CONFIDENTIAL
August, FCO and ODA put forward a detailed package proposal. to the Treasury to provide:-
- a compensation scheme incorporating an incentive for HMOCS officers to stay on in Hong Kong after 1997 in the interests of stability. HMG has an obligation to offer HMOCS officers some compensation in the event of a change in their status arising from constitutional change;
- a sterling safeguard which would protect the value of their pensions in the event of a significant fall in the value of the Hong Kong dollar after 1997;
adjustment to the Supplementary Pension for Overseas Service (SPOS) arrangements, ie a technical change to the way present pensioners' statutory UK pension supplements respond to changing exchange rates.
More details of our proposals are set out in our August B letter to the Treasury at Flag B. This package would fall
well short of the expectations of HMOCS officers, and would be significantly less generous than schemes agreed for other colonies. But we judged that this was as much as the Treasury market would bear, and also took account of some special features of Hong Kong (civil servants are well paid; many of them will be able to continue their careers under the SAR Government; and the payment of their pensions is guaranteed by the Joint Declaration).
5.
C
The Treasury seem to accept that Ministers (including Mr Major as Chief Secretary) agreed in 1988 to a compensation scheme funded by HMG on the lines we have suggested (Ministerial correspondence at Flag C). But they have not discussed the detail or the PES implications. have also said nothing about the SPOS proposal (although
They
BODAFX/3
CONFIDENTIAL
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