Н
E
State's minute of 10 November to Mr Portillo; and the
Governor's letter of 13 October to the Secretary of State and
the Secretary of State's reply of 27 October.
2. We have just received advice from Hong Kong that the
Governor is considering granting HMOCS officers the right to retire in 1997 with pension. He will put forward
recommendations on this next week. The Treasury are aware
that this matter is under consideration: they have been
pressing hard for officers to be given this right as it would reduce the contingent liability on an HMG pension safeguard by
about 30%.
3. It is difficult to know how far the Treasury will be prepared to move at this meeting. I suspect that Mr Portillo will:
(i) Concede that HMG should provide a pension safeguard, but at level no higher than that enjoyed by UK civil servants of equivalent rank. This principle underlies Option B (UK comparator); but he is unlikely to press this option as it
would be too difficult to administer. The same principle can be applied to Option A (Fixed Trigger) and would translate
into a safeguard level of 30:1 (based on average salary and pension differentials) or 22:1 (based on average salary differentials). The Treasury's opening position is likely to
be 30.1 to give themselves room to be beaten down to 22:1.
(ii) Argue that HMG need protect only the non-commutable element of the pension if the private sector can offer a
scheme to safeguard the commutable element. The Bank of
England consider that such a scheme should be feasible even if
there is no HMG guarantee against default by the SARG; but
Hong Kong Bank have advised that they could not offer an effective scheme without an acceptable guarantee. The
sub.overs.civils.ADM
JEB