CODE 18-77
CC MS MARDSEN
MR STONE
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Reference..
Рас
FROM: D S FISH
HB 4316
(GTN 7 7243 3444)
RECE
DATE: 28 June 1990
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co Mr Kerby (o/r)
Mr Paul
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HONG KONG COMPENSATION/INCENTIVE SCHEME
As requested we have been working on costings for the various scenarios outlined in the draft annex to the compensation/incentive submission.
Mr Stone's draft suggested a range of starting positions: the best case being all existing and contingent HMOCS_remaining until normal-retirement; the more likely (probable") case being based on Hong Kong's best guess; and a pessimistic ("worst") case where only a handful of HMOCS officers remain. The figures we have used are-detailed in Annex A and produce HMOCS in post of:
Maximum
Probable
Worst
1997
- 750
540
170
98
717
378
120
99
691
336
80
2000
665
294
40
01
632
252
02
594
210
03
560
168
04
513
126
05
475
84
06
433
42
The "maximum" is derived from Hong Kong's April estimate. It differs from your figures mainly because it takes account of 80 officers retiring under the special scheme (about which we spoke briefly) and 45 under the limited scheme. Otherwise it follows your pattern of retirements. The "worst" case is fairly arbitrary. We have therefore assumed for costing purposes, that the residue would hang around long enough to collect the incentive payments at the beginning of year 4.
2. Annex B shows the costs of a conventional compensation scheme under each of these possibilities. However such schemes are so attractive that it is unrealistic to believe that, with such a promise, the maximum number of officers would not remain until 1997 to receive their lump sum, gratuity and early pension. The figures therefore assume this, but otherwise conform to the pattern described by Mr Stone. It should be noted that the phased lump sum is payable in full, regardless of whether
an officer remains in service. The "early" payment of gratuity assumes that the scheme is limited to 25% commutation. The pension and gratuity are based on an average 20 years service, 1/50th of salary each year, and an average gratuity multiplier of 16. This gives costs of:
1.
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