TNAG-2425-FCO40-3527-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 235

CONFIDENTIAL

Annex passed separately to

Private Office on 15/6 for onward transmissie

Bu

1516

HONG KONG HMOCS ARRANGEMENTS

COMPENSATION

Previous practice

-Compensation, calculated with actuarial factors, payable

to all HMOCS officers serving at time of independence.

-Usually paid in six equal instalments (to avoid incentive

to immediate departure), with interest at 5%

-Cap of £12,000

£14,000 (early 1960s)

-Exchange rate: fixed rate as at time of independence.

HMOCS claim

-Compensation, calculated with traditional actuarial

factors, payable to all HMOCS officers serving on 30 June 1996

-To be paid in lump sum on or before 30 June 1997.

-No cap

-Exchange rate to be as for sterling safeguard: "neutral", eg average 1972-1991 (about HK$11.6: £1).

HMG's original proposal

-"Benefits", calculated at half traditional actuarial

factors, to be payable to HMOCS officers serving on 30 June 1997

-20% of this notional total payable to all as of right,

plus annual instalments of 10% for those who stay in the service of the SAR Government after 1997.

-No cap (very few would be caught by a defensible cap).

-Sums to be calculated according to 1991/92 salary of post

held in 1997, converted to sterling at 1991 average exchange rate, up-rated in line with subsequent UK retail price inflation.

COST: in 1991 prices probably £20-£30m, with a maximum of £39m (if all eligible contract officers came into HMOCS); if upgraded to reflect 1992 Hong Kong salaries: £22-£33m, with a maximum of £43m.

CONFIDENTIAL