17 July 1992
Mrs S D Brown HM Treasury
Dear Sandra.
CONFIDENTIAL
HKA 233/1
Fate
Foreign & Commonwealth
Office
London SWIA 2AH
470
HMOCS PENSIONS
(468
1. Thank you for your letter of 15 July and its enclosures (we had not previously seen your record of the meeting on 28 February but, as you say, Michael Stone attended
it and did a file note).
2.
We had assumed from what the Chief Secretary said to the Foreign Secretary on 3 July that you had since received some more encouraging and detailed written advice from Barings than Mr Norris offered on 28 February. He then seemed clear that the best the private sector could offer would be loans against the commutable element of pensions falling due between 1997 and 2002 for about 300 officers. (Even then it was not clear whether he considered that the Government would have to bear any exchange-risk.) We understand that the Hong Kong Government's financial advisers were similarly discouraging. Such a scheme would in no way meet HMOCS officers' reasonable expectation of a lifetime sterling safeguard of pensions, as provided in the 42 other Dependent Territories etc affected by constitutional change since 1954. Indeed, unless institutions were willing to make loans against receivables due up to 25 years in the future, it would not even cover the commutable element of HMOCS pensions. I am not surprised therefore that the Hong Kong Government decided not to embark on further discussions with the institutions listed in Mr Norris's letter of 13 April (no doubt if they had done so, there would have been leaks, fuelling a damaging public controversy).
3.
For future reference, Hong Kong Department is in the main FCO building (my room number is WH307): correspondence sent to 3 Central Buildings takes some time to reach us.
Ya
ever,
PF Ricketts
Hong Kong Department.
Peter Releetl
CONFIDENTIAL