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incentives to retain staff. Mr Fifoot said that membership of HMOCS provided an extra element which kept people in the territory. Mr Rew said the retention of HMOCS members
was the duty of HKG as their employer. Mr Rew recalled that
in 1988 HMG had already agreed to help HKG through the
compensation incentive scheme. There was now a need to
consider what further action should be taken to retain
HмOCS up to 1997 and what measures might be needed to
motivate HмOCS to continue to serve after the hand over to
SARG.
13. Mr Kerby said that a Compensation/Incentive scheme would be effective but would only work if the pensions of HMOCS were worth something. Mr Rayson said that in this
respect the Treasury proposal was a good option. Members of HMOCS could take their accrued pension rights from HKG at any time between now and 1997 and buy a pension from a commercial provider. Pensions would therefore be provided from a safe source. If HKG was setting aside money for HMOCS pensions anyway this was certainly a good option.
Mr Shipley said that money was not being set aside. Pensions were a yearly liability. In any case, if HKG made this provision for HMOCS members, they would have to do it for all civil servants. This option was not financially possible and even if it were, any cashing-in of pensions would be seen by the Chinese as destabilising.
C: DISCUSSION OF PROPOSALS
14. Mr Rayson asked Mr Shipley to explain HKG's proposal. Mr Shipley explained that HMG would take over the payment of HMOCS pensions from HKG. HKG would then reimburse HMG on a continuing basis in Hong Kong Dollars at an agreed exchange rate. HMG would then guarantee the pensions at a fixed sterling rate. Mr Rayson asked if it was possible for HMG to pay all HMOCS pensions in a single lump payment up front before 1997, or in instalments over the next seven years. Although the Treasury did not accept in principle that
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