TNAG-2269-FCO40-3268-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1991 — Page 205

Read. 30/8/91

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? Mountfield Esq AEFI

HM Treasury

Whitehall

London

Dear Mountfield,

CONFIDENTIAL

Mr Stone

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compensation

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how much money we are talking

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HONG KONG: COMPENSATION AND PENSION ARRANGEMENTS FOR HER MAJESTY'S OVERSEAS CIVIL SERVICE (HMOCS)

MA

6/9

1. In March 1985, OD (K) first discussed what arrangements should be made for Hong Kong HMOCS members in the light of the end of British administration in 1997. It concluded that the main body of doctrine on compensation and pension safeguards which had been applied to HMOCS members in previous dependent territories should also apply in Hong Kong. On finance, OD(K) decided that, certainly initially, we should aim for costs to be met by the Hong Kong Government or by the post-1997 Special Administrative Region Government.

2.

In November 1988, Sir Geoffrey Howe wrote to Mr Lawson about compensation arrangements. In his letter of 19 December 1988, Mr Major, then Chief Secretary, agreed that HMG should fund a compensation scheme, spread over a number of years from 1997. However no action was taken at the time to promulgate

the scheme.

3. More recently, discussions on these matters between officials have also addressed the need to deal with the issue of sterling safeguards, to protect HMOCS pensions against falling exchange rates. Adjustments to the regulations govering Supplementary Pensions for Overseas Service (SPOS) have also been discussed, on an exploratory basis, between the Head of ODA's Overseas Pensions Department and the Head of the Treasury Superannuation Division.

4. Our Ministers have concluded that HMG must now address these matters decisively, in the interests of maintaining the stable administration of Hong Kong. I am therefore writing to bring you up to date with our plans for the compensation scheme and to seek your agreement for HMG to provide a sterling safeguard for HMOCS pensions and to amend the application of the SPOS regulations.

5.

I summarise the key issues below; more details are set out in the attached annexes prepared in conjunction with the ODA Overseas Pensions Department and the Hong Kong Government.

PICABA/CC

CONFIDENTIAL