CONFIDENTIAL
ANNEX B
COMPENSATION ARRANGEMENTS: HISTORICAL BACKGROUND AND
PROPOSALS
INTRODUCTION
1.
The historical background and HMG statements are set out
in Annex A. Compensation schemes were normally introduced in two stages: a limited scheme, to cover compulsory retirement to facilitate the localisation of posts before independence; and a general scheme, offering HMOCS officials
the option to retire at independence, or later, with immediate payment of pensions. Compensation for loss of
career and other factors was given on an actuarial basis.
The compensation was available to all HMOCS officers
irrespective of whether they stayed on or not. It normally
contained an inducement to stay on: those officers who did
so were paid more compensation.
MINISTERIAL CONSIDERATION
2.
OD (K) agreed in 1985 that we should aim for arrangements
whereby HMOCS officers in Hong Kong would be eligible for
compensation from local revenue. In 1988, however, the then
Foreign Secretary, Sir Geoffrey Howe, concluded that it
would not be feasible to ask the Hong Kong Government to
bear the costs because a locally financed scheme for these
expatriates would be highly divisive within the Hong Kong
civil service and politically untenable. The Hong Kong
Government was in any case already making a substantial contribution to the total cost of compensation arising from the change of sovereignty by funding a limited compensation
scheme (to facilitate localisation of senior civil service
posts before 1997) and a special scheme for Special Branch
officers at a combined cost of some £40 million.
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CONFIDENTIAL