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4. On sterling safeguards there is not much point in looking further at the details of our proposal (a trigger level for HMG intervention of HK $16 £1) until Treasury Ministers or Cabinet endorse the principle. Nor will the
Treasury let us make progress on SPOS adjustment until this
is settled.
5. On compensation we have been looking at ways of
re-casting our benefits proposal in order to make it more acceptable to HMOCS officers and to provide a stronger inducement for them to stay at least until 1997, some
options are listed on the attachment: none would involve a
significant increase on the maximum possible total of £38 million to £41 million which we previously gave the
Treasury.
6. On early retirement, Hong Kong have confirmed that it
would not require new legislation or a high-profile ExCo
endorsement of our scheme to allow HMOCS officers to retire
up to 30 June 1997 with immediate payment of pension. However the Governor is opposed to this on Hong Kong grounds. It would not be possible to keep secret a commitment to allow such early retirement. Proceeding
unilaterally could be damaging. The Governor, Mr Galsworthy
and Sir R McLaren have all cautioned that the Chinese
reaction could be very negative. Mr Galsworthy thinks that
the Chinese might even renege on their Joint Declaration
commitment and refuse to pay pensions for officers who
retired before the normal retirement age. If we were to
discuss the proposal with the Chinese in the next few months
the prospects of their agreeing it are remote. We are
inclined to think, however, that with some creative thinking
there may be a way around the mine-fields which have been
identified. Subject to the Minister's views we should like
to try on Peking and UKREP JLG the possibility of blurring
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