m

in 2011: £ 8.7 m

If HK dollar became worthless (or if SARG defaulted):

in 1998: £ 12.1 m

in 2011: £ 20.4 m

Option B:

HMG to under-write pensions at "historic" rate of HK $16 : £1% (50%. over 20-year average)

ANNUAL COST:

If HK dollar at or above this rate: Nil

If HK dollar fell to HK $20 : £1 :

in 1998: £ 2.1 m

in 2011: £ 3.5 m

If HK dollar fell to HK $24 : £1 :

in 1998: £ 3.5 m

in 2011: £ 5.8 m

If HK dollar became worthless (or if SARG defaulted):

in 1998: £ 10.4 m

in 2011: £ 17.5 m