TNAG-2428-FCO40-3530-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 186

B

C

options.1.HMOCS

CONFIDENTIAL

Option B:

HKG/SARG to pay to HMG each year the total sum payable in respect of that year's HMOCS pensions; HMG then to pay individual pensions at a fixed rate as under Options A or B above.

POTENTIAL ANNUAL COST:

Maxima would be as under Options A and B 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. attached graph and table show the effect under several possible scenarios.

The

Option C:

As in Option A, HMG to underwrite pensions at a fixed exchange rate, but assuming that all HMOCS afficers are granted early retirement by HKG (and funded by HKG) on 30 June 1997. The effect would be to reduce the overall contingent liability but to bring it forward to 1997.

POTENTIAL ANNUAL COST:

See Graph C and table

Option D:

HMG to under-write only non-commutable element of pensions, paying supplements in respect of these as under Options A or

B.

POTENTIAL ANNUAL COST:

Would depend on number of officers opting for new or old pensions schemes (ie 25% or 50% commutatable) and on trigger-point chosen as at Options A and B. In the best case the potential cost could be a little more than 50% of potential costs under Options A and B.

CONFIDENTIAL