TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 79

CONFIDENTIAL

A

EXTRACT FROM

FROM SIRG

SIRG HOWE'S

MINUTE OF

7 MARCH 197:

SHOULD HMG GO BEYOND THE CARR-ROBERTSON ASSURANCE AND SEEK TO TAKE OVER THE PENSION ENTITLEMENTS OF HONG KONG HMOCS OFFICERS?

ON WHAT TERMS?

IF SO

14. If Ministers

accept

that HMG would have to take responsibility for the pensions of HMOCS in Hong Kong in the event of a default the question arises whether we should initiate a formal take-over of the

before 1997. This pensions

be on would

lines which have

become standard elsewhere, but with the important difference that

i s not Hong Kong, which

aid-worthy, would me et the cost.

or not i t question arises irrespective of whether

at

ог

to reaffirm

taking over

Carr-Robertson Assurance).

responsibility

9

is

financial

(The

proves necessary The main argument for

to

i s not

extinguish the

inconsiderable.

estimate i s currently

contingent liability. The money at stake Excluding widows' benefits for which по available, expenditure on pensions would be approximately £10 million pa (at 1984-85 prices and exchange rates) at the turn of the

century. The trend would be downwards, but the liability would not be finally extinguished until 2040. HMG would have to finance this itself if the SAR Government defaulted. The risk would be avoided

by

for responsibility to arranging

pass to HMG before Chinese

sovereignty is resumed: the Hong Kong Government would finance the pensions by handing over capitalised values of the entitlements (if necessary in a phased programme). As at 1997, these would be in the region of £210 million at 1984-85 prices and exchange rates.

15. The Hong Kong Government is strongly opposed to a take-over because of the divisive effect this would have on the public

service.

It would also be difficult to persuade the Legislative Council to approve the £210m representing the capitalised value of

the pensions.

Moreover, action on HMOCS pensions by HMG would

indeed

inevitably undermine our reas sur ances

Agreement;

on the

of credibility

there i s

case a

for

leaving responsiblity

the

for

these pensions with the SAR Government

as a mark of our faith in the

Agreement. The balance of argument is therefore against early action, but the question should be looked at again, perhaps in about

1990.

CONFIDENTIAL