CONFIDENTIAL
ANNEX
a
Revisions to Compenstion Scheme
The
HMOCS officers have made clear that the proposals
put to them earlier for a limited compensation/incentive
scheme are not an acceptable basis for a settlement.
revised proposals summarised in the Foreign Secretary's
minute of 12 June give all the points needed for
Ministerial decisions on the issue of principle. They
are based on detailed work by FCO and ODA officials. results of computer modelling could be made available to
Treasury officials if required.
The
Impact of early retirement on sterling safeguard
arrangements
K
Any scheme which alters the retirement dates of
HMOCS members could, of course, have an effect on the
sterling safeguard arrangements. But the effect of early
retirement is likely to be to reduce any liability
falling to HMG. The worst case a contingent liability of £19 million per annum in the peak year of 2011 assumes normal retirement ages and no commutation of pension. If officers decide to take early retirement they will need to leave before 1997. They would in all
likelihood need to commute a substantial sum of their
pension in order to start afresh. Their much reduced pension entitlement would present us with lower
liabilities
-
though starting at an earlier date.