CODE 18-77
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6. This brings me to a further presentational point. We must stop referring to Our scheme as a General Compensation Scheme : this has very clear connotations for HMOCS staff and is an inappropriate description for a scheme drawn up with specific, and to some extent non-traditional, objectives in mind. Both I and my Under Secretary have made the point before that our scheme should be described as a compensation/incentive package. The payments we are going to make are in recognition of the inevitable uncertainty which HMOCS staff will feel working for a new employer, and an acceptance that they may need an additional financial incentive to continue to serve the SAR Government.
7. We spoke about Mr Fifoot's apparent misapprehension that we are in some way trying to deny HMOCS staff the right to retire with pension. I explained that Mr Fifoot himself served at a time when those who retired lost their pension rights. Hong Kong staff now have the right to retire with frozen pension (as we do). The difference from what happened elsewhere is that retirees will not be eligible for immediate payment of pension. This would clearly be an incentive to retire and, in any case, I cannot imagine the Chinese (or even local staff) accepting such an arrangement as being justified for HMOCS staff, given the guarantees on offer.
8.
The outstanding question which causes me some difficulty is that of how we should handle the various staff associations. Mr Fifoot's advice points to a consultation process and this is certainly consistent with Cmnd 1193. But unless we are prepared to move from our present position, genuine consultation is not possible. We know that HMOCS staff and OSPA will press for а traditional scheme; we wish to get as far away as possible from this. We could perhaps offer a 40% initial payment, with 20% additional to salary each year. This would leave some room for manoeuvre, otherwise it is difficult to see any areas for negotiation, other than the quantum of any overall financial ceiling to apply. A consultation process would be further complicated by the inevitable wish of HMOCS staff to get guarantees from HMG about payment of pension in case of default, and about exchange rates. I said last week that "consultation" is an issue I would very much wish to discuss with the Governor before putting proposals to Ministers. But as Mr Maude has asked for a very
early submission, you can but seek the Governor's views by telegram.
9. In summary I think the submission to Mr Maude should begin by describing the special considerations which led Hong Kong and the FCO to reject a traditional scheme, and to concentrate on maximising continuity of employment. It should then describe the agreement reached with the Treasury and the scheme (with costs) which we have worked out in consultation with the Governor. I would suggest that we give Mr Maude a full account of the Governor's views, especially on the likely success of the scheme and consultation with staff. We should highlight the possible divisiveness within the service; and the sensitivity of the Chinese, although the scheme as outlined can be clearly seen as an attempt to promote stability whereas a traditional scheme could be viewed in the opposite light.
10.
I hope these comments are useful. draft submission in due course.
D S FISH
дік
Overseas Pensions Department
30 March 1990
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You will no doubt let me see your
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