SECRET
HKCA 016/1
SECRET
FM HONG KONG
TO DESKBY 02130OZ FCO
TELNO 2815
OF 021145Z DECEMBER 92
AND TO IMMEDIATE UKREP JLG HONG KONG
97
124435
MDHIAN 0326
TOP COPY Q DIST?
PERSONAL FOR RICKETTS, HKD. SERVICE.
.96
FROM SECRETARY FOR THE CIVIL
YOUR TELNO 1677: LOCAL PENSION SAFEGUARDS.
1.
WE HAVE INDEED CONSULTED EXCO ON THE OUTCOME OF OUR STUDY ON LOCAL PENSION SAFEGUARDS. EXCO HAS AGREED THAT GREATER COMMUTATION, A PROVIDENT FUND SCHEME FOR FUTURE SERVICE, VARIOUS PRIVATE SECTOR LOAN SCHEMES (HYPOTHECATED PENSION FUNDS) AND VARIOUS HOUSING BENEFIT RELATED PENSION SAFEGUARD PROPOSALS ARE NOT FEASIBLE AND DO NOT PROVIDE A PENSION SAFEGUARD.
2.
THIS LEAVES US WITH THE PARTIAL FUNDING SUGGESTION. DESPITE THE EXISTING PENSION SAFEGUARDS (STATUTORY OBLIGATIONS AND THE GUARANTEES IN THE JOINT DECLARATION AND THE BASIC LAW) AND THE CONCEPTUAL DIFFICULTIES, EXCO FELT STRONGLY THAT THERE WAS CIVIL SERVICE CONCERN OVER THE SECURITY OF PENSIONS THAT NEEDS TO BE ADDRESSED IF WE ARE TO MAINTAIN A STABLE CIVIL SERVICE IN THE RUN UP TO 1997. IN ADDITION, WHILST MEMBERS NOTED THE STATUTORY OBLIGATION TO PAY PENSIONS FROM RECURRENT REVENUE, THEY ALSO NOTED THAT UNDER THE PROPOSED COMMUNITY WIDE COMPULSORY PRIVATE SECTOR RETIREMENT SCHEME, PRIVATE SECTOR INSTITUTIONS WOULD BE REQUIRED TO FUND PENSIONS.
3. EXCO STOPPED SHORT OF AGREEING FORMALLY AT THIS STAGE TO A PARTIAL PENSION RESERVE FUND. THEY WERE HOWEVER SYMPATHETIC TO THIS IDEA. IT WAS DECIDED THAT THE PARTIAL FUNDING PROPOSAL SHOULD BE CONSIDERED FURTHER IN THE LIGHT OF THE FINANCIAL POSITION OF THE KG AND THE FUTURE SARG AND OF HOW A PENSION RESERVE FUND MIGHT BE SET UP AND MIGHT OPERATE. THIS WOULD INCLUDE DISCUSSION WITH THE CHINESE IN THE JLG CONTEXT. A FORMAL DECISION WOULD BE TAKEN IN 1994-95. IT WAS AGREED THAT STAFF SHOULD BE INFORMED ACCORDINGLY. IN THE MEANTIME WE WOULD EXTEND THE NEW PENSION SCHEME OPTION DEADLINE BY THREE YEARS UNTIL 31 DECEMBER 1995. EXCO FELT THAT IT WAS IMPORTANT THAT THE STAFF BE INFORMED IN SUCH A WAY THAT THE GOVERNMENT RETAINED SOME OF THE
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