28-07-1993 14:48
FROM
GAD PENSIONS DIRECTORATE
TO
2703387
P.04
COSTS OF
STERLING
SAFEGUARD
Tagge level
Cross
Treasury popmal
Dedust
(Ermelhos)
FCO proposal
Net
excluding
Add
Goss
cost
SPOS
cost
wr Deases
SPOS
cost
HK$
Payment
Estacast of FCO, proposal (3)-(2) o (5) (4)
(1)
(2)
(3)
(4)
{s)
(6)
(=)
(8)
26
200
94
106
150
94
244
44
22
236
94
142
177
94
271
35
16
324
94
230
244
96
338
14
13.76
377
94
283
283
94
377
Notes:
i:
ii.
SPOS costs for existing pensioners if HK$ worthless are now assessed as £94m (not £80m).
The average SPOS protection for existing pensioners is broadly equivalent to a trigger level of HK$13.76.
iii: SPOS costs for active employees are difficult to isolate
from other costs, without developing a stochastic model for future changes in HK & UK inflation and exchange rates.
iv:
V:
As an example of fiii), if the HK$ becomes worthless in 1997, the basic pension entitlement of active employees retiring after 1997 is worthless, and SPOS is nil! Incorporating SPOS for actives would increase the extra costs of the FCO proposal shown in column (8).
TOTAL
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