17 September 1992
Mr David Fish
CONFIDENTIAL
HKA 233/1
NIS
File
(first 4 pages
Foreign & Commonwealth
Office
by pax)
524
London SWIA 2AH
Telephone: 071-
ODA
East Kilbride
Dear Dave,
HMOCS: PRIVATE SECTOR PENSION SAFEGUARDS20
1.
You should have by now received copies of both
521
Mr Wiggham's letter of 4 September to Mr Gray of the Hong Kong bank, and the latters reply of 11 September. I should like your views as to whether you think the two will be sufficient to convince the Treasury that this proposal is no longer worth pursuing.
2.
Mr Wiggham asked for the feasibility of a scheme:
for some 300 senior officers
- covering retirement between now and 2002
- covering only the accrued commuted pension gratuity "5 years before retirement" (?) and costing HK$600- 700 million
2.
placing such money in a sterling fixed deposit.
The scenario set out by Mr Wiggham is on the right lines but does not adequately cover the options which Mr Margolis eventually concluded might run and which we asked HK to run past the Bank- see FCO Telno 1144 attached. These were for institutions with large HK dollar deposits to purchase the receivables at a discounted value or for an exchange rate hedging programme. Mr Wiggham's scenario does not appear to be either.
3.
I am frankly not sure what Mr Gray's reply means and hope that Mr Lane of Economic Advisers may be able to help. Point 1 in Mr Gray's letter appears to suggest that the officer (or HMG) would have to pay out real money up front as a margin. If this interpretation is correct, and point 2 seems to bear it out, it is not clear to me why this should be the only option. What about the discounted cash flow option? Gray's points 3 and 4 are not relevant.
Mr
SLN
CONFIDENTIAL
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