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Implications for the level of reserves in 1997. The
Treasury have always kept a close eye on HKG decisions which
could affect the reserves. We have consulted them over this
proposal. They are not overly concerned at this stage as no decision has been taken on the size or nature of a possible
reserve fund. They have however stressed the need for
prudence on the part of HKG so that when a decision is taken
it does not lead to the reserves being over committed.
- The implications for HMOCS. A pension reserve fund will not
affect any of the elements of our proposed HMOCS package. However, postponing the option deadline for the NPS plays into the Treasury's hands and they may argue that decisions on
HMOCS can now be taken nearer to 1997. On the other hand, we have in the past pressed Hong Kong to consider favourably the establishment of a fund for the civil service as a whole, but as a contribution to the maintenance of civil service morale,
and because it would ease the divisive effects of a deal for
HMOCS officers. This consideration is still relevant, although its value is slightly diminished as the timing of the announcement on the reserve fund and arrangements for HMOCS will not coincide.
7. HKG has commented that non-officials in ExCo are very sympathetic to civil servants' concerns and it was only with difficulty that they were persuaded not to make an unequivocal commitment to provide a fund immediately. In these circumstances, I do not think that we should try to prevent HKG following ExCo's advice and making the announcement contained in the speaking note. We should however suggest they consider making clearer in the speaking note the need to
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