TNAG-0916-FCO40-1127-Policy-on-salaries-and-pensions-for-civil-servants-in-Hong-K-1979 — Page 178

Saving

of

From the Minister for Overseas Development

AKK RECIVIC

AGM-YNO 51

YRC

15 AUG 1979

To Officer Administering the Government of Hong Kong

Date.......... 1.0 AUG 1979.

No. PD 201/77/01

}

Mio Plus/811 Ма

REFERENCE YOUR SAVING No 156 OF 27 JUNE 1979 FREEZING OF PENSIONS

1. Prior to 1972 pension benefits to home civil servants were awarded under the Superannuation Acts, and (with minor exceptions) any established civil servant who left before the retiring age forfeited all his accrued superannuation benefits.

2.

With the introduction of preservation, as described in the first paragraph of your saving, this is no longer the case, and there is no doubt that this change has altered the attitude of civil servants to the question of resignation,

CSD have which is undertaken far more readily now than was previously the case. no data available to quantify this change of attitude but there can be no doubt that the loss or otherwise of superannuation benefits must play a large part in the consideration of persons who are contemplating resignation, particularly if

Another important they have completed a long period of reckonable service. factor which undoubtedly has affected this issue was the concurrent introduction of transfer arrangements which enable any civil servant, regardless of length of service, to transfer his accrued benefits to another scheme, although thic would not appear to be relevant to the situation in Hong Kong.

3. CSD have not received complaints they say, about any adverse effects of preservation of benefits, but that could be due either to lack of alternative opportunities for generalist administrators or because CSD, being more concerned with recruitment and overall numbers, are not told by Departments about problems of staff turnover, loss of experienced officers etc.

4.

The payment of short service benefits does, they say, cause management problems in some sectors of the Civil Service, to judge from management complaint There is a tendency for staff to resign just prior to completing 5 years' reckonable service in order to get their hands on the short service lump sum. Since this payment has to be refunded if a person is re-employed in the Civil Hong Service after an interval not exceeding 6 months, these staff are lost. Kong must meet this too and there is no suggestion that 'freezing' of these benefits is being considered by CSD, or would be effective, as a means of over- coming the problems.

5. There can be no doubt that preservation of benefits on resignation, rather than their forfeiture must lead to an increase in potential pension liability for the future however. A further point to be borne in mind with preservation is that it creates a long-term commitment which builds up. It is possible for a pension to be preserved for 39 years for a new entrant at 16 who leaves at 21 and there will be consequent problems later in storage and retrieval of the information and in tracing the officer.

6. The provision and regulation of occupational pension schemes has become a very live issue in the UK over the past few years, and the PCSPS was, in the mai drafted in anticipation of the changes which were forthcoming in the statutory

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