CONFIDENTIAL
HMOCS members in Hong Kong with an actuarially assessed lump sum payment (averaging about £70,000 at current values) and immediate payment of pension to those who wish to retire in or after 1997.
The Joint Declaration guarantees a continuing career to these
officers.
Furthermore, traditional compensation, while it contained an element of inducement to stay on, would in fact rather encourage officers to leave since it would permit them to obtain early payment
of pension and full compensation, whether or not they remained in
service. This would be inconsistent with the intentions of the 1960
White Paper, and contrary to our commitment under the Joint Declaration. We have always judged that the Chinese would oppose a
scheme which was likely to have such a result.
15. Ministers therefore concluded in 1988 that a modified
compensation Scheme, providing a positive incentive to expatriates
to stay on after 1997 but without the full benefits for loss of
career given under a "traditional" Scheme, would, in political
terms, offer the best prospect of reconciling the conflicting interests. They endorsed a Scheme which would provide a limited
payment in 1997 to compensate for the loss of the Secretary of
State's protection (say one tenth of the full payment that would
have been made were an officer to have retired at independence under a traditional scheme), plus 9 further annual payments for each year
that an HMOCS member remained in service after 1997. This would
fall short of what HMOCS officers in Hong Kong would hope to receive. But it would be a substantial addition (on average about
£7,000 a year at current values) to the already attractive Hong Kong
salaries (on average about £45,000 a year) they would continue to
command. Its effect would also be consistent with the intentions of
the 1960 White Paper to encourage expatriates to remain in service.
Cost of the Scheme
16.
The cost of the modified compensation scheme described in para 14 above would depend not only on the generosity of the terms we offer; but also crucially on
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CONFIDENTIAL
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