SECRET
FM HONG KONG
TO DESKBY 17090OZ FCO
TELNO 2710
HKA 233/1
OF 170816Z NOVEMBER 92
SECRET
TOP COPY Q DIST?
PERSONAL FOR RICKETTS, HKD FROM DINHAM, GH
(PLEASE PASS PERSONAL TO PS/GH VISITING)
1617
1618
YRTELNOS 1626 AND 1627 HMOCS
ри
6191
056332
MDHIAN 7962
1. THANK YOU. WE AGREE THAT THE FCO SHOULD REVERT TO THE TREASURY ALONG THE LINES SET OUT IN TELNO 1627. ASSUMING BROAD AGREEMENT IN PRINCIPLE CAN BE REACHED, WE ENVISAGE A SCENARIO IN WHICH AN FCO/ODA TEAM WOULD COME OUT FOR A SECOND ROUND OF CONSULTATIONS TO LAY OUT THE VARIOUS PROPOSALS. THE HMOCS ASSOCIATION WILL CERTAINLY SUBMIT COUNTER-PROPOSALS BUT MAY ACCEPT THE FINAL HMG
DECISION PROVIDED THE PACKAGE IS SEEM TO BE FAIRLY BALANCED. OUR
SPECIFIC COMMENTS FOLLOW.
2. AN ADEQUATE HMOCS COMPENSATION PACKAGE IS ESSENTIAL. OPTION C, WHILST ACCEPTABLE, HAS A CAP SET AT GBP120,000. THIS CAP IS ALREADY ARTIFICIALLY LOW. IF PAST PRACTICE ELSEWHERE WAS FOLLOWED IT WOULD BE NEAR GBP200,000 HAVING REGARD TO HONG KONG SALARY LEVELS.
3. IF THE HKG ACCOMMODATES A GENERAL RIGHT TO RETIREMENT THIS WOULD REDUCE POTENTIAL COSTS TO THE TREASURY ON STERLING SAFEGUARDS (SMALLER PENSIONS AND LESS NEED TO PROTECT THE COMMUTED LUMP SUM AFTER 1997). GENERAL RIGHT TO RETIREMENT WAS A FEATURE OF ALL HMOCS COMPENSATION PACKAGES ELSEWHERE. SO WAS THE PROVISION OF STERLING PENSION SAFEGUARDS. IF WE CONCEDE ON GENERAL RIGHT TO RETIREMENT THIS MUST BE ACCOMPANIED BY A PENSION SAFEGUARD AT A DECENT RATE.
4. THE HMOCS ASSOCIATION WILL ARGUE VERY STRONGLY FOR A PENSION SAFEGUARD AT HKD13.76:GBP1. ALTHOUGH THEIR FINAL POSITION IS LIKELY TO DEPEND UPON THE ACCEPTABILITY OF THE OVERALL PACKAGE INCLUDING COMPENSATION AND GENERAL RIGHT TO RETIREMENT. THEY WILL STRESS THAT THE HKD13.76 RATE CAN BE JUSTIFIED AS AN AVERAGE IN 1991 AND THAT THERE IS NO LOGICAL REASON TO PENALISE HMOCS OFFICERS WHO HAVE SERVED IN HONG KONG BY SETTING AN ARTIFICIALLY ADVERSE RATE AND THAT THE LEVEL OF SALARIES SHOULD NOT BE THE
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