TNAG-2269-FCO40-3268-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1991 — Page 64

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Mr Burns

CONFIDENTIAL

175

கிய

FROM: N J Cox

Hong Kong Department

DATE: 12 November 1991

HMOCS: STERLING SAFEGUARDS

cc: Mr Dew, RMD

Ms Williams, HKD

the Ricketts

1. I attach copies of the papers regarding the October 1990 Treasury proposal, mentioned at this morning's meeting, that the Hong Kong Government should pay HMG before 1997 the capitalised value of HMOCS pensions. It is clear that the Governor has considered this proposal and ruled it out for

three reasons:

a) local officers would also demand the capitalisation of

their pensions before 1997;

b) it would be a clear vote of no confidence in the future SAR's ability to pay; and

c) it would not run with the Chinese, who would see it as

reserve stripping.

Sir R McLaren accepted this advice in February.

2.

I have spoken to Mr Rew in Treasury to see whether he could explain more clearly how the Treasury proposal could

NJCAAD/1

CONFIDENTIAL