nsions before 1997?
CONFIDENTIAL
15.
Mr Shipley said it would be impossible for Hong Kong to do this. HKG's considerations were political, not
-
financial. HKG would not be able to capitalise pensions for one section of its staff and not for the others especially as local officers were the ones currently pressurising HKG to capitalise their pensions. HKG's Financial Committee would never approve such expenditure. Mr Rayson said that
HKG already recognised the importance of retaining its staff and improving morale, this was HKG's special need.
Mr Shipley said that it was HMG not HKG which had special obligations to members of HMOCS: it was HMG's responsibility to reassure them about their pensions.
16. Mr Rew said the issue would be a presentational one. For its part the Treasury would like to see some figures. He reiterated that there was no commitment to a sterling safeguard. Mr Rayson said that he could not advise Ministers to go along with sterling safeguards and that he did not rule out the possibility of the Treasury returning to their own proposal at some stage. Mr Rayson said it was necessary to reflect further on the matter and for consideration to be given to the political price to be paid by HKG. There were advantages in having this matter solved and perhaps HKG could persuade its Financial Committee that as a one-off, this solution was necessary. Mr Shipley said that the Chinese would also need to be consulted. It would
be very difficult to persuade them to accept such a large pay off in 1997 and it would look like a clear indication of a lack of faith after 1997.
17. Mr Rew said it could be presented as relieving the Chinese of an obligation at a favourable discount. Mr Fish agreed that a figure of HK$300 m against reserves of
HK$71 bn was small. Mr Shipley reiterated that it was not the cost of the idea which was HKG's problem. Mr Rayson repeated that the Treasury would still keep its own idea on
JL6AAK/7
CONFIDENTIAL
No comments yet.
Private notes are available after approval.