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066554
MDHOAN 5399
BUT IF THE CHINESE WERE INDEED TO THREATEN TO VIOLATE JD 73, AND TO START ENQUIRING INTO THE TERMS ON WHICH PARTICULAR OFFICERS HAD RETIRED, OR WOULD RETIRE, BEFORE 1 JULY 1997, THE
IMPLICATIONS WOULD BE GRAVE. (ON THE FINANCIAL SIDE, IF CHINA OR THE SARG WERE TO DECIDE NOT TO CONTINUE EARLY PAYMENT OF PENSION IN SOME CASES, WE WONDER WHETHER THERE IS A RISK THAT THE SARG WOULD NOT IN FACT RESUME PAYMENT WHEN THE PERSONS CONCERNED REACHED THEIR NORMAL RETIREMENT AGE ?)
4.
IF THERE IS A PROSPECT OF A BREACH OF JD 73, THE CASE FOR HONG KONG INITIATING A SCHEME FOR PARTIAL FUNDING OF PENSIONS UNDER THE CONTROL OF INDEPENDENT TRUSTEES (OUR TELNO 737 TO HONG KONG, TO WHICH HONG KONG HAVE NOT YET REPLIED) INCREASES AND BECOMES AN EVEN STRONGER UK INTEREST. BUT IF THE CHINESE WERE TO ANNOUNCE BEFORE 1997 THAT THE SARG MIGHT DEFAULT ON SOME HMOCS PENSIONS, WE WOULD HOPE THAT EXCO AND FINANCE COMMITTEE WOULD THEN LOOK MORE FAVOURABLY AT CAPITALIZING THESE PENSIONS ENTITLEMENTS AND TRANSFERRING THE FUNDS TO HMG IN THE UK. IF NOT, MINISTERS MIGHT EVEN WISH TO LOOK AT THE OPTION OF ACTING BY ORDER IN COUNCIL. WE WOULD NOT BE WHOLLY POWERLESS BEFORE A THREATENED BREACH OF THE JD.
5. AS FOR WHAT WE HAVE ALREADY SAID TO THE CHINESE (PARA 7 OF UKREP JLG TELNO 227), WE DO NOT THINK THAT THIS HAS IN ANY WAY PREJUDICED OUR POSITION ON ALLOWING PRE-1997 RETIREMENT ON THE LINES IN HONG KONG TUR. A RIGHT TO EARLY RETIREMENT IS NOT THE SAME AS AN INDUCEMENT OR INCENTIVE TO RETIRE EARLY: OFFICERS CHOOSING TO AVAIL OF IT WOULD BE FOREGOING YEARS OF EMPLOYMENT AT FULL AND PROBABLY GROWING SALARIES, AND THUS ALSO FOREGOING ENHANCED FUTURE PENSIONS ENTITLEMENTS. OUR BENEFITS/COMPENSATION SCHEME WILL INCLUDE ELEMENTS OF INDUCEMENT TO STAY ON. CAS FOR PARA 6 OF UKREP JLG TUR, WE DID NOT SUGGEST THAT JD 72 AND 73 ENVISAGED EARLY RETIREMENT WITH PENSION: WE WERE INSTEAD MAKING A POINT ABOUT THE TIMING OF LOCALISATION.)
WE
6. NEVERTHELESS, IN THE LIGHT OF THE ADVICE SO FAR RECEIVED, ACCEPT THAT THE CHINESE DIMENSION WILL PROBABLY RULE OUT THINKING IN TERMS OF GIVING HMOCS OFFICERS A GENERAL COMMITMENT THAT THEY WILL BE ALLOWED TO RETIRE BEFORE 30 JUNE 1997 WITH IMMEDIATE PAYMENT OF PENSION. HOWEVER WE SHOULD BE GRATEFUL FOR YOUR VIEWS ON THE CHINESE DIMENSION OF INSTEAD GIVING HMOCS OFFICERS A LIMITED ASSURANCE OF 'BEST ENDEAVOURS'. WHAT WE HAVE IN MIND IS THAT, WHEN MR GALSWORTHY BRIEFS THE CHINESE ABOUT THE PACKAGE OF HMOCS ARRANGEMENTS WE ENVISAGE, IN THE LIGHT OF OUR
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