TNAG-2685-FCO40-3886-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1993 — Page 78

CONFIDENTIAL

(a)

a lump

sum

officer's annual

appropriate

3

calculated

by multiplying the

salary by a factor actuarially

to

his age and length of service

subject to an overall

maximum ceiling of 4.76

times the annual value of the Master Pay Scale

Point 48 (now Point 45 of the revised MPS);

(b)

on

retirement, payment of the officer's earned

pension benefits with, in the case of officers

below the age of 55, an enhanced factor for the

commutation of pensions.

5.

contained

Annex A (Annex A).

The compensation

and

commutation

factors are

in the tables I to III in the Appendix to the LCS

When the scheme was introduced in 1987 it was

estimated that about 100 officers, mainly in the Police

Force and the Administrative Service, would be affected and

the cost of the proposal would be around $100m at 1987-88

prices. So far a total of 16 officers have been retired

under the LCS at a cost of a total of $17.1 million.

Tax Issue

6.

Under existing legislation, compensation paid to

officers who are directed to retire is exempt from tax.

This is because the lump sum payment can be regarded as

compensation

for loss of office or employment and would not

CONFIDENTIAL