CODE 18-77
Carlde hai
Kefernce
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devious. I said that a halfway house would be hard to defend: we now needed to propose something to which we could stick. Mr Waters suggested that we might invite the Government Actuary's Department to have another look at the full factors. One point was that in other DTS overseas education allowance had been paid for two years after compensation was paid, but the Hong Kong full factors included an element for this. (Action: perhaps Mr Fish could find time to have a word with Mr Ballantyne about this?)
6.
Early retirement. Civil Service Branch continue to believe that this will remain a strong HMOCS demand. The Chief Secretary's oral advice to Mr Goodlad (that they would come off this if the compensation and sterling safeguards package was satisfactory) reflected the Governor's views. The CS had since signed off a telegram saying that the question was an open one (not CSB's view). We talked inconclusively about how we might tell the HMOCS Association that we aimed to discuss this question with the Chinese in the context of a wider discussion of civil service issues, eg whether we could go slightly further in private with Mr Cartland than in writing to the Association Committee. Mr Waters was inclined to think that we should set a time-table, eg say that we aimed to open discussions with the Chinese about this within one year. He also said that the total number of officers who might by 1997 have been granted early retirement with immediate pension could be some 2000, 90% of whom would be local. (800 Special Branch, plus 80 spouses, 100 under the Limited Compensation Scheme, 50 other spouses, and perhaps 800 members of the group complaining that HKG had not regarded them as in the vulnerable category eligible for compensation ie certain SB officers and certain Immigration Officers, to whom HKG might have to concede early retirement though it would not concede compensation.) Adding 400 HMOCS officers to this would not be a problem of numbers; the difficulty was that HMOCS would be treated as a generic group. Mr Waters added that the Chinese must be aware of what was being done for the SB etc. (Comment. I fear we may have trouble with the Chinese about these and must think of them as the vanguard of HMG's potential contingent liability for local civil service pensions: all the more reason to push partial funding.)
7.
Sterling safeguards. Mr Waters said that the HMOCS Association firmly believed that the rate for a safeguard should be fixed at the same current rate as for compensation. Previous practice was of course to fix a current exchange rate. I said this was quite unrealistic: it would mean that HMG would have to intervene even in case of the sort of modest fall in the value of the dollar against sterling we had seen over the past year. Mr Waters said thatwe might get away with HK $ 16: £ 1, which had been the fixed rate until 1972 and was mentioned in 1948 pensions legislation as the rate at which pensioners were entitled to take their pensions in sterling. But any other rate would be arbitrary and unjustifiable. (Comment. I think 16:1 is fair, but we should start thinking
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Confidential