TNAG-2417-FCO40-3519-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 234

CONFIDENTIAL

HMOCS members' expectations, it goes some way to meeting the White Paper obligation to provide compensation. The cost of the scheme is difficult to predict. The most likely figure is between £20-30 million, with a maximum of £44 million.

The scheme at Annex B was designed to form part of a package, with a sterling safeguard (see next section).

But

if no such safeguard scheme can be agreed, one option would be to introduce a compensation scheme only. Views differ on the impact this would have. HKG believe that it would buy

some time with HMOCS officers. ODA consider that it would

be seen by them as so inadequate that it would only fuel

pressures for a full safeguard scheme as well. FCO

Diplomatic Wing see a risk of salami tactics by HMOCS

officers first pressure for a traditonal compensation

package then pressure for sterling safeguards.

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Sterling Safeguards

6.

All Civil Servants in Hong Kong are worried about the

possibility of the Hong Kong dollar declining in value:

but HMG's commitment is limited to HMOCS members. The

compensation scheme outlined in Annex B will do nothing to allay these worries. There are essentially six possible ways of addressing this issue:

(a) to introduce traditional arrangements whereby officers

can retire in 1997 with full payment of pension at a

rate safeguarded by HMG;

(b) for HMG to accept a contingent liability that if the

Hong Kong dollar/sterling exchange rate drops below a

certain value say 16 to 1 HMG will make up the

difference;

(c) to persuade the Hong Kong Government to pay to HMG a

capitalised sum representing HMOCS pension entitlements

for service up to a given date, and for HMG then to pay the pensions;

(d) to introduce a scheme whereby HMOCS members (and other

civil servants) can take out a commercial loan against a

NFJABA/3

CONFIDENTIAL