TNAG-2269-FCO40-3268-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1991 — Page 116

CONFIDENTIAL

The

the cost.

(The

proves necessary

main argument for

to extinguish the

inconsiderable.

14. If Ministers accept that HMG would have to take responsibility for the pensions of HMOCS in Hong Kong in the event of a default the

question arises whether we should initiate a formal take-over of the

pensions at or before 1997. This would be on

lines which have

become standard elsewhere, but with the important difference that

Hong Kong, which is not aid-worthy, would me e t

question arises irrespective of whether or not it

to reaffirm the Carr-Robertson Assurance).

taking over responsibility is financial

contingent liability. The money at stake is not

Excluding widows' benefits, for which по estimate

available, expenditure on pensions wou id be approximately £10 million pa (at 1984-85 prices and exchange rates) at the turn of the century. The trend would be downwards, but the liability would not be finally extinguished until 2040. HMG would have to finance this

itself if the SAR Government defaulted. The risk would be avoided

by arranging for responsibility to pass to HMG before Chinese

sovereignty is resumed: the Hong Kong Government would finance the pensions by handing over capitalised values of the entitlements (if

necessary in a phased programme). As at 1997, these would be in the region of £210 million at 1984-85 prices and exchange rates.

is currently

15. The Hong Kong Government is strongly opposed to a take-over

because of the divisive effect this would have on the public

service. It would also be difficult to persuade the Legislative Council to approve the £210m representing the capitalised value of the pensions. Moreover, action on HMOCS pensions by HMG would

inevitably undermine Our reas sur ances on the credibility of the

Agreement; indeed there is a case for leaving responsiblity for these pensions with the SAR Government as a mark of Our faith in the Agreement. The balance of argument is therefore against early action, but the question should be looked at again, perhaps in about

1990.

BE

IF

1997 CONTINUE TO

NOT SHOULD OTHER

SHOULD HMOCS OFFICERS WHO REMAIN IN SERVICE AFTER

REGARDED BY HMG AS MEMBERS OF HMOCS?

ARRANGEMENTS BE INTRODUCED ΤΟ MAINTAIN THE BENEFITS NORMALLY

ASSOCIATED WITH MEMBERSHIP OF HMOCS?

16. The main

main benefits of HMOCS status that would be relevant to

CONFIDENTIAL