CONFIDENTIAL
(d) Commercial Loan
15.
HKG have commissioned a consultancy report on a scheme
to enable all Civil Servants to take out loans against a
part of their pension entitlements. The attractiveness of such a scheme to HMOCS members would depend upon whether
it could be extended to cover their full pension
entitlements and whether HKG and/or HMG were prepared to
subsidise the costs, and if so by how much. From HMG's viewpoint this scheme could provide (at a quantifiable price before 1997) a means of safeguarding the sterling value of HMOCS pensions. This assumes that financial institutions will be willing to operate it without HMG giving a sovereign
guarantee ie a continuing contingent liability. No
assessment has yet been made of the level of government
involvement which might be necessary to make a scheme viable. A potential attraction is that such a scheme could be applicable to all Hong Kong Civil Servants, even if HMG
topped up the loans to HMOCS officers. It could, however, prove divisive if a scheme for local officers was ruled out by HKG. We would not expect insuperable difficulties with the Chinese. Experts are considering further whether this option (or variants of it) could be made a viable scheme,
and if so at what cost. The Hong Kong Government's consultancy report is not expected before the end of February. HKG would need to consider whether a variant
tailored to HMOCS would cause resentment among local Civil Servants, and if so, what they could do about it.
Comment: Departments agree that this would be an attractive
scheme if a feasible scheme can be worked out.
(e) FCO/ODA Scheme
16.
This would fall well short of what HMOCS members are
expecting. They would in particular oppose the likely safeguard rate. But they would see that HMG had taken some account of their position and past commitments and the
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