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further the establishment of such a fund with a view to reaching a decision by the end of 1994, in the light of the financial position prevailing at that time.
4. Civil servants have asked HKG to reach a final decision on the pension reserve fund before the option deadline of 31 December 1992 for transfer to the New Pension Scheme (NPS). The new scheme provides for a higher level of commutation, a deferred pension for officers who work over ten years, and retirement at 60 instead of 55. As a final decision on the pension fund will not be taken until 1994, HKG has decided to extend the option deadline by three years to 31 December 1995.
5. The HKG have not kept us in touch with the evolution of their thinking on this, which has implications for a number of issues of concern to HMG. They have now said that they need to inform the staff of these decisions before the JLG meeting next week when the Chinese side are expected to raise the subject of pension safeguards. Although HKG's draft speaking note states that a final decision will not be taken until 1994, the staff will interpret this as agreement in principle to the establishment of a fund.
6.
There are three angles of interest to HMG:
the Chinese angle.
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