with an incentive to stay on. This could, for example, be achieved by providing for ten annual payments of a certain percentage of the individual officer's annual salary, starting in 1997. The advantage of this approach is that it would not depend on the principle of making payments on the basis of an actuarially assessed sum, nor on
the principle of compensation for loss of the Secretary of State's
protection. It would thus dissociate the Hong Kong scheme for a "traditional" scheme, thereby (the ODA believe) reducing the risk of subsequent pressure from the relevant staff associations for a full traditional scheme to be introduced. (It seems to me however
equally possible that the opposite would be the case.) Moreover, a major drawback would be that younger HMOCS members (ie those who will be in the age range 35-45 by 1997 and who would arguably have
the most to contribute to the SAR Government) would lose out under
this Option, whereas officers close to retirement in or shortly
after 1997 would do very well.
16. We have also considered whether, following the events of last
June in Peking, it would be necessary to improve the terms of any modified Scheme, in order to give HMOCS members the incentive to
stay on until 1997 (if the terms of the Scheme are not generous enough, some HMOCS members may conclude that it would not be worth remaining until 1997, and would elect to go while they still had the
chance to embark on a second career. We have concluded that it is impossible to assess whether, and if so to what exent, the "Tiananmen factor" should be taken into account; and have therefore
assumed that Ministers would not wish to enter into a commitment
that was potentially more generous than the arrangements agreed by
their predecessors in 1988.
Cost of the Scheme
17.
It is extremely difficult to estimate the likely cost to HMG of a Scheme. This depends not only on the generosity of the terms we offer; but also (crucially) on the number of HMOCS members in service in 1997; and on how long they remain in service after 1997.
WEDABH/6
CONFIDENTIAL