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Fro 40/3888
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MDHOAN 811
relatively small sum, it is actual expenditure, and we may find that the Prime Minister seeks to reduce the cost. If he is not prepared to accept our proposal, we think the next best option would be to agree to officers who leave in 1997 receiving compensation based on full factors, and those who stay obtaining compensation based on half factors. We appreciate that this is the opposite of the approach underlying the proposal on which we consulted the HMOCS Association, but it does reflect our current policy which is to retain staff up to 1997. It has some Logic in that those who continue after 1997, and who still have a limited career, should receive less compensation than those who decide to go.
We calculate that this proposal would reduce the cost of the scheme by some 4 million pounds.
Sterling Safeguard
5. We believe it is essential to continue to resist the Treasury's position on comparability with UK civil servants, otherwise we may be forced to accept the rate of 22:1 (reflecting differences in pay) or 26:1 (reflecting differences in pay and pensions). However, when it comes to negotiations with the HMOCS Association it will be a very strong point in our armoury if we can say that the safeguard will ensure that an HMOCS officer's pension will not fall below that of his UK counterpart. For this to be true the rate would have to be no worse than Hong Kong dollar 19:1 pound (based on a comparison between Hong Kong police officers and their counterparts in the UK). Would you be able to agree that as part of a final settlement, the Secretary of State should be prepared to move to 19:1? He would probably also have to accept the Treasury mechanism for the safeguard (the difference between our proposal and the Treasury's was set out in para 6 of our telno 126), partly because it is difficult to argue against it and because we can present it as a concession in order to secure the SPOS amendment.
SPOS
6. Given that the safeguard as described above would only be of value to officers in the event of a catastrophic decline in the value of the Hong Kong dollar or default by the SARG on pension payments, we think it essential that the SPOS Regulations be amended. In practice, this will mean more to current HMOCS officers and to existing pensioners (who are also lobbying us) than the safeguard. We should be prepared to trade our
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