CONFIDENTIAL
scheme are that only people retiring between now and 1997
would feel reassured and the additional cash flow up to 1997
would amount to about HK $4 billion.
(d) A Provident Fund Scheme
This could involve the establishment of a Contributory
Provident Fund Scheme with the Government paying in a
percentage of salary (say 5%, 10% or 15% increasing with
length of service) and civil servants likewise (5% in other
Hong Kong schemes). Singapore, for example, runs a highly successful scheme. The main disadvantages of such a
scheme would be that (a) it would take considerable time to
set up and therefore its benefit would be limited because of
the nearness to 1997 and (b) it could result in considerable
cash flow implications for HKG (about HK £6 billion in the first 6 years).
HKG have therefore concluded that nothing further can be
done to reassure existing civil servants about their pensions.
HMG'S INTEREST AND PROPOSAL
HMG has several reasons to be interest in this issue:
(a) HMOCS.
The Treasury feel that Hong Kong have plenty of money and
should be paying for any HMOCS sterling guarantees. An
effort by HKG to do something for all civil servants would
help with the Treasury. We are also concious that if HMG introduces a sterling safeguard for HMOCS officers, this may
cause some divisiveness with the local officers. If HKG
were to do something for them, the divisiveness would be
reduced.
JUDADG/3
CONFIDENTIAL