CONFIDENTIAL
FM HONG KONG
TO IMMEDIATE FCO
TELNO 3872
OF 17101OZ DECEMBER 91
CONFIDENTIAL
INFO ROUTINE PEKING, UKREP JLG HONG KONG
(220
221
231
117047
TOP COPY MDHIAN 6563
DIST
MKB 2331
MY TELNOS 3801-2: HMOCS: COMPENSATION/INCENTIVE SCHEME AND
PENSIONS: VISIT BY WHITEHALL TEAM
SUMMARY
1. WE HAD FIVE DAYS OF DISCUSSIONS WITH THE WHITEHALL TEAM. THEY HAD TALKS WITH ME, CS FS AND SCS, AMONG OTHERS.
2. THE TEAM SEE THE PROVISION OF STERLING SAFEGUARDS AS THE KEY TO A PACKAGE OF MEASURES FOR HK MEMBERS OF THE HMOCS. THEY PUT FORWARD PROPOSALS WHEREBY STERLING SAFEGUARDS WOULD BE ACHIEVED BY HKG TRANSFERRING THE CAPITALISED VALUE OF THE HMOCS PENSION LIABILITY TO HMG. WE EXPLAINED THE POLITICAL IMPOSSIBILITY OF TRANSFERRING FUNDS TO HMG FOR THIS PURPOSE AND THE ADVERSE REPERCUSSIONS OF SUCH A MOVE ON THE LOCAL CIVIL SERVICE AND WITH THE CHINESE.
3. THE VISIT PROVED USEFUL IN THAT BOTH SIDES UNDERSTAND EACH OTHER'S PROBLEMS BETTER, BUT WE HAVE REACHED NO AGREEMENT ON THE WAY FORWARD.
DETAIL
4. THE WHITEHALL TEAM EXPLAINED THE DIFFICULTY THEY SAW IN HMG ACCEPTING A POTENTIAL LIABILITY FOR HK HMOCS PENSIONS AT THE EXPENSE OF THE UK TAXPAYER. THEY THEREFORE PUT FORWARD A PROPOSAL UNDER WHICH HMG WOULD ASSUME RESPONSIBILITY FOR HK HMOCS PENSIONS AND HKG WOULD TRANSFER PAYMENT TO HMG OF THE CAPITALISED CURRENT VALUE OF PENSION LIABILITIES FOR HKG HMOCS MEMBERS. IN PARALLEL, HMG WOULD PROVIDE COMPENSATION/INCENTIVE ARRANGEMENTS FOR HK HMOCS MEMBERS. THE PROPOSAL WAS ACCOMPANIED BY OPTIONS AS REGARDS TIMING, MEANS OF PAYMENT, ETC. THE TEAM ARGUES THAT THE PROPOSAL WAS IN HKG'S INTEREST. IT WOULD RESOLVE THE PROBLEM OF MAKING ARRANGEMENTS FOR HK HMOCS MEMBERS AT AN AFFORDABLE COST, WHILE AT THE SAME TIME REDUCING THE HKG/SARG PENSION LIABILITY. BY SOLVING THE STERLING SAFEGUARDS PROBLEM, IT WOULD ALSO ALLOW PROGRESS ON COMPENSATION/INCENTIVE ARRANGEMENTS.
1
PAGE CONFIDENTIAL
Page 90Page 91
No comments yet.
Private notes are available after approval.