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worthless. While the scheme would be divisive to a certain
extent in the Civil Service, the fact that HMG were paying, pursuant to their part undertakings to HMOCS members, should
make this containable. Departments differ on whether HMG should be prepared to take on a contingent liability of this
kind. The Treasury argue that HMG should not do so unless
they simultaneously received assets from Hong Kong to pay
for it.
X
Capitalisation
10. This scheme would cost HMG nothing, and would give HMOCS members the protection they seek. However, it
presents grave problems in the Hong Kong context. Capitalisation of pensions is precisely what local Hong Kong civil servants are after. For the Hong Kong Government to provide this for a small group of expatriates without
providing the same for the great majority of civil servants
would be highly divisive. HKG simply cannot fund the HK$120
billion needed for capitalising the whole Civil Service
Pension Scheme. The Governor's considered judgement is that the Legislative Council would not be willing to vote the
money for a capitalisation of HMOCS pensions alone, and that
Hong Kong could not afford to capitalise all pensions.
11.
Chinese views have not been tested. Views differ
between Departments on how strongly they would object. But the advice from Peking, Hong Kong and our Delegation to the JLG in Hong Kong is that they would be deeply suspicious of
proposals for Hong Kong to pay for disproportionately
generous arrangements for expatriate civil servants. At the least they would engage us in lengthy dialogue: at the worst
they could accuse us of trying to renege on the Joint Declaration and could withdraw co-operation in other areas, despite the damage this would to the prospects of a smooth transition in 1997 and to the authority of the Hong Kong Government. The FCO consider that the Chinese should only be approached if Ministers concluded that they wished to
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