TNAG-2417-FCO40-3519-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 235

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proportion of their pension entitlements;

(e) to make a firm decision not to introduce a safeguard

scheme;

(f) to delay a decision on safeguards until much nearer

1997.

Each of these options is explained in more detail in Annex

C.

7. The political and financial consequences of each option

are considered below.

Traditional Scheme

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8. This is what HMOCS members are seeking, but it could be very divisive in Hong Kong. It would be very expensive. As most HMOCS officers would be likely to take advantage of the

scheme, the cost could approach its maximum £150 million. It would also be hard to reconcile with our commitments

under the Joint Declaration. It could be difficult to

explain to Parliament why we were prepared to commit up to £150 million on a group of civil servants who are already

well paid by UK standards and given the assurances about

security of pensions in the Joint Declaration. Departments are agreed that this option should be ruled out as being too

expensive, and undermining the assurances in the Joint

Declaration.

FCO/ODA Scheme

9.

This would fall short of what HMOCS members are

expecting.

They would in particular be strongly opposed to

a safeguard rate of, say, $16 to £l. But it would give them a degree of certainty that their pensions would not become worthless even if the Hong Kong dollar collapsed. The costs of the scheme cannot be predicted they could be zero if

the Hong Kong dollar stayed stronger than $16 to £1, or they

could amount to several hundred million pounds if it became

NFJABA/4

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CONFIDENTIAL