CONFIDENTIAL
HMOCS members' expectations, it goes some way to meeting the White Paper obligation to provide compensation. The cost of the scheme is difficult to predict. The most likely figure is between £20-30 million, with a maximum of £44 million.
The scheme at Annex B was designed to form part of a package, with a sterling safeguard (see next section).
But
if no such safeguard scheme can be agreed, one option would be to introduce a compensation scheme only. Views differ on the impact this would have. HKG believe that it would buy
some time with HMOCS officers. ODA consider that it would
be seen by them as so inadequate that it would only fuel
pressures for a full safeguard scheme as well. FCO
Diplomatic Wing see a risk of salami tactics by HMOCS
officers first pressure for a traditonal compensation
package then pressure for sterling safeguards.
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Sterling Safeguards
6.
All Civil Servants in Hong Kong are worried about the
possibility of the Hong Kong dollar declining in value:
but HMG's commitment is limited to HMOCS members. The
compensation scheme outlined in Annex B will do nothing to allay these worries. There are essentially six possible ways of addressing this issue:
(a) to introduce traditional arrangements whereby officers
can retire in 1997 with full payment of pension at a
rate safeguarded by HMG;
(b) for HMG to accept a contingent liability that if the
Hong Kong dollar/sterling exchange rate drops below a
certain value say 16 to 1 HMG will make up the
difference;
(c) to persuade the Hong Kong Government to pay to HMG a
capitalised sum representing HMOCS pension entitlements
for service up to a given date, and for HMG then to pay the pensions;
(d) to introduce a scheme whereby HMOCS members (and other
civil servants) can take out a commercial loan against a
NFJABA/3
CONFIDENTIAL