TNAG-2101-FCO40-2990-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 171

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Mr Paul

CONFIDENTIAL

MKB 431

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RODADY

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Gil

Reference

Su

CIVIL SERVICE PENSIONS: PAPERS HANDED OVER TO THE CHINESE

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1. You will recall that we recently "ked" a paper for handing over to the Chinese on the above subject: but the three annexes were missing. These have now arrived.

The table forecasting pension expenditure gives pause for thought. It disconcerts me (as a pensioner) and may well disconcert the Chinese. It shows that pensions will increase as a percentage of "Personnel Enrolments" (PE) from 9% now to 26% in 2006/7 - a massive increase.

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Fortunately PE only represents about 25% to 30% of Government expenditure, but it nevertheless is a big increase. It is due to the rapid expansion of the Government in the 1970's (but will only cover retirees from the early 70's).

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4. You may understand better now why a lot of civil servants, including myself, doubt whether they will receive the pensions they should.

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As regards, the paper for the Chinese, I wonder whether we should not return to the charge and suggest some amplication of the passages on pension liabilities It would, I suggest, be worth reassuring the Chinese that the pension bill, when compared to overall Government expenditure, (as opposed to PE as in their table) will remain relatively small and quite manageable.

CODE 18-77

2 November 1990

cc: Miss Marsden

M V Stone

Hong Kong Department