CODE 18-77
Mr Cox
CONFIDENTIAL
Reference..
HKB 233/1
198
Tite
HMOCS MATTERS
1. You asked før views on paragraphs 5 and 6 of the attached letter from Mr/Waters of Civil Service Branch dated
21 November 1991. I had delayed replying until we had met Mr Ballantine of the Government Actuary's Department yesterday in the hope that he might have some useful comments to make. Unfortunately he appears to know nothing about HMOCS matters.
2. Paragraph 5 is simply a factual explanation of the assumptions Hong Kong have used in costing the compensation proposals. As stated, Hong Kong have assumed that everybody will go onto the new pension scheme, which is slightly more expensive in terms of compensation because of the extra five years of possible service.
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3. With regard to the factors used in working out compensation, I agree that we need to be clear on the rationale and I shall be taking this up with Mr Fish, having failed to get anywhere with Mr Ballantine. At this stage, my comments would be as follows. In previous territories the assumption must have been that HMOCS officers would not be able to continue to work - at least for any length of time - in the newly independent country. The compensation factors used (and early payment of pension) assumed termination of service. Given that the terms of the Joint Declaration mean we cannot and should not assume HMOCS officers will have their services or careers terminated, the justification for traditional levels of compensation fall away. We are therefore left with trying to decide fair compensation for the loss of the Secretary of State's protection. As you may recall, the ODA were keen at one stage to get away from any reference to actuarial factors so as entirley to distinguish the scheme we were proposing from previous compensation schemes. However, at the end of the day, we decided that one based on actuarial factors was fairer to the officers concerned since one based, say, purely on a percentage of salary, would have favoured the older officers who were just about to retire, against the young ones who had low salaries.
4.
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I believe our lighting upon the compensation terms set out in the limited compensation scheme for officers superseded for promotion was largely that it looked a reasonable compromise but I need to check this. anything Mr Ballantine said may be trusted, he indicated that schemes of this sort are significantly effected by horse trading with the parties induced and that the actuarial factors are merely (important) one factor in the equation.
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M V Stone
4 December 1991
cc: Miss Williams
MVSAAB
CONFIDENTIAL
207
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