CONFIDENTIAL
HKB 233/1
CONFIDENTIAL
FM FCO
TO IMMEDIATE HONG KONG
TELNO 2037
OF 2115OOZ NOVEMBER 91
Bh 26/11
INFO ROUTINE PEKING, UKREP JLG HONG KONG
TOP COPY Q DIST?
Pa
192
013500
MDHOAN 5245
PERSONAL FOR GOVERNOR FROM BURNS, AUSS
PEKING: PERSONAL FOR AMBASSADOR
UKREP JLG HONG KONG: PERSONAL FOR MR GALSWORTHY
HONG KONG HMOCS: COMPENSATION/INCENTIVE SCHEME AND PENSIONS
1. FCO, ODA AND TREASURY OFFICIALS HAVE BEEN CONSIDERING FURTHER THE SUGGESTIONS OF A COMPENSATION/INCENTIVE SCHEME AND PENSIONS ARRANGEMENTS FOR HMOCS. IN PARTICULAR, ATTENTION HAS FOCUSED ON POSSIBLE WAYS OF PROTECTING HMOCS OFFICERS' PENSIONS IN CASE OF A FUTURE SUBSTANTIAL DECLINE IN THE VALUE OF THE HONG KONG DOLLAR. TREASURY COLLEAGUES HAVE MADE IT CLEAR THAT THEY ARE NOT IN A POSITION TO RECOMMEND TO TREASURY MINISTERS THAT THE UK TAX PAYER SHOULD BE BURDENED WITH FINANCIAL LIABILITIES IN RESPECT OF HONG KONG GOVERNMENT PENSIONS WITHOUT THE TRANSFER OF RELATED ASSETS.
2. AS WE SEE IT, THE NEXT STEP MUST BE TO CONSIDER FURTHER THE SCOPE FOR ARRANGEMENTS WHICH INVOLVE THE TRANSFER OF PENSION LIABILITIES AND RELATED ASSETS FROM THE HONG KONG GOVERNMENT TO THE OFFICERS THEMSELVES, OR TO A FINANCIAL INSTITUTION ON THEIR BEHALF, OR TO THE UK IN SUCH A WAY AS TO MEET THE INTERESTS OF ALL CONCERNED.
3.
WE APPRECIATE THAT, YOU HAVE CONSIDERED THIS KIND OF PROPOSITION IN PRINCIPLE BEFORE BUT THAT YOU DID NOT, AT THAT STAGE, CONSIDER THAT A SCHEME INVOLVING THE TRANSFER OF ASSETS COULD BE DEVISED IN A WAY WHICH WOULD BE ACCEPTABLE TO THE HKG. AFTER FURTHER DISCUSSIONS HERE, HOWEVER, WE CONSIDER THAT THE WAY FORWARD RESTS IN WORKING UP JOINTLY, IN A CONSTRUCTIVE AND IMAGINATIVE WAY, THE DETAILS OF ARRANGEMENTS WHICH COULD BE ACCEPTABLE TO BOTH SIDES. IT IS IMPORTANT TO EMPHASISE THAT THERE IS NO PROSPECT OF MAKING PROGRESS ON QUESTIONS RELATING TO THE RETENTION OF HMOCS OFFICERS UNTIL THIS MATTER HAS BEEN EXAMINED SATISFACTORILY.
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