CONFIDENTIAL
NOTE ON EARLY RETIREMENT
HK
Under previous schemes HMOCS officers have been permitted to take early retirement with immediate payment of pension. HMOCS have asked for the same treatment. However, unlike previous schemes an offer of early retirement is not within the gift of HMG, and is a decision for HKG. HKG's view has so far been that early retirement should not be granted as it would be divisive within the service, would draw a hostile response from the Chinese, and might affect the stability of the SAR in the period following the transition. However, this view might change depending upon the Chinese side's views on the future of expatriates in the civil service.
If officers were allowed to retire early, they could receive the commutable element of their pension before 1 July 1997. Any HMG safeguard would thus only apply to the non-commutable portion of the pension, thereby reducing HMG's overall contingent liability but at the same time bringing it forward by creating HMOCS pensioners sooner.
NOTES:
1.
In order to fix in 1992 UK prices the potential liability under Options A, C and F (ie to insulate the scheme against the possibility of Hong Kong salaries/pensions increasing more rapidly than UK increases), we consider that it would be necessary for HMG to safeguard only a notional pension, corresponding to the pension payable in 1992 for the retirement rank, converted into sterling at the average 1991 exchange-rate (HK$13.76: £1) and upgraded in line with the UK RPI.
2.
The Treasury consider that it would be desirable to require all officers benefiting from a scheme to commute at retirement their maximum entitlement (50% or 25%, depending on whether they are on the new or old pensions scheme). This would reduce the long-term contingent liability for HMG, although if there were an early fall in the value of the HK dollar it would have the effect of bringing forward the liability.
options.1.HMOCS
MVS
CONFIDENTIAL
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