st.ps/dr/5mp2.2

CONFIDENTIAL

most HK HMOCS will continue to enjoy pension benefits

well in excess of those in the UK;

to the best of our knowledge, in no past case has the salary/pension benefits differential with the UK been as

great as in the case of HK. The Government Actuary's

Department calculates that on average HK HMOCS are

counterparts; we

roughly twice as well off as their UK cannot be expected to ignore this;

in

HK;

| A

along

on the compensation scheme, the Treasury does not accept

that the case of Brunei is a precedent for HMOCS

our reading of the 1960 White Paper is that HK

with Brunei

is indeed excluded from "new

arrangements" which involve HMG in making a contribution

to the indigenous government to the costs; these "new

arrangements" appear to us to include compensation for

loss of career.

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