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expatriate officers, it would fall to HMG to pay the
pensions at least up to the normal retirement age. We have estimated the possible cost of this at about £150 million.
It therefore formed no part of the proposal we put to the Treasury, and the Governor has confirmed his opposition to
it this week.
Preparing for consultations
13.
In order that the consultations in Hong Kong next week
can concentrate constructively on the details of our
compensation proposal, and as a matter of good faith, it is
desirable that we should let the HMOCS Association know in
advance that we shall not be able to give them any
encouragement on early retirement or any news on sterling
safeguards. If we fail to do this there is a risk that they
will break off the consultations when we make these points
at the opening meeting, which would place HMG in a weak
public position (and mean our journeys to Hong Kong were a
waste of public funds). If we make the position clear in
advance the present moderate leadership of the HMOCS
Association are likely to agree to proceed with consultations on the basis proposed, while reserving their
position to argue other points. If instead they say that
they do not wish to hold consultations with us on this
basis, that would be unwelcome, but it would still be open
to us to expand on our compensation proposal by letter and thus to preserve a degree of initiative.
Consultation tactics
14.
The main area where we can offer the HMOCS
Association movement on, or at least clarification of, our
proposal, is on the phasing arrangements. In these
circumstances our best tactics seem to be as follows:
Day 1: we should first say that many of the criticisms
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