SECRET
012611
MDLOAN 5721
PROVIDES FOR IMMEDIATE PAYMENT OF PENSION TO OFFICERS WHO ARE REQUIRED TO RETIRE FOR LOCALISATION PURPOSES OR BECAUSE IT WOULD BE UNREASONABLE FOR THEM TO CONTINUE IN SERVICE OR TO FACILITATE CONSTITUTIONAL CHANGE ETC: AND TO OFFICERS WHO OPT TO RETIRE AFTER BEING SUPERSEDED FOR PROMOTION. (IN SUCH CASES THE OFFICERS WOULD ALSO BE ELIGIBLE FOR VERY SUBSTANTIAL HKG COMPENSATION PAYMENTS, WHICH MIGHT INCREASE THE DIFFICULTIES IN HONG KONG).
(HKG COULD ALSO ALLOW MORE LOCAL OFFICERS TO RETIRE UNDER (A), (B), OR (D).)
CHINESE REACTIONS
7. AS SEEN FROM HERE, NONE OF THESE APPROACHES NEED BE HIGH-PROFILE (EXCEPT PERHAPS (D) IF FINANCE COMMITTEE HAD TO BE INVOLVED), PROVIDED THAT ONLY LIMITED NUMBERS OF OFFICERS TOOK UP THE RIGHT AND THAT WE COULD AVOID BUNCHING OF THEIR RETIREMENTS. SEEN AGAINST THE OVERALL HONG KONG PENSIONS BILL, THE MARGINAL COST OF EARLY PAYMENT OF HMOCS PENSIONS SHOULD NOT CAUSE STRAIN OR STAND OUT PUBLICLY. THERE SHOULD THEREFORE BE NO CONTROVERSY AND CONSEQUENTLY NO DOUBTS ABOUT THE SARG'S CONTINUING TO PAY THE PENSIONS FROM 1 JULY 1997 IN THE NORMAL
WAY.
8. HOWEVER IF IT LOOKED AS THOUGH LARGE NUMBERS OF HMOCS OFFICERS WOULD DECIDE TO RETIRE BEFORE 1 JULY 1997, WE SHOULD NEED TO TALK TO THE CHINESE AND TRY TO SECURE THEIR ACQUIESCENCE. WE COULD PERHAPS PRESENT THIS NOT ONLY IN THE CONTEXT OF TRADITIONAL HMOCS ARRANGEMENTS BUT ALSO IN THE CONTEXT OF RESPONDING TO PUBLIC PRESSURE IN HONG KONG FOR A FASTER PACE OF LOCALISATION. INDEED THERE MAY BE ADVANTAGE IN
INITIATING DISCUSSION EARLIER WITH THE CHINESE ABOUT THE FUTURE ROLE OF EXPATRIATES GENERALLY IN PUBLIC SERVICE IN HONG KONG.
THIS MIGHT BE DONE AS PART OF A BROADER DISCUSSION OF CIVIL
SERVICE ISSUES BEARING ON THE TRANSITION, INCLUDING SAFEGUARDS FOR (ALL) CIVIL SERVICE PENSIONS (OUR TELNO 737 TO HONG KONG), AND PERHAPS TYING IN TO DISCUSSION OF PRINCIPAL OFFICIALS AND CHIEF EXECUTIVE. A KEY QUESTION WILL BE WHETHER THE CHINESE WOULD THEMSELVES ENVISAGE THE SARG PURSUING A MORE ACTIVE OR
RADICAL LOCALISATION POLICY AFTER 1997 WITH PROVISION OF COMPENSATION (AS UNDER THE PRESENT LIMITED COMPENSATION SCHEME OR ON A LESS GENEROUS BASIS) FOR EXPATRIATE OFFICERS SUPERSEDED OR REQUIRED TO RETIRE BECAUSE OF IT OR BECAUSE OF THE NATIONALITY RESTRICTIONS IN THE JD AND BL.