CONFIDENTIAL
extra element which kept people in the territory, Mr Rew
was the duty of said the retention of HMOCS members should fall on HKG as
their employer. Mr Rew acknowledged that in 1988 HMG had already gone some way down the road by agreeing to help HKG
thegh
incentive out with the compensation scheme. HMG should now look at what action was needed post and pre-1997.
There
ماس
How a
serve afteite
need to conside's what further action should be taken to retain MMOCS up to 1997 and what addition mensies nought be needed to mctuate tucks to contime to 13. Mr Kerby said that a Compensation/Incentive scheme would be effective but would only work if the pensions of hand one HMOCS were worth something. Mr Rayson said that in this
to SARY respect the Treasury proposal was a good option. Members of HMOCS could take their accrued pension rights from HKG at
any time between now and 1997 and buy a pension from a commercial provider. Pensions would therefore be provided
from a safe source. If HKG was setting aside money for
HMOCS pensions anyway this was certainly a good option. Mr Shipley said that money was not being set aside. Pensions were a yearly liability. In any case, if HKG made this provision for HMOCS members, they would have to do it
for all civil servants. This option was not financially
possible and even if it were, any cashing-in of pensions would be seen by the Chinese as destabilising.
C: DISCUSSION OF PROPOSALS
X
14. Mr Rayson asked Mr Shipley to explain HKG's proposal.
Mr Shipley explained that HMG would take over the payment of
HMOCS pensions from HKG. HKG would then reimburse HMG on a continuing basis in Hong Kong Dollars at an agreed exchange rate. HMG would then guarantee the pensions at a fixed sterling rate. Mr Rayson asked if it was possible for HMG to pay all HMOCS pensions in a single lump payment up front
before 1997, or in instalments over the next seven years.
The Treasury MX-Rayson said that, Although He did not accept in principle
Kayson asked whether, that sterling safeguards should be given, [if HMG were 'to
a safeguard, the provide them would HKG/be prepared to put up the money for
JL6AAK/6
would
CONFIDENTIAL