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3.... In these circumstances expatriate staff particularly were focussing on pensions and nationality arrangements. Pensions in particular were acquiring a symbolic importance.
General Compensation Scheme (GCS) and Sterling Safeguards
4.
Mr Wiggham outlined where he thought we stood on the GCS. --a subject of particular importance to the police. There: had been agreement last, summer to revert to the original plan: for payments in installments (20% then 8 annual payments of 10%), but this had not been put to the Chinese in the JLG (though all agreed that this was the right way to proceed) because it had got caught-up with the question of sterling- safeguards. The Treasury accepted the GCS but wanted to see the total sums involved and therefore the sterling safeguard implications before agreeing the figures..
5
I corrected Mr Wiggham. by pointing out that we had not in fact gone back to Ministers last summer about the GCS pending further clarification of sterling safeguards. I could not be sure how robust was the understanding reached-in 1988 by Sir G Howe with Mr-Major. The sums were not- inconsiderable. Our fear: was that we would secure a GCS. wi much pain and grief only to find that it did not impress the HMOCS staff in Hong Kong in the absence of sterling safeguards-and that we would walk into a major: parliamentary. row at home.
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In response to my questions Mr Wiggham said. that the HKG would prefer to proceed with a separate: GCS on its own ie without sterling safeguardsTM This would confirm=HMG! 83-** fundamental commitments and demonstrate both that the HMOCS was not forgotten and that HMG had faith in the 1997. transition. Any sterling safeguard scheme, if brought-insfor serving-HMOCS staff, would cause great problems for them (a with regard to existing-pensioners and (b) over the treatment of local civil servants..
7 The priority issue at present was security of pensions But although the HKG had brought in new legislation to protect private sector pensions, they could not fully fund¬~ the pensions bill for the public services. (The figure of t HK$120 billion quoted recently did not constitute the total -bill, only what would be needed now to generate enough money
to cover all future obligations until 1997.) There was no need for the HKG to do anything more: The HKG were under a statutory obligation to honour their pensions obligations. This was a first call on revenue; at 34% there was no problem. And satisfactory safeguards were written into the Joint Declaration-and. Basic Law.
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