SECRET
FM HONG KONG
TO IMMEDIATE FCO
TELNO 246
OF 170936Z FEBRUARY
SECRET
HKA 233/1
18 FEB 1993
Y
OF
INDEX
KA
REGISTRY
HỒNG
INFO PRIORITY PEKING, UKREP JLG HONG KON
39
TOP COPY Q DIST?
171150 MDHIAN 0019
GOVER
PERSONAL FOR RICKETTS, HKD FROM GOVERNOR
37
YOUR TELNO 126 HMOCS
1.
THANK YOU FOR THE COPY OF THE LETTER FROM THE CHIEF SECRETARY AND THE COPY OF THE DRAFT REPLY FROM THE SECRETARY OF STATE. WE DO NOT ACCEPT THE TREASURY ARGUMENTS EITHER ON THE PRINCIPLES OR THE DETAILS AND BELIEVE THAT THESE HAVE BEEN CLEARLY REBUTTED IN YOUR DRAFT REPLY.
2. WE WOULD SUGGEST THAT YOU MENTION THE CHINA DIMENSION IN PARAGRAPH 5 OF THE DRAFT REPLY. APART FROM THE LEGCO PROBLEM, CHINA WOULD OBJECT TO THE TRANSFER OF ANY FUNDS TO THE UK FOR THE FUNDING OF HMOCS PENSIONS AND WOULD STIR UP A POLITICAL FURORE. THEY WOULD ACCUSE US OF ROBBING THE FUTURE SARG'S COFFERS FOR SOMETHING WHICH BRITAIN SHOULD PAY FOR. HKG HAS ALREADY DONE WHAT IT CAN IN ACCOMMODATING GENERAL RIGHT TO RETIREMENT.
3=
IN ADDITION PERHAPS YOU MIGHT MENTION THE CURRENT EXCHANGE RATE OF HK DOLLARS 11: POUNDS 1 IN PARAGRAPH 6 THUS DEMONSTRATING THE SIGNIFICANTLY LESS GENEROUS SCHEME NOW BEING PROPOSED.
4. TURNING TO THE MECHANICS OF THE PENSION SAFEGUARDS AS SET OUT IN PARAGRAPH 4 OF TUR, IT IS APPARENT THAT EVEN AT A RATE OF HK DOLLARS 16: POUNDS 1 THERE WILL BE LITTLE REAL PENSION PROTECTION UNLESS THERE IS A VERY SIGNIFICANT FALL IN THE VALUE OF THE HONG KONG DOLLAR OR THE SARG DEFAULTS. THIS WOULD BE ESPECIALLY TRUE
IF HONG KONG INFLATION AND SALARY INCREASES BETWEEN NOW AND 1997 WERE HIGHER THAN UKRPI INCREASES. THE TREASURY SCHEME AS EXPLAINED IN PARAGRAPH 6 OF TUR IS UNACCEPTABLE. IT PROVIDES NO REAL PENSION PROTECTION AND MAINTAINS AN INIQUITOUS SPOS SYSTEM.
5. WE HAVE ALWAYS TAKEN THE VIEW THAT THREE ELEMENTS MUST BE ADDRESSED TO RESOLVE THE HMOCS ISSUE. THESE ARE A COMPENSATION SCHEME, STERLING PENSION SAFEGUARDS AND REVISION OF SPOS ARRANGEMENTS AS PROPOSED BY ODA. WE THEREFORE SUGGEST THAT THE
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