CONFIDENTIAL
Revisions to Compensation Scheme
HMOCS officers have made clear that the proposals put to them earlier for a limited compensation/incentive scheme are not an acceptable basis for a settlement. The revised
proposals summarised in the Foreign Secretary's minute of 12 June give all the points needed for Ministerial decisions on the issue of principle. They are based on detailed work by FCO and ODA officials. The results of computer modelling could be made available to Treasury officials if required.
Impact of early retirement on sterling safeguard
arrangements
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Any scheme which alters the retirement dates of HMOCS members could, of course, have an effect on the sterling safeguard arrangements. But the effect of early retirement is likely to be to reduce any liability falling to HMG. The worst case a contingent liability of £19 million per annum in the peak year of 2011 - assumes normal retirement ages and no commutation of pension. If officers decide to take early retirement they will need to leave before 1997. They would in all likelihood need to commute a substantial sum of
their pension in order to start afresh. Their much reduced pension entitlement would present us with lower liabilities
though starting at an earlier date.
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CONFIDENTIAL
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