CODE 18-77
T
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Reference.......
Maximum
Probable
Worst
£m
£m
£m
Lump Sum-
57
57
57
Gratuity
25
27
Pension
0
49
79
57
131
163
3.
Annexes C and D show the costs of the 10% and 25% options respectively. Annex E covers a fourth option, initial payment of 25% followed by annual payments of 20%, and is included to illustrate the sensitivity of overall costs to changes in the percentages chosen.
10% 25%/25%
Maximum
£m
Probable
£m
Worst
£m
45
17
72
•
59
34
28
376
-25%/20%
.It is worth noting that none of these options are likely to be maintained in the light of the mass exodus of HMOCS officers prior to 1997, which is implied by the worst case.
4. It is also worth noting that none of the above give the worst case of costs. This would occur under а conventional scheme if all officers remained until 1997 but no longer. Those circumstances imply a complete breakdown in the Agreement with China, in which case there would be doubts about whether the Chinese would pick up the continuing pension and gratuity bill. Such a breakdown could occur late in the day and any of the staffing scenarios could apply, with an inevitable switch from an incentive option to a conventional scheme for those still in post. The costs of this are set out at Annex F and would be:
Maximum
Probable
Worst
£m
£m
£m
Lump Sum
57
38
12
Gratuity
102
79
26
Pension
64
49
16
223
166
54
The gratuity in these cases is based on 50% commutation.
2.
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