TNAG-2360-FCO40-3431-Visit-by-John-Major--UK-Prime-Minister--to-Hong-Kong--Septem-1991 — Page 25

CONFIDENTIAL

compensation, been allowed to retire with early payment of pension and had their pensions guaranteed in sterling terms. HMOCS officers in Hong Kong expect comparable

treatment in 1997. Their expectations are not easy to

reconcile with our commitment to a smooth transition and

our need to keep down the costs of any scheme.

In 1988 FCO and Treasury Ministers agreed in

principle on a limited incentive/compensation scheme

funded by HMG. This scheme will not allow retirement with an early pension and will spread compensation over several years post-1997. We are now again pursuing this and related questions with the Treasury with a view to an

early announcement. Pressure is mounting: HMOCS members have recently formed an Association to press their case,

and may make public their lack of confidence in post-1997

Hong Kong.

If questioned the Prime Minister could say:

We continue to recognise fully the concerns of HMOCS

members. HMG are in the process of drawing up

appropriate arrangements for HMOCS members in Hong Kong

which recognise the change of sovereignty in 1997.

Civil Service General/Police

Local civil servants are also concerned about their

future careers and the safety of their pensions (despite

the reassuring provisions of the Joint Declaration). HKG

are considering staff suggestions to protect pensions and

have discussed the issues with the Chinese. The Chinese

have proposed setting aside HK$15 bn to back-up pensions.

CONFIDENTIAL