TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 61

CONFIDENTIAL

20

17.

The likely cost of a modified compensation scheme, based on

best estimate of the number of HMOCS members likely to remain in service and current Hong Kong Civil Service salaries (assuming that salaries do no more than keep pace with inflation) is [£16 million]. But the cost could be as high as £42 million in the unlikely event that all eligible HMOCS officers were to remain until normal

retirement age and all contract officers who had the option to

transfer to permanent and pensionable terms chose to do so.

Equally, if a high proportion of HMOCS officers were to leave in

1997 or shortly thereafter, the cost could be very low (ie a few million pounds). By comparison, the likely cost of a traditional General Compensation Scheme would be about [£130 million] (but could vary between £163 million and £57 million).

As set out in more detail in paragraphs 28 to 31, this modified

compensation/incentive scheme will not be well received by HMOCS members who will want the full package granted in previous colonies. There are of course many other options which could be considered, for example:

(a) a traditional compensation scheme without early payment of pension: the compensation could be paid over several years but would be guaranteed if the officer was in post on 1 July 1997. This could be acceptable to HMOCS members but would be relatively costly (up to £42 million). It would encourage HMOCS members to stay until 1997 but could lead to an exodus of HMOCS members in 1997 although clearly less than with a General Compensation Scheme;

(b) an incentive scheme front loaded to provide sufficient incentive

to stay up to 1997 but possible not long thereafter. This would be less expensive than (a) but possibly not much, would not be welcomed by HMOCS members but might be effective in retaining reasonable numbers up to and beyond 1997;

(c) no scheme. This would provoke an outcry fromm HMOCS members and possibly Parliament, could lead to legal action/judicial review and

WEDABH/8

CONFIDENTIAL