RESTRICTED
7 October 1992
HKA 233/1
Mr Woodfield
HM Treasury
Parliament Street
LONDON
W1
Foreign & Commonwealth
Office
London SWIA 2AH
Telephone: 071-
270 2650
Dear New World Beled,
HONG KONG HMOCS: OPTIONS FOR PENSIONS SAFEGUARD
1.
(542
It is helpful
Thank you for your letter of 28 September. to have your early views so that we can clear up quickly exactly what the options paper should cover.
www
2. On the graphs, I agree that it would be useful to have graphs covering options A, B and C for more on option B see below. I should be most grateful if, by copy of this letter, Mr Hughes in GAD could initiate this, together with the cost estimates for HMG to safeguard the non-commutable part of pension only - para 3 of your letter.
Option B
3. Our motive in suggesting that option B should not be explored in any detail in the paper was so as to make it digestible for Ministers. As it is, the number of options and attendant graphs will present a complex enough picture, without including an option (B) which is marginal in its financial impact, and likely to prove politically untenable.
A key
4. I should be grateful if you would reconsider your view that option B should remain in the paper. point in announcing an exchange rate now is to eliminate the uncertainty that HMOCs officers face. If we were to set the exchange rate as at 1 July 1997, no-one would know what this would be. As Mr Cox set out in his letter to you of 11 September, setting the safeguard at (a percentage of) the rate on the day the officer retired is completely arbitrary, would favour those who had already retired -not the group we are primarily interested in- and would not resolve the uncertainty of those who have not yet retired. As the last two weeks have shown, such a system could be highly divisive- and possibly indefensible. Could we really say that it was
opt.saf.ADM
SLM
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