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extra element which kept people in the territory. Mr Rew
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 out with the compensation scheme. HMG should now look at what action was needed post and pre-1997.
13. Mr Kerby said that a Compensation/Incentive scheme would be effective but would only work if the pensions of HMOCS were worth something. Mr Rayson said that in this 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
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 installments over the next seven years. Mr Rayson said that, although he did not accept in principle that sterling safeguards should be given, if HMG were to provide them would HKG be prepared to put up the money for
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