CONFIDENTIAL
iii) Payments under Compensation/Incentive Schemes have always been based on advice provided by the Government Actuary's
Department.
The Actuary constructs tables of
compensation factors (multipliers of annual salary) which
relate to the officers' age and length of service. The
factors are based on actuarial assessments of how much
salary and pension the officers concerned are losing,
together with other less tangible aspects, like the availability of suitable alternative employment and loss
of promotion prospects. To arrive at the latest estimate
of costs, the Hong Kong Government have used the
compensation factors set out in the Hong Kong Limited
Compensation Scheme, which has already been promulgated for officers in sensitive posts who will have to retire
before 1997.
iv) To arrive at the maximum costs of the proposed Compensation/Incentive Scheme we have assumed that all
officers in post in 1997 will collect the initial 20% of
their compensation entitlements, and that those who are not scheduled to retire before 2005 will remain in post
to collect the remaining eight annual instalments. Το obtain the "probable" costs we have simply used the Hong Kong Government's broad assumptions about the numbers likely to continue in service beyond 1997. There can be no substantive basis for these assumptions; indeed it is unlikely that the officers themselves will be in any better position to forecast their eventual departure dates, although some have already indicated that they will not work on after 1997 in principle. Annexe C gives a breakdown of the incentive payments over the period 1997 to 2005.
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