CONFIDENTIAL
FM FCO
TO IMMEDIATE BTC HONG KONG
TELNO 65
OF 30130OZ MARCH 92
CONFIDENTIAL
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037402
MDHOAN 2178
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INFO IMMEDIATE UKREP JLG HONG KONG, HONG KONG, PEKING
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YOUR TELNO 99: HMOCS
1.
THIS ISSUE IS A SENSITIVE ONE IN LONDON AS WELL AS IN HONG KONG. IT IS ALSO VERY COMPLEX. YOU SHOULD AVOID GETTING TO DRAWN IN TO ANY DETAILED DISCUSSIONS AND IF NECESSARY REFER REQUESTS FOR DETAILED INFORMATION BACK TO LONDON. GENERAL BACKGROUND AS FOLLOWS.
2.
TRADITIONALLY, IN TERRITORIES PROCEEDING TOWARDS INDEPENDENCE, HMOCS OFFICERS RECEIVED A PACKAGE CONSISTING OF THREE ELEMENTS: COMPENSATION FOR LOSS OF CAREER AND LOSS OF THE SECRETARY OF STATE'S PROTECTION: THE RIGHT TO RETIRE AT OR AROUND INDEPENDENCE WITH EARLY PAYMENT OF PENSION: AND STERLING SAFEGUARDS FOR THEIR PENSION. IN THE CIRCUMSTANCES OF HONG KONG,
IT IS NOT APPROPRIATE OR DESIRABLE THAT WE SHOULD ENCOURAGE EARLY RETIREMENT. OUR PACKAGE WILL THEREFORE NOT MAKE ANY PROVISION FOR EARLY PAYMENT OF PENSION. WE HAVE WHITEHALL AGREEMENT FOR A COMPENSATION SCHEME - CONSIDERABLY REDUCED FROM COMPENSATION SCHEMES IN OTHER TERRITORIES - FUNDED BY HMG. BUT WE HAVE NO AGREEMENT ON STERLING SAFEGUARDS AND THE CURRENT POSITION IS THAT THE TREASURY ARE ARGUING STRONGLY THAT THESE SHOULD BE MET BY HKG. YOU SHOULD KNOW, THAT IN PREVIOUS TERRITORIES MOVING TO INDEPENDENCE, IT WAS THE SUCCESSOR GOVERNMENT WHICH TOOK ON THE OBLIGATION TO MEET THE COMPENSATION, TO PAY FOR THE PENSIONS, AND TO GUARANTEE THE PENSIONS AT A STERLING RATE. IN MOST BUT NOT ALL CASES HMG HAS OVER THE YEARS TAKEN OVER SOME OR ALL OF THESE COSTS USUALLY IN THE FORM OF AID. BUT FOR BERMUDA, THE BAHAMAS AND BRUNEI ALL RICH TERRITORIES AND THUS IN TREASURY EYES IN THE SAME POSITION AS HONG KONG THE TERRITORIES CONCERNED AGREED TO FUND THE STERLING SAFEGUARD AND ARE STILL PAYING PENSIONS. (IN FACT THE CURRENCIES OF THESE COUNTRIES HAVE APPRECIATED AND THEREFORE THE STERLING SAFEGUARD HAS NOT HAD TO BE BROUGHT INTO PLAY.)
3.
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YOU
IT IS THEREFORE NOT ACCURATE TO IMPLY THAT ALL/ALL ARRANGEMENTS FOR HMOCS WILL NECESSARILY BE FUNDED BY HMG. MAY MAKE IT CLEAR THAT THE SCHEME CURRENTLY UNDER DISCUSSION, INVOLVING ELEMENTS OF COMPENSATION AND INCENTIVE, WILL BE FUNDED
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