TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 95

CONFIDENTIAL

a sterling safeguard for HMOCS members' pensions.

16.

The Joint Declaration contains many of the safeguards

which would have been included in a POA and indeed is more

reassuring: all officers may continue in service with terms

and conditions "no less favourable than before". But the

point is that there is sceptisism that the Joint Declaration

will infact achieve its aims.

17.

HMG cannot do anything which might show that we do not

have faith in the Joint Declaration. The Chinese on their

part are not going to see any need to go further than is set

out in the Joint Declaration to protect the position of

HMOCS members. Nevertheless, the only way on which a

sterling safeguard could be contemplated is in the context of what has happened in previous colonies. HMG's options

are thus; (i) to restate our faith in the Joint Declaration,

(ii) to seek to persuade the HKG/Chinese that a sterling

safeguard should be introduced for HMOCS members, (iii) or

to acknowledge that in Hong Kong's special circumstances, sterling safeguards are indeed a matter for HMG and that we are keeping the position under continuous reviews. As stated above, (ii) could be explored but is likely to fail, (i) is in effect the current situation, (iii) is thus the

only viable option, if we wish to take action.

18. My view is that there is no justification now for

introducing a sterling safeguard. There is concern that HMOCS members will quit in large numbers in the run up to

1997, but there is no evidence for this yet. However, there is widespread concern amongst all Hong Kong civil servants that their pensions will not be worth much post 1997. To

acknowledge that such a concern is legitimate for HMOCS

members could be very destabilising. It would appear that

for the good of Hong Kong generally it would be best not to

RODACP/8

CONFIDENTIAL