CONFIDENTIAL
then. I therefore now propose the revised scheme set out in the Annex to this letter, which is closer to traditional schemes. The cost would probably be about £8m pa (in 1992 prices) over 5-6 years from June 1997.
a
3. We are not in a position at present to give satisfaction to the HMOCS officers on the third main element outstanding from the traditional package of arrangements made at the time of constitutional change: right of early retirement with immediate payment of earned pension. This is a matter for the Hong Kong Government, and they need to consider it as part of the wider question of terms and conditions for their Civil Service up to 1997. We continue to explore the possibilities with them. But as we envisage no UK financial commitment, I do not think we need discuss this when we meet.
4. I hope you will agree that we also need not discuss the question of UK pensions supplements (SPOS) payable to existing Hong Kong pensioners under UK pensions
legislation.
David Mellor recognised the degree of
inequity of present arrangements, so I hope that we agree now that officials should implement the necessary changes.
5. These commitments would all be handled by the ODA, with costs being charged to the Superannuation Vote. They would require separate provision from 1997 onwards (John Major accepted in 1988 that we could not justify the diversion of Aid funds to Hong Kong for the compensation scheme but left it to a future government to decide how to deal with the funding in PES terms.)
6.
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I am copying this letter to Michael Portillo, Chris Patten, Lynda Chalker and Alastair Goodlad.
DOUGLAS HURD
CONFIDENTIAL
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