CONFIDENTIAL
DIFU-EN
(b) most HMOCS officers still come back to the UK to retire. Having some certainty of how much their pension will be worth in sterling is very important to them; and
(c) HMOCS officers expect there to be a sterling safeguard. There has been one in every other territory as it went towards independence. HMG has stated publicly that we accept that the situation in Hong Kong raises comparable issues to those in previous territories.
8.
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We are not clear what you mean by alternative approaches to this ¡issue involving the transfer of assets (and liabilites) to HMG. This is something we can of course discuss when we meet. But you should know that we have carefully explored with the Hong Kong Government the possibility of them making over (a) capitalised sum(s) to HMG which would allow HMG to take over the payment of HMOCS pensions at a fixed sterling rate. There is a range of options available for this from Hong Kong annually making over a sum in HK dollars for the pensions due that year; to Hong Kong making over the full capitalised sum (in HK dollars) for all current and future HMOCS pension liabilities.
9.
The former was proposed by HKG but was rejected by the Treasury, since it would leave us entirely exposed to exchange rate fluctuations. The latter is simply not possible for the Hong Kong Government for the reasons set out in paragraphs 15 to 17 Nigel Cox's letter of 29 August. Hong Kong would find it impossible to do this only for a small group of expatriates; and they are unable to fund such a scheme for all civil servants.
10. We now need to make early progress on these matters. The Governor of Hong Kong is in town this week and has again emphasised the need for an early announcement given the mounting concern among HMOCS cficers at the continuing
delay.
weeks.
I suggest that we aim to meet within the next two
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Yours en R
R A Burns
سمه
COLADZ
CONFIDENTIAL
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