CODE 18-77
Reference.
629
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1. Mike Waters called this morning to tell me the following:
(a) A paper was considered yesterday by ExCo on local pension safeguards. The Governor and ExCo were sympathetic to civil servants' concerns. Although the FS argued strongly against a pension reserve fund, the conclusion was that HKG should agree to some form of partial funding, but the extent of this should be decided in 1994 in the light of the financial situation at that time. The Chinese would be told of this decision at the next JLG. I suggested it might be better if an announcement could be made before the JLG otherwise it would appear that the Chinese had forced us to concede. Waters said they were still considering the tactics.
(b) ExCo has decided to extend by three years the option deadline for the new pension scheme. This is likely to be announced at the same time as the decision on a local pension safeguard.
(c) HKG is genuinely very worried about Cartland's re-election chances. If HKG cannot get anything useful from us before the end of this week (the deadline is due to Cartland having to circulate a position paper by the end of the month) they will try to get the Governor to attend a cocktail party with 50 senior members of HMOCS so that he can tell them informally his decision on early retirement.
2.
The Governor believes the Treasury have conceded the principle of a sterling safeguard: this combined with right to retire would in Waters' view secure Cartland's re-election. I said that if the Treasury want to be difficult they can argue that they cannot agree the principle of a safeguard until agreement is reached on all the components of the package. I added that we had mitter to the I.
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the line proposed by the.
whdy.
N C G Whitney
Hong Kong Department
WH 304 270 2651
25 November 1992
cc: Mr Morris
HKA 233/1
Treasury ading tem
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