aefl.mr/sr/9.20.7
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at the financial consequences: we don't know how many eligible officers there will be in 1997 or what their salary levels will be. We certainly cannot be expected to sign a blank cheque at this stage. I think that this points to the need to consider either putting off the announcement of any scheme until much nearer 1997 or placing a ceiling on the total size of the scheme. This would of course mean that there would need to be a review of any scheme announced now before it come into force. Incidentally it seems to me that the relatively high salaries enjoyed by HMOCS in Hong Kong would mean that most of them stay on for as long as possible and that the effect of any compensation/incentive scheme on retention 1997 would be quite limited. Moreover, there must be a question in the case of relatively at least some junior officers whether inducements to stay on are justified.
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5. Returning to your projection of potential costs, I am afraid that we need to see a lot more detail of the underlying assumptions both on retention rates and salary levels/actuarially determined lump sums. You indicated, in your letter to me 4 June that the annex would indicate the "detailed assumptions" underlying each scenario.
In this connection, I would still welcome a reconciliation between the figures for the numbers of staff you are now using and those quoted by the then Foreign Secretary
in his minute to the then Chancellor of 24 November 1988. On the scenarios themselves, I suggested we needed to see the best likely and worst likely cases. I am not sure if you really believe the best and worst scenarios set out in your annex to be likely.
6. I would reiterate our view that a meeting is necessary to discuss these issues: as you will see from the above we continue to have a number of major reservations about the details and timing of the compensation/incentive scheme as proposed by you.
7.
I would also note that I have addressed in this letter what we see as the major issues. There may well be other detailed points we will wish to raise on any amended scheme.
8.
I look forward the proposed meeting on this.
9.
I am copying this to Dave Fish and John Kerby at ODA.
Yous R.
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S REW