CONFIDENTIAL
"Nil cost" options
4. The options paper lists in Section II two "nil cost" options, ie theoretical possibilities not requiring any
funding by HMG. We can dismiss both of them:
-
we cannot wash our hands of our obligations to HMOCS
officers without jeopardising our ability to administer and
police Hong Kong up to 1997;
-
"capitalisation" of pensions before 1997 is a non-starter.
It would require UK legislation, which would be seen in Hong
Kong and in Westminster as taking money forcibly from an
unwilling Hong Kong. It would for the same reason provoke a
confrontation with China. I see absolutely no attraction in
putting the idea to the Chinese simply to confirm that they would reject it.
Pensions safeguards
5.
In
The options paper provides a list of advantages and
disadvantages in respect of each pension safeguard option.
my view, some of the disadvantages of Options B-E are so
significant as to make these options undesirable. Option B
should be discounted as being too far removed from past
practice and too complicated to administer. Option C, while
providing a similar safeguard mechanism to Option A, would
not give officers the reassurance which they need now. The
uncertainty of potential cost in this option might also be
unattractive to HMG, but this will be more for you to judge.
Option D has the same problem as option C as it would leave officers with no quantifiable guarantee eg if there were to be
a serious fall in the value of the Hong Kong dollar in the
approach to 1997; and there would be endless arguement about
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