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MDHOAN 4442
scheme to HMOCS officers.
One option which we recognise to be undesirable (and probably unachievable), but on which we undertook to consult you, would be to increase the number of HMOCS officers directed to retire under the Hong Kong Limited Compensation Scheme (LCS). We understand that this scheme and the Special Branch Scheme provide for about 170 officers (presumably not exclusively HMOCS) to be directed to retire. We imagine that both ExCo and LegCo would require full justification for any increase in this number and that you would not want to put this to them unless there was a genuine need for more officers to be covered by this scheme. However, we would be grateful for your advice on whether there might be scope for a small increase (say 10-15).
5. A second possible option to reduce the cost of the scheme would be to include the full factors used in similar schemes in other DTS e.g the Western Pacific, rather than the factors specified in the Hong Kong LCS. The full factors in the LCS are more generous than those for most other traditional schemes (very roughly 15-20% more generous). However, these factors have been calculated taking account of Hong Kong's circumstances and it may be difficult to justify using another scheme as a basis. We and the ODA shall explore this but if this idea leads to a dead end then the only other means of bringing the cost of the scheme down sufficiently to meet the Treasury's likely offer would be to reduce the cap to around 100,000 pounds. We recognise that the Association would object strongly to a cap at this level and we would need to find a suitable historical basis to justify it (the proposed cap of 120,OUU pounds is based on the Kenya cap uprated in line with UK inflation).
STERLING SAFEGUARD
Treasury officials initially suggested that if we could accept their proposed mechanism for the safeguard scheme, they might be prepared to recommend a compromise on the rate at around 20:1. We explained that this would be totally unacceptable and that for the safeguard to be worth anything to HMOCS officers, the rate could be no lower than 16:1. The Treasury did not demure at our assertion that even at 16:1 the safeguard would almost certainly never be required and they seemed to appreciate the presentational advantage of setting the rate at this level. They said they would examine further whether use of their proposed mechanism would enable the rate to be reduced to 16:1 without a significant increase in contingent liability.
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