Mr Stone,
Kevin Woodfield
is wringt
to me
U
about this.
24/9
GAD
534
Government Actuary's Department
22 Kingsway, London WC2B 6LE
Telephone: 071-242 6828 ext. Fax: 071-831 6653
For Lave
Miss Peri's
File
Mr K Woodfield,
HM Treasury,
Parliament Street,
LONDON,
SW1P 3AG
HKA 233/1
Dear Kevin,
Your reference:
CONFIDENTIAL
Our reference:
8766/6/1, S1851\op2
Date:
23 September 1992
HONG KONG HMOCS OPTIONS
518
Following Nigel Cox's letter of 11 September, have prepared some additional figures and graphs.
As a starting point, I attach Tables A & C from my letter of 9 September, extended to include additional scenarios for the HK$ after 1 July 1997. Table C shows the effect of savings assumed to be recouped by the UKG when the HK$ is more valuable than the trigger level.
The final columns of these tables are the capitalised values at 1 October 1991 of the future streams of payments (not their sum, by the way) shown in the graph labelled Scenario 3. This is the worst case scenario when the HK$ is worthless from 1 July 1997.
The other graphs show the future streams of payments under scenarios 1 & 2, all to the same scale. Scenario 1 assumes an exchange rate of HK$20: £1 from 1 July 1997. Scenario 2 assumes that the HK$ depreciates steadily at 2% pa from HK$13.76: £1 at 1 July 1997.
These figures assume that any sterling safeguard would apply to all service up to retirement. As an additional piece of information, it may useful to note that the figure of £377 millions in Table A would fall to about £335 millions if only those benefits accruing up to 1 July 1997 were safeguarded.
I am copying this to John Morris, Dave Fish, and Don Rayson.
Yours sincerely,
David Hughes
DJ Hughes
1
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