SECRET
175
032422
SECRET
FM FCO
TO PRIORITY HONG KONG
TELNO 566
OF 26163OZ MARCH 92
HKA 233/1
INFO ROUTINE PEKING, UKREP JLG HONG KONG
la
TOP COPY Q DIST?
*MDLOAN 1510
M 2713
PERSONAL FOR GOVERNOR
HMOCS: STERLING SAFEGUARDS
1. WE HAD NOT EXPECTED TO HEAR AGAIN *FROM THE TREASURY ABOUT STERLING SAFEGUARDS BEFORE THE ELECTION, BUT TREASURY MINISTERS HAVE NOW PUT DOWN ANOTHER MARKER ABOUT THEIR ATTITUDE. IT REMAINS THEIR VIEW THAT THE ONUS SHOULD BE ON THE HKG TO FIND THE SOLUTION TO THIS PROBLEM. THEY SAY THAT THEY ARE REINFORCED IN THIS BY THE FINANCIAL SECRETARY'S PROJECTION OF A HKD71.6 BILLION RESERVES BALANCE IN JUNE
1997.
2. THEY THEREFORE BELIEVE THAT YOU SHOULD LOOK AGAIN AT THE OPTION OF CAPITALISING HMOCS PENSIONS BEFORE 1997: AT A COST OF HKD2-5 BILLION, WHICH COULD BE PHASED OVER FIVE YEARS. THEY SUGGEST THAT YOU MIGHT IMPROVE THE POLITICAL RECEPTION OF SUCH PROVISION FOR HMOCS BY SIMULTANEOUSLY RESPONDING TO THE PRESSURES ON YOU TO MAKE SOME PROVISION TO SUPPORT THE PENSION VALUES OF OTHER HONG KONG CIVIL SERVANTS (PERHAPS DRAWING ON THE CHINESE NOTION OF A HKD15 BILLION SET-ASIDE): SUCH SUPPORT MIGHT TAKE THE FORM OF PUMP-PRIMING, SUBSIDISING OR UNDER-PINNING A PRIVATE SECTOR SCHEME. IN THE LIGHT OF MARGOLIS' RESEARCH AND OF DISCUSSIONS BETWEEN TREASURY OFFICIALS AND REPRESENTATIVES OF BARINGS, THE TREASURY BELIEVE SUCH A SCHEME SEEMS INCREASINGLY LIKELY TO BE PRACTICABLE ON A COMMERCIAL BASIS.
3. WE DO NOT ACCEPT ALL THE POINTS WHICH THE TREASURY HAVE MADE IN THEIR LETTER AND SHALL MAKE THIS CLEAR IN DUE COURSE. WE NOW NEED TO AWAIT THE OUTCOME OF THE GENERAL ELECTION BEFORE TRYING TO TAKE THINGS FURTHER FORWARD HERE. MEANWHILE WE LOOK FORWARD TO HEARING YOUR COMMENTS ON MARGOLIS' REPORT ON THE PROSPECTS OF A PRIVATE SECTOR SCHEME. WE THINK THAT TREASURY OFFICIALS, IN THE LIGHT OF THEIR DISCUSSIONS WITH BARINGS, PROBABLY NOW SEE THAT THE PRIVATE SECTOR COULD NOT MOUNT A SCHEME TO COVER THE FULL VALUE OF HMOCS PENSIONS ENTITLEMENTS. INSTEAD THEY SEEM TO CONSIDER THAT SOME SUCH SCHEME AVAILABLE TO ALL CIVIL SERVANTS, BUT ONLY COVERING A LIMITED PORTION OF THEIR PENSION ENTITLEMENTS AND A RELATIVELY SHORT TIME-
PAGE
SECRET
1
No comments yet.
Private notes are available after approval.