TNAG-2269-FCO40-3268-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1991 — Page 67

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CONFIDENTIAL FM HONG KONG

TO PRIORITY FCO

TELNO 469

CONFIDENTIAL

Mristone

2

ра чтоб року

Ms Colin 1912 ans,

we need

This is why

a convinang

OF 130212Z FEBRUARY 91

case

INFO ROUTINE UKREP JLG HONG KONG for

1

agree with the

036615 MDLIAN 8085

with X, E

conclufern Irther

telegram. Bouw (7) A (o the Treasury) now

of the

reverting to the

GCS strategy.

FOR PAUL, HKD FROM SHIPLEY, CSB.

You are drafting

a tee

bone

13/2

и до

13/

YOUR TELEGRAM NO. 111 AND OUR TELEGRAM NO 201: HMOCS MATTERS: STERLING SAFEGUARDS/PENSIONS.

1. WE OWE YOU A REPORT ON THE POSITION WE HAVE REACHED ON THIS ISSUE FOLLOWING OUR MEETING WITH ODA AND TREASURY REPRESENTATIVES IN NOVEMBER LAST YEAR.

2. AS ALREADY INTIMATED, WE ARE UNABLE TO GO ALONG WITH THE TREASURY'S LATEST PROPOSAL. THIS, AS YOU WILL RECALL, WAS FOR HKG TO PAY HMG THE CAPITALISED VALUE OF HMOCS PENSIONS, BOTH THOSE IN PAYMENT AND FUTURE COMMITMENTS, IN EXCHANGE FOR HMG TAKING OVER THE PAYMENT OF HK HMOCS PENSIONS. WE HAVE CAREFULLY CONSIDERED THE PROPOSAL BUT FOR US TO PAY OUT THE CAPITALISED VALUE OF SERVING EXPATRIATE OFFICERS PENSIONS BEFORE 1997 WOULD MAKE IT DIFFICULT IF NOT IMPOSSIBLE TO RESIST CAPITALISING AND PAYING OUT PENSIONS TO SERVING LOCAL OFFICERS BEFORE 1997. AS. YOU ARE AWARE: THIS IS EXACTLY WHAT MANY LOCAL OFFICERS ARE SEEKING. IN ADDITION, TO PAY OUT PENSIONS BEFORE 1997 WOULD BE A CLEAR VOTE OF NO CONFIDENCE IN THE FUTURE SAR'S ABILITY TO PAY.

3. WE HAVE HOWEVER BEEN LOOKING AT A POSSIBLE VARIATION OF THE TREASURY PROPOSAL. THIS WOULD INVOLVE HKG PAYING HMG THE: CAPITALISED VALUE OF EXISTING HMOCS PENSIONS ALREADY IN PAYMENT: PAYING HMG THE CAPITALISED PENSION OF FUTURE HMOCS PENSIONS AS AND WHEN THE LIABILITY FELL DUE; I.E. WHEN THE OFFICER RETIRES: AND AT THE SAME TIME PERMITTING LOCAL OFFICERS TO COMMUTE 100 PER CENT OF THEIR PENSION THUS PUTTING THEM IN A SIMILAR POSITION TO. SERVING HMOCS OFFICERS. WHILE WE ARE STILL WORKING ON THE COST OF THIS PROPOSAL, AND THIS MAY WELL RULE OUT ON BUDGETARY GROUNDS, WE HAVE NOW COMPLETED OUR ASSESSMENT OF THE LIKELY CHINESE REACTION. THE UNANIMOUS VIEW, INCLUDING THAT OF UKREP IS THAT THE PROPOSAL IS LIKELY TO BE A NON STARTER. IT IS CONSIDERED THAT THE CHINESE WOULD ALMOST CERTAINLY FIND THE ARRANGEMENT TO TRANSFER THE CAPITALISED VALUE OF PENSIONS TO HMG OBJECTIONABLE

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