TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 77

CONFIDENTIAL

A B

D

possible for the present Hong Kong Government to set up an

arrangement which would go some way to funding the estimated

capitalised value. I attach relevant extracts from Sir G

Howe's minute and the Prime Minister's response.

7.

I have been unable as yet to find explicit reference

from Hong Kong that they would refuse to contemplate making over a capitalised sum to meet HMOCS pensions. The only

references I have traced are HK telnos 2820 of 1984 and 707

of 1985, attached. These are not very helpful.

Nevertheless, I would expect the arguments deployed to be similar to those used in para 3 of HK telno 2531 of August

1986. In summary, these are:

(a) At present HKG, like HMG, funds its pension

liabilities from recurrent revenue. It has no fund for

In 1986 the amount required to fund

this purpose.

pensions up to 1997 was estimated to be HK$120 billion.

HKG has stated publicly that it is simply impossible for

it fully to fund this pension liability. It would therefore be politically impossible for the Hong Kong Government to agree to fund the liability only for HMOCS members because it would be seen as highly

discriminatory against the vast majority of local civil

servants. HO would also be likely to be viewed as a misuse of tight government reserves.

(b) If such a fund were to be handed over to HMG it

would require the approval of Finance Committee.

There

is no way the Finance Committee would agree to such a transfer because it would be seen as highly

discriminatory against the vast majority of local civil

servants. It would also be likely to be viewed as a

misuse of Government reserves.

RODACQ/3

CONFIDENTIAL