TNAG-2096-FCO40-2985-HM-Overseas-Civil-Service-(HMOCS)-general-correspondence-1990 — Page 70

Mr M Stone

Hong Kong Department/FCO

CONFIDENTIAL

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In mocs, foling

FROM: D S FISH

DATE:

(GTN 7 7243 344 grosions

18 April 1990

cc Mr Kerby

Jale)

Thank you for sending me а copy of Nigel Pusinelli's letter of 4 April addressed to Robin McLaren.

2.

It is difficult not to feel sympathy with OSPA when both HMG and the Hong Kong Government continue to insist that it is the other's responsibility to address the question of the protection of pension values for HMOCS staff. Fortunately, Hong Kong pensioners are doing pretty well at present, and should continue to do so for as long as the link between the Hong Kong dollar and the US dollar is maintained.

to

3. As you know, I am of the view that HMG will eventually be forced to offer a sterling safeguard to HMOCS staff, but that that safeguard will be at a rate of exchange considerably lower than OSPA and many serving officers would like. When/if it comes

the point where we have to negotiate with the Treasury about the details of a scheme, they are sure to try to relate the safeguard to what people in similar jobs in the UK might expect to receive in pension terms. This would not be straightforward because there is no uniform relationship between Hong Kong Government and UK public service salaries, although it may be possible to look at the police, where Hong Kong salaries in relation to the UK do not seem quite so generous, as a separate group.

4.

All this requires a good deal of work and before we embark on the preparation of a scheme it might be as well to seek a Ministerial view on the principle of a sterling safeguard. I can see that any announcement would prove divisive. The offer a sterling safeguard to HMOCS staff would surely lead to requests for similar treatment from local staff (doing similar jobs) who are offered the right of abode under the Nationality package. And it may not be too long before local staff seek the security of the Carr/Robertson assurance, the oblique repetition of which, OSPA So gratefully acknowledge in their letter. It will not have escaped your attention that the recent letter to the Secretary of State from the Police Superintendents' Association referred to the wish of "both local and expatriate officers" to retire with immediate payment of pension, and compensation. Clearly we are entering an area of significant potential financial liabilities and Ministers will wish to focus on the possibilities.

I wonder whether we ought to discuss the wider implications with Mr McLaren, before you start work on a draft reply to OSPA.

5.

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DS FISH

Overseas Pensions Department

18 April 1990

CODE 18-77

CONFIDENTIAL