Mrs Sandra Brown
HM Treasury
CONFIDENTIAL
Reference
From: D S FISH
(Ext 3444)
Date: 23 November 1992
cc Mr J V Kerby
Mr D Rayson, HM Tsy Mr P Ricketts, HKD/FCO
628
HONG KONG HMOCS: EARLY RETIREMENT
1.
You asked for comments on the Hong Kong Government paper which sets out the case for an early retirement arrangement for HMOCS officers.
2. The first point I would make is that if the Governor proceeds with a scheme along the lines proposed, it will be an extremely brave thing to do. We know that there are large numbers of local staff who would like to get out early with the immediate payment of pension and I doubt whether the enhanced career prospects resulting from a 'localisation' measure will do very much soften the protests.
to
3. The paper is right to point out that an Agreement with the HMOCS Association would be impossible without the early retirement facility. There can be little doubt that in the absence of such a facility, we would be in the business of imposing a settlement. It is suggested that the Association might take legal action against "HMG and/or HKG". In practice, I do not see how they would be able to take action against HKG; the commitment that HMOCS should be able to retire early with compensation is entirely a British Government commitment. This was shown to be the case in Brunei, where we insisted on financing an early retirement/compensation package ourselves when the local government refused to do so and we paid the pensions until the normal retirement date. If the Hong Kong Government are not able to proceed in line with this proposal, I believe that it will be HMG who have to defend their position in court.
4. This all points to our being as supportive of the Governor as possible. We should encourage him to proceed along the lines recommended in the paper.
The effect will be to reduce the contingent liability for the sterling safeguard and I would hope that the Treasury could be a little more accommodating about the trigger level as a result.
5. On compensation, we have already proposed a cap of £120,000, thus restricting benefits to levels which reflect the UK salary position. Had we not done so, the cap would probably be doubled I hope therefore that we can reach early agreement on Option C. The Association will still protest about the limit
and
1