CONFIDENTIAL
(ii) HMG should present a revised compensation proposal on traditional lines. If the Treasury do not agree to Option C, we would need to consider with the Governor.
(iii) The amendments to the SPOS regulations should be implemented we would prefer that they be implemented immediately but implementation as part of a package (including compensation and sterling safeguards) would also be
acceptable. We should not accept any attempt to resile from a SPOS amendment. We cannot object to a review of possible double benefit, but this should not hold up a decision on a sterling safeguard.
4.
If the only sticking point is continued Treasury insistence on pursuing a private sector scheme to safeguard pensions, we could agree to continue exploring this option with Hong Kong Bank for a few more weeks, but on the condition that any private scheme would have to provide a safeguard no less attractive to HMOCS members than the traditional
guarantee we are proposing. This should also not be a recipe for continued Treasury procrastination.
5. The other element which HMOCS officers seek is the right to early retirement with full payment of pension. That is in the Hong Kong Government's gift, not ours. We have just heard from Hong Kong that the Governor is reviewing the possibility of giving HMOCS officers the right to retire in 1997 with pension. He may 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. Government Actuaries Department estimate that the reduction could be in the order
of about 30%.
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CONFIDENTIAL