SECRET
217
1006 TO
MDHOAN 5982
SECRET
FM FCO
TO IMMEDIATE HONG KONG
TELNO 701
OF 221707Z JULY 93
TOP COPY Q DIST?
PERSONAL FOR PS/GH FROM MORRIS, HKD
HMOCS
1.
на
233/1
We have held further meetings with Treasury officials on a quote without compromise unquote basis and the present position is as follows.
COMPENSATION SCHEME
We have recalculated the costs of the Treasury's and our proposed compensation schemes using updated figures of the number of eligible officers provided by Waters, CSB. The Latest estimates are pounds 32 million and pounds 46 million respectively.
3.
We have established that Treasury officials would be prepared to recommend to the Chief Secretary that he agree to a scheme costing pounds 39 million. It would be possible to arrive at a scheme at this price if it included a cap of pounds 120,000 (as previously proposed) and factors approximately 20% lower than the full factors in the Limited Compensation Scheme (LCS). We would need to consider carefully how to present these HMOCS factors (which would be lower than those in the LCS), as full factors in the context of a Hong Kong HMOCS scheme. At present, clearly, they do not have any objective actuarial basis, but we believe we could defend them as being reasonable given that, unlike under the LCS, HMOCS officers can continue to work after 1997 (with the guarantees set out in the Joint Declaration).
4.
Treasury officials said that if we are prepared to agree a scheme costing around pounds 39 million, they would not want to be involved to any degree in the details of the scheme. This might enable us to devise a scheme with some features attractive to the officers concerned, such as payment of compensation in one lump-sum, and making payment on the date of retirement for those who, due to phasing, have to retire before 30 June 1997.
STERLING SAFEGUARD
PAGE 1 SECRET