TNAG-2270-FCO40-3269-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1991 — Page 28

CONFIDENTIAL

RECORD OF A MEETING ON COMPENSATION/INCENTIVE SCHEME AND

PENSIONS ARRANGEMENTS FOR MEMBERS OF HER MAJESTY'S OVERSEAS

CIVIL SERVICE IN HONG KONG: 20 DECEMBER 1991 AT 1215

Present

FCO Diplomatic Wing

ODA

Treasury

Mr Burns

Mr Kerby

Mr Ricketts

Mr Stone

Mr Wightman

Miss Williams

Mr Fish

Ms Brown

Mr Rayson

Mr Woodfield

Mr Brancen

Capitalisation

1. Ms Brown said that the team had been grateful for the opportunity to make a successful visit to Hong Kong, during which they had discussed the Treasury's capitalisation proposal. Members of HKG had been cooperative and had

accepted that they would not have any difficulty with the proposal at a technical level. HKG had seemed pleasantly surprised at the low cost of some of the options.

2.

Ms Brown handed over a copy of the team's

"without Commitment" note on the capitalisation

option. This showed that converted to £ sterling, the global cost of the pensions liability would be between £170 m and £370 m spread over 5 years. The exact cost would depend on several factors, primarily: whether all pensionable service was involved, or only that up to 1 January 1992 and whether transfer payments from HKG to HMG

took place in 1992 or 1997.

3. Ms Brown continued that the team had discussed

affordability. They were confident that HKG could afford to capitalise HMOCS pensions given: healthy current reserves;

WADABJ/1

CONFIDENTIAL