SECRET
153753
MDHOAN 1120
ASPECTS OF THE NORMAL ARRANGEMENTS HAVE ALREADY BEEN COVERED BY THE JOINT DECLARATION AND BASIC LAW (IE POINT B) ABOVE. ONE OR TWO ASPECTS ARE NOT CONSIDERED SUITABLE IN THE HONG KONG CONTEXT, EG THAT OFFICERS SERVING ON AFTER CONSTITUTIONAL CHANGE SHOULD CONTINUE TO BE REGARDED BY HMG AS MEMBERS OF HER MAJESTY'S SERVICE: FOR CERTAIN PURPOSES THE BRITISH GOVERNMENT BELIEVE THAT ALL HMOCS OFFICERS SERVING IN HONG KONG SHOULD CEASE TO BE MEMBERS OF HMOCS ON 1 JULY 1997. THE REMAINING ASPECTS HAVE BEEN UNDER DISCUSSION BETWEEN THE UNITED KINGDOM GOVERNMENT AND THE HONG KONG GOVERNMENT FOR SOME TIME. THERE IS NOW INCREASING IMPATIENCE AMONG HMOCS OFFICERS TO KNOW WHAT ARRANGMENTS ARE BEING MADE FOR THEM IN 1997. THERE IS ALSO STRONG PRESSURE IN THE UK FROM MPS AND OTHERS SYMPATHETIC TO HMOCS CONCERNS WORLDWIDE. HOWEVER THE ISSUES ARE COMPLEX AND CONSIDERATION OF THEM IS TAKING TIME. THE UK GOVERNMENT HAVE THEREFORE NOW DECIDED TO ADDRESS THE DIFFERENT ELEMENTS SEPARATELY, BEGINNING WITH THE QUESTION OF SEVERANCE PAYMENTS. CONSULTATIONS WITH HMOCS OFFICERS ON THIS SUBJECT WILL BEGIN IN HONG KONG SHORTLY.
7. IN HONG KONG'S CIRCUMSTANCES, FOR A NUMBER OF REASONS INCLUDING THE RELATIVELY HIGH SALARIES OF HONG KONG CIVIL SERVANTS, THE UK GOVERNMENT DO NOT BELIEVE THAT THESE SEVERANCE PAYMENTS SHOULD BE AS LARGE AS IN PREVIOUS DEPENDENT TERRITORIES. THEY BELIEVE THAT THEY SHOULD BE CALCULATED IN ACCORDANCE WITH THE TRADITIONAL ACTUARIAL FACTORS, IE REFLECTING OFFICERS' AGE AND SENIORITY AT TIME OF THE CHANGE OF
ADMINISTRATION, BUT THEN SHOULD BE REDUCED AT A PROPORTION TO BE DECIDED IN THE LIGHT OF THE FORTHCOMING CONSULTATIONS WITH HMOCS OFFICERS. IN PRACTICAL TERMS THIS MIGHT AMOUNT TO A MAXIMUM COMPENSATION ENTITLEMENT OF APPROXIMATELY ONE AND A HALF TIMES ANNUAL SALARY FOR A TYPICAL OFFICER IN 1997.
8.
ALTHOUGH THE PAYMENTS WOULD BE LOWER THAN IN PREVIOUS CASES, THE BRITISH SIDE SEE A POSSIBILITY THAT, IF THEY ARE MADE IN A LUMP SUM AT THE TIME OF A CHANGE OF ADMINISTRATION, THEY MAY ENCOURAGE MANY OFFICERS TO RETIRE EARLY AND TO MOVE INTO THE PRIVATE SECTOR OR TO LEAVE HONG KONG ALTOGETHER. THE BRITISH SIDE ARE CONCERNED THAT THIS COULD HAVE A DAMAGING EFFECT ON PUBLIC SERVICE CONTINUITY, ON THE MORALE OF SOME LOCAL OFFICERS AND ON INVESTOR CONFIDENCE. THEY THEREFORE CONSIDER IT RIGHT TO FRAME THE SCHEME IN A WAY WHICH PROVIDES NO INDUCEMENT TO RETIRE EARLY (SIMILAR PROVISIONS HAVE BEEN A FEATURE OF OTHER SCHEMES IN OTHER DEPENDENT TERRITORIES). TO THIS END THE UK GOVERNMENT