TNAG-2099-FCO40-2988-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 70

Part from " payt of 256 depends on

staying on

•

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full payment that would have been made were an officer to have

retired at "independence" under a traditional scheme;

(b) nine annual payments, in Hong Kong dollars, of 25% of the

individual officer's annual salary, starting 1997.

It is difficult to judge what levels will induce officers to

stay on but will not be so large that they all leave in 1997.

We must also have careful eye to the costs. The level is

clearly a matter of judgement, but we consider that 10%

compensation and 25% annual salary is about right. The figure

of 25% is well known in Hong Kong as the level of gratuity for

officers on agreement terms. Clearly there is no real link but

it would be credible figure.

Icament

Costs

,

(c) using the wastage figures set out above and the percentages

listed in (a) and (b) we estimate that the total cost of the

scheme is likely to be at January 1990 salary levels,

HK $331 million (£25.5 million at an exchange rate of 13:1)

This is not out of line with the original estimate, £10-£20

million given that there have been increases in civil service

salaries in Hong Kong since then.

Currency To Be Used

(d) We have considered whether to denominate the scheme in

sterling to fix the salary points at cement prevailing rates

and to link it to UK inflation rates: this would give us a

clearer idea of our likely commitments. We have concluded such

a move is fraught with difficulties. The main difficulty

stems from a related issue which will have to be tackled but in

slower time: the question of sterling safeguards for pensions

of HMOCS members. There has been increasing pressure from the

Overseas Service Pensioners Association for the pensions of

HMOCS members from Hong Kong to be linked to a fixed sterling

rate. We have resisted these moves to date but we recognise

that should there be a collapse in the Hong Kong dollar,

pressure on HMG to offer a safeguard would become intense. At

this stage we cannot say what would be considered an

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the