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position. Originally they had hoped that a private sector scheme for Hong Kong civil servants, perhaps with some HKG or even HMG pump-priming, might meet the full HMOCS
obligation. We agreed to explore the feasibility of this, although we expressed some scepticism about the prospects.
The Treasury now seem to recognise that any such scheme
could safeguard only a small part of officers' pension
entitlements. They therefore argue that if HKG launched a
general scheme of this kind it would provide political cover for HKG to transfer to HMG the capitalised value of HMOCS
pensions, so that we could then take over their payment in
sterling.
6.
HKG are indeed exploring what more they can do to
reassure the civil service generally about their future
pensions, but any scheme adopted will be on a modest scale,
eg starting a partial funding of pensions by opening a fund
with the injection of one year's pension liability. HKG cannot provide insurance against the risk of a break in the
link between the Hong Kong and US dollars at its present
level. There is no possibility that any HKG scheme will alter the political impossibility of bringing ExCo, LegCo and the Chinese to accept the transfer from HKG to HMG of up to HK$5 billion for HMOCS pensions. This would be seen as gross discrimination, at the Hong Kong taxpayer's expense, in favour of a group of expatriate officers, although
concerns about 1997 are widespread in the civil service and
beyond it and although for many years HKG has treated local and expatriate officers equally. Peking would seize the
opportunity to drive wedges between London and Hong Kong; it
would anyway be acutely concerned about "asset-stripping" by
the British before the handover to China. To attempt to
override ExCo and LegCo and effect such a transfer would
cause political and constitutional crisis in Hong Kong,
political crisis with Peking and consequently a crisis of
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