TNAG-2431-FCO40-3533-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 126

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FCS/92/077

CONFIDENTIAL

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Mr Mu

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My Cerbu ODAHKA?33)

PS/Matten M FISH (JAMES

PSIPUS

Mrisques FED..

Mißernan

CHIEF SECRETARY

Mr Stye Spa

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Siv Jes Mr Burns

Miss Brooks Legal Aduas MILYE, RAD

HONG KONG: HMOCS PENSIONS

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5.

David Mellor and I corresponded recently about how we should fulfil our obligations towards the several hundred British officials and police officers in Hong Kong who at the change of sovereignty on 1 July 1997 will cease to be members of Her Majesty's Overseas Civil Service (HMOCS). This matter has been under discussion since the negotiation of the Joint Declaration in 1984, and the Governor has recently advised me that unless we can soon announce satisfactory arrangements, in line with those made in the other dependent territories, we risk losing many of these officers well before 1997, jeopardising our ability to govern Hong Kong effectively up to 1997 and damaging, the prospects for a smooth transition. I am sorry to trouble you with this problem so early in the life of the new government, but Chris Patten and I both believe that it is essential that we should resolve it before he takes up his position as Governor and, if possible, before 30 June, the date by when the officers concerned have to opt for pensionable terms or between new and old pension schemes.

3.

2. Last August we proposed a package solution, whereby HMG would fund a compensation/incentive scheme, to compensate the officers for the loss of my protection and to a certain extent of career prospects, and a safeguard for the sterling value of their Hong Kong pension. We also proposed that we should amend the inequitable operation of the present regulations for UK pensions supplements (SPOS) for existing Hong Kong pensioners affected by exchange rate fluctuations. As David Mellor and I were unable to agree on this package, we decided to split it up, first implementing the compensation proposals, originally agreed between John Major

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