TNAG-1668-FCO40-2317-Future-of-Hong-Kong-continuity-of-administration-civil-serv-1987 — Page 121

2 March 1987

Gued

Titus PA 233/2 PA233/2

крив

GOVERNMENT ACTUARY'S DEPARTMENT

22 KINGSWAY LONDON WC2B 6LE

TELEPHONE 01-242 6828 Ext

17

CONFIDENTIAL

Mr C Leeks

Hong Kong Department

Foreign & Commonwealth Office London SW1

Dear Clinton

Hong Kong's New Pension Scheme

I refer to the draft of the Bill and Regulations for the New Pension Scheme that you sent me for comment on 20 February 1987. It is not easy for someone who is not a lawyer to detect what is of financial significance from a draft Act or draft Regulations without some guidance on what is intended. I suggest that you ask to see a draft of the Explanatory Note which is a blank on page 32 of the papers you copied to me and the notes on clauses, or the Hong Kong equivalent, to be provided to members of the Legislative Council when they are considering the Bill and Regulations.

In the meantime, the main point I have concerns abolition of office and compulsory retirement for the purpose of facilitating improvement in the organisation of a department. In 1984, before the agreement with China over the future of Hong Kong, there was concern at the large increase in expenditure on pensions that would be incurred if posts were abolished on 30 June 1997 and serving officers were to become entitled to the immediate payment of enhanced pensions under the existing scheme. We were asked to estimate the increase in annual expenditure if all posts were abolished; the answers were contained in our Report No. 2 to Anthony Beattie issued in draft only on 3 August 1984. When I was in Hong Kong with Anthony Beattie, the introduction of a new scheme, for new staff and those transferring from the old scheme, which did not include provision for the immediate payment of an enchanced pension on abolition of office and compulsory retirement, was seen by me as a means of reducing this large contingent liability. I remember a meeting there when Keith Shipley was talking about a modest lump sum benefit under the new scheme on abolition of office.

Cont'd/.