briefly in my letter of 2 April, the latest advice from Peking, UKRep JLG Hong Kong and Hong Kong is that, given the Chinese reaction so far, they did not believe the Chinese would differentiate between the two systems - it would not be a major consideration for them in the totality of the scheme. Inded they might see the accrual approach as giving HMG more of a handle over the officers throughout their career.
5. We too have had in mind the need to avoid creating an incentive to retire early for those otherwise free to stay on. We do not believe that making the payments available as they are earned would in fact lead to any (additional) incentive to retire early. The payments would need to be available immediately when somebody retired, resigned or otherwise left the service of the SAR. The only difference would be that in the first case HMG would hold the money until the person left and in the other the officer himself would have it in his hand. The total amount available would be unchanged.
6.
Accrual would be a major irritant for HMOCS officers and could present us with considerable problems. For example the officers could argue that they were entitled to receive the money and therefore should be free to spend it or invest it as they though fit. There could therefore be argument over whether it was fair and reasonable for HMG simply to put the money aside earning interest (how much interest?). We would also need to consider how to set the money aside - individual accounts? - and also what the tax position would be on any interest earned. All in all, we concluded that the suggestion would cause far more trouble than it is worth.
Briefing the Chinese
7.
The final version of the briefing used with the Chinese was that set out in our telno 18 of 12 March to UKRep JLG
(copy enclosed for ease of reference). We did not need to deploy any defensive lines.
Consultations with HMOCS
8. I also enclose for your records a copy of the final version of the statement, handed over to the Chairman of the Association by Nigel Cox on 7 April. Mr Cartland was grateful for the progress made and content with the proposed timetable for consultations but he reiterated that a key concern for HMOCS members was sterling safeguards. He sought an assurance that this would be resolved before the 30 June deadline. Nigel Cox confined himselt to saying that we were aware of HMOCS officers' concerns; that no decisions had been taken; and that he could give no assurance that any would be by 30 June. There was no substantive discussion of the statement's contents.
REGACR