sos.min.HMOCS
MVS
CONFIDENTIAL
"Nil cost" options
4.
(in Section I
The options paper lists two "nil cost" options, ie theoretical possibilities not requiring any funding by HMG.
We can dismiss both of them:
we cannot wash our hands of our obligations to HMOCS
officers without jeopardising our ability to administer and
police Hong Kong up to 1997;
-
"capitalisation" of pensions before 1997 is a non-starter.
It would require UK legislation, which would be seen in Hong Kong and in Westminster as taking money forcibly from an unwilling Hong Kong. It would for the same reason provoke a
confrontation with China. I see absolutely no attraction in putting the idea to the Chinese simply to confirm that they
would reject it.
Pensions safeguards
/
In
5. The options paper provides a list of advantages and
disadvantages in respect of each pension safeguard option. my view, some of the disadvantages of Options B-E are so significant as to make these options undesirable. Option B should be discounted as being too far removed from past practice and too complicated to administer. Option C, while providing a similar safeguard mechanism to Option A would
not give officers the reassurance which they need now. The
uncertainty of potential cost in this option might also be unattractive to HMG, but this will be more for you to judge. Option D has the same problem as option C as it would leave officers with no quantifiable guarantee eg if there were to be a serious fall in the value of the Hong Kong dollar in the
approach to 1997; and there would be endless arguement about inequity and hardship cases. I also see difficulties about Option E: our direct involvement as recipient of SAR pensions
CONFIDENTIAL
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