TNAG-1373-FCO40-1819-Ministerial-visits-from-the-UK-to-Hong-Kong-1985 — Page 88

CONFIDENTIAL

maximum of 25%

25% of his pension.

I t

is proposed that this be

increased to 50% under the revised arrangements. There will

be taxation implications as a result of the increase in the

level of commutation. This is because pensions are taxable

while the I ump sums deriving from the commutation are not.

However, when viewed against the substantial future savings

from the new scheme, the HKG believe the tax loss arising from

the higher rate of commutation can be regarded as insignificant.

4.

The scheme also proposes the introduction of deferred

pension benefits for civil servants who leave the service

after completing 10 ог more years qualifying service.

Pensions will be payable to these civil servants when, but

only when, they reach normal retirement age. (At present, civil servants may retire early on reaching the age of 45 in

certain circumstances, or on reaching the age of 50 on

request, in either case they receive their pension benefits

immediately upon retirement.) On the other hand, civil

servants who resign at

present before the age of 45,

regardless of their length of service, forfeit their pension

benefits. The proposed new arrangements are more in line with

international practice. The provision whereby pensions are

granted at the pleasure of the crown will be deleted from the

pensions legislation.

5.

It is proposed to apply the new scheme to all civil

servants appointed on pensionable terms after the date of its introduction. Existing civil servants will be permitted to

transfer to the new scheme, and to encourage them to do SO

they will be allowed to retain their existing retirement age

of 55.

.

6.

Assuming that all existing civil servants convert to

the n ew scheme, and as suming costs at 1983-84 rates, it is

estimated that, under the new scheme,

liability in 1997 will be about 18 per

the existing

the total pension

cent less than under

arrangements. Some minor modifications to the

proposed

new

scheme

may

be

CONFIDENTIAL

necessary

in the

light

of

ميد المتسقة