TNAG-2268-FCO40-3267-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1991 — Page 25

CONFIDENTIAL

(a) the number of HMOCS members in service in 1997 and on how long they remained in service after 1997;

(b) Hong Kong Civil Service salary increases between now

and 1997; and

(c) the exchange rate at the dates of payment.

The cost could be as high as £44 million (at current exchange rates) in the unlikely event that all 666 potentially eligible HMOCS officers were to remain until normal retirement age and all contract officers who had the option to transfer to permanent and pensionable terms chose to do so: and "bought back" all their previous service. Equally, if a high proportion of HMOCS officers were to leave in 1997 or shortly thereafter, the cost could be relatively low. A figure midway between these extremes, say £20-30 million, is probably the most likely. (By contrast the traditional compensation scheme (allowing for early retirement and immediate payment of pensions) which members of HMOCS are expecting, would cost between £60 million and

£205 million.)

3. One way of limiting the financial commitment would be to state that the compensation was based on 1991 Hong Kong

salary levels for the grade reached in 1997 and would be

paid in sterling at the average exchange rate for 1991.

value thus derived could then be uprated annually to take

account of the movement of the UK Retail Price Index.

The

CONSULTING THE CHINESE

4.

This scheme is an issue bearing on the implementation of

the Joint Declaration on which the Chinese could

legitimately claim that they should be properly consulted.

They may see the scheme as an attempt by HMG to preserve

PICABB/2

CONFIDENTIAL