CONFIDENTIAL
1987. This scheme provides for retirement at 60 (instead of 55) with a slower pension earning rate: but it allows commutation of 50% of salary in a lump sum instead of 25%. If we do not inform HMOCS members what type of scheme we are proposing before then they will be faced with making a decision on the pension scheme without knowing their future as regards HMOCS. A traditional scheme involves the early payment of pension and HMOCS members could and would legitimately argue that it was grossly unfair if they did not know what type of scheme was being contemplated before they had to decide for a different pension scheme. We could not rule out legal action. But the main reason why we consider it necessary to promulgate the scheme soon is the link with the nationality package. This compensation scheme will be quite devisive in Hong Kong civil service - expatriate officers will be earning 25% more money for doing exactly the same job as locals. We therefore intend to minimise the impact of this by announcing the scheme at about the same time as the nationality package goes firm. Local officers comparable to HMOCS members are very likely to qualify under the nationality scheme and we hope that this will lessen the impact of the devisiveness. Lastly consideration of the scheme is long outstanding: it has been in the running since about 1986.
7. We are currently extensively revising the paper which I sent you and I shall soon forward a revised version. I think it would then be time for us to get together with Mr Fish to discuss the proposals.
cc: Mr Fish, ODA Pensions
M V Stone
Hong Kong Department
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