TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 83

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YEARS OF STRONG PRESSURE FROM LOCAL OFFICERS FOR A CIMILAT GUARANTEE IN RESPECT OF THAT PROPORTION OF THE IP PENSIONS EARNED IN CROWN SERVICE. WITH TWELVE YEARS TO GO, THE EARLY INTRODUCTION OF A GUARANTEED STERLING EXCHANGE RATE COULD ALSO LEAD TO REQUECTS PERIODICALLY TO REVIEW THE LEVEL OF STERLING GUARANTEE IN THE LIGHT OF CURRENCY FLUCTUATIONS. IN ADDITION, THE EARLY OFFER OF A GUARANTEE ARRANGEMENT WOULD DE INTERPRETED AS A LACK OF FAITH IN OUR ABILITY TO MAINTAIN THE VALAUE OF THE HONG KONG DOLLAR I

THE RUN UP TO 1937.

IN ANY CASE, GIVEN THAT THE HONG KONG GOVERNMENT (HKG) WILL HAVE CEASED TO EXIST AFTER 1997, AND THAT THE SAR GOVERNMENT WILL BE

INCLUDING RESPONSIBLE UNDER ANNEX IV FOR FUNDING ALL PENSIONS, HMOCS PENSIONS, THEN IT IS NOT CLEAR TO US HOW THE HKG CAN SAFEGUARD AFTER 1997 THE STERLING VALUE OF PENSIONS EARNED PRIOR TO 1997. IT IS THE CHINESE GENERAL POSITION THAT THE AGREEMENT COVEPS THE SITUATION AS IT IS NOW, AND THEY AND THE SAR ARE NOT COMMITTED TO ANY CHANGES WE MIGHT MAKE BETWEEN NOW AND 1997. (I WOULD EXPECT ANY SUGGESTION OF CAPITALISED VALUES OF HMOCS PENSIONS BEING PAID TO HMG BY THE HKG IN ADVANCE OF 1997 (PARA 7 OF YOUR TELNO 2333) TO BE HIGHLY DIVISIVE AND CONTROVERSIAL HERE.)

(C) LOAN ADVANCES

WE HOPE THAT FOR THE TIME BEING YOU CAN AVOID REAFFIRMING THAT HMG WILL PAY LOAN ADVANCES IN LIEU OF PENSIONS TO HMOCS OFFICERS IN THE EVENT OF A DEFAULT. AGAIN THIS WOULD BE DIVISIVE. CERTAINLY WE WOULD NOT WISH SUCH AN UNDERTAKING TO BE GIVEN IN ADVANCE OF THE INTRODUCTION OF THE PROPOSED NEW PENSION ARRANGEMENTS FOR LOCAL

OFFICERS.

(D) AND (E)

WE NOTE YOUR INTENTION OF DEFERRING UNTIL 1990 THE QUESTION OF HG TAKING OVER THE PENSION ENTITLEMENT OF HMOCS OFFICERS, AND OF WHETHER AND HOW THE BENEFITS OF HMOCS STATUS SHOULD BE RETAINED FOR PENSIONABLE SERVICE IN HONG KONG AFTER 1997. WE ASSUME THAT WE SHALL BE CONSULTED ON THESE ISSUES.

4. IN ADDITION TO THE ABOVE GENERAL POINTS WE HAVE THE FOLLOWING DETAILED COMMENTS ON THE PROPOSED DRAFT LETTER TO OSPA IN YOUR SECOND

TUR:

−(A) WE DO NOT THINK YOU SHOULD IMPLY IN YOUR REPLY TO OSPA THAT HMG WILL NEGOTIATE WITH US ABOUT THE STERLING VALUE OF PENSIONS. ALL THAT CAN BE SAID IS THAT THIS IS A MATTER WHICH WILL HAVE TO SE

CONSIDERED IN DUE COURSE.

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((B)