For discussion
FCR(97-98)29
on 23 July 1997

ITEM FOR FINANCE COMMITTEE

HEAD 30 - CORRECTIONAL SERVICES DEPARTMENT
Subhead 700 General other non-recurrent
HEAD 120 - PENSIONS
Subhead 015 Public and judicial service pension benefits and compensation

Members are invited -

1. to approve a new non-recurrent commitment of $18,083,000 together with supplementary provision under Head 30 Correctional Services Department Subhead 700 General other non-recurrent for ex-gratia payments; and

2. to note the financial implications, estimated at $59,892,000 for non-recurrent commuted pension gratuity payments, and $4,628,000 per annum for recurrent monthly pension payments

to staff who have retired or will shortly retire on abolition-of-office terms following the closure of the Whitehead Detention Centre in June 1997.

PROBLEM

The Correctional Services Department (CSD) needs funds for the grant of ex-gratia awards to redundant staff of the Whitehead Detention Centre (WHDC).

PROPOSAL

2.The Commissioner of Correctional Services (C of CS), with the support of the Secretary for Security, proposes to create a new non-recurrent commitment of $18,083,000 together with the necessary supplementary provision for the payment of ex-gratia awards to the affected staff.

JUSTIFICATION

3.With the implementation of the Orderly Repatriation Programme and Voluntary Repatriation Programme, the population of Vietnamese Migrants (VMs) has decreased significantly in recent years. As at early June 1997, there were only 900 VMs (including 400 VMs who have been released on recognizance) remaining in Hong Kong. We accommodated about 100 of them in the WHDC and detained the remaining 400 in the High Island Detention Centre (HIDC). In view of the small population of VMs in the WHDC, we closed the WHDC on 16 June 1997. Thereafter, we have kept all VMs centrally in the HIDC.

4.The following staff manned the WHDC prior to its closure -

5.Upon completion of the winding down work, the 18 General Grades staff have returned to the Civil Service Bureau for re-posting to other departments and CSD has re-deployed the 109 (i.e. 18 + 91) staff of the penal stream to other penal institutions. Of the 11 catering staff, three have transferred to other penal institutions while the remaining eight are surplus to requirement. As regards the 193 (i.e. 12 + 181) staff of the VM stream, since we employed and trained them specifically for the management of Vietnamese Migrants Detention Centres (VMDC), we cannot deploy them directly to work in non-VM related areas in CSD institutions. We allow those wishing to join the penal stream of CSD to do so after passing through the normal recruitment and training procedures. Although HIDC remains open, CSD mans the Centre wholly by staff of the penal stream and the existing staff there are able to cope with the additional population transferred from WHDC without reinforcement. In the circumstances, we have to make the eight surplus catering staff and 193 VM staff redundant and they have to retire on abolition-of-office terms if they fail to secure other positions in the civil service.

6.We issued discharge letters to all the affected staff on 15 April 1997 giving them three months' notice. Upon expiry of the notification period on 14 July 1997, the position of the 201 (i.e. 8 + 193) affected staff is as follows -

1. 122 VM/catering staff have not submitted any applications for civil service posts. They have proceeded on pre-retirement leave with effect from 15 July 1997 and will retire on abolition-of-office terms after exhausting their leave; and

2. the remaining 79 officers have applied for other civil service posts. Those who are unsuccessful in their applications will have to retire on abolition-of-office terms.

In addition, there are 24 other VM/catering staff who are currently on probation/trial in other posts. They can revert to their former office in CSD at will during their probation/trial period and retire on abolition-of-office terms.

7.Under the Pensions Ordinance (Chapter 89) or the Pensions Benefits Ordinance (Chapter 99), officers who have to retire on abolition-of-office terms will be eligible for enhanced pension benefits. In addition, in line with other redundancy exercises in the past, we will also grant each of them an ex-gratia award equivalent to six times the officer's final monthly salary in his substantive rank for loss of non-job related benefits. We have made similar ex-gratia awards to retired officers in such exercises as the contracting out of the management and operation of Government tunnels and the transfer of function of the Music Office to the Municipal Councils. Retirement benefits are payable to the affected staff at the end of their leave period.

FINANCIAL IMPLICATIONS

8.In working out the amount of ex-gratia awards payable to the affected staff, we have included in the calculation -

1. all of the 122 VM/catering staff who have not submitted any application for civil service posts as they will retire on abolition-of-office terms after exhausting their leave;

2. half of the 79 officers who are seeking alternative employment in the civil service as it is not realistic to assume that all of them will be able to find an alternative job in the civil service; and

3. none of the 24 officers who are currently on probation/trial in other posts as there is no evidence that they will revert to CSD for retirement.

9.Based on the above assumptions, C of CS estimates that the ex-gratia payments will amount to $18,083,000. As regards the enhanced pensions benefits, the non-recurrent commuted pension gratuity and recurrent monthly pension payments will be $59,892,000 and $4,628,000 per annum respectively. Details are at Enclosures 1 and2.

10.We have not made any provision under Head 30 Correctional Services Department for the proposed ex-gratia payments. Subject to Members' approval of the proposal, we shall offset the necessary supplementary provision by deleting an equivalent amount under Head 106 Miscellaneous Services Subhead 789 Additional commitments. Sufficient provision has been included in the 1997-98 Estimates under Head 120 Pensions for the pension payments.

BACKGROUND INFORMATION

Reason for the employment of VM staff

11.The large and sudden influx of asylum-seekers from Vietnam in the 1980s presented the Government with a very difficult situation in arranging accommodation for them. CSD had to employ additional staff to manage the VMDCs. We employed and trained temporary staff specifically for the management of the VMDCs. As the VM population persisted and CSD was faced with staff retention difficulties then, we offered permanent terms to some of the staff concerned from 1987 to alleviate the recruitment and retention problem.

Measures taken to minimise the potential redundancy problem

12.In recognition of the potential redundancy problem, the management of CSD has undertaken the following measures since 1992 -

1. stopping the transfer of temporary VM staff to permanent terms since 1992 in light of the stabilisation of the VM population;

2. conducting career talks and consultation exercises with the VM staff with a view to assisting them to seek alternative employment in the civil service since 1993;

3. issuing 18 rounds of letters to the staff concerned to invite them to apply for suitable positions in the civil service, including posts in CSD, since 1993;

4. obtaining the approval of the Finance Committee on 21 March 1997 (vide EC(96-97)69) to delegate the authority to Controlling Officers to create supernumerary posts, to be held against permanent posts of a lower pay scale, to enable as many affected staff as possible to take up alternate employment within the civil service; and

5. obtaining the agreement of the Administration in March 1997 to grant no-pay leave on an individual basis to those affected staff who require more time to seek other civil service posts before they are discharged.

Security Bureau
July 1997

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Enclosure 1 to FCR(97-98)29

Formulae for Calculating Enhanced Pensions Benefits

1.Formula for calculating unreduced annual pension is -

*	1/675 for New Pension Scheme
	1/600 for Old Pension Scheme

2.Formula for commuted pension gratuity is -

*	maximum of 50% for New Pension Scheme
	maximum of 25% for Old Pension Scheme

3.Formula for calculating reduced annual pension is -

*	maximum of 50% for New Pension Scheme
	maximum of 25% for Old Pension Scheme

4.Enhanced pension benefits due to abolition of office -

New Pension Scheme

An additional sum is added to the annual pension of an officer who retires from service on abolition of office if he has completed qualifying service of not less than two years. The rate of the additional sum is -

10/675 of an officer's highest pensionable emoluments for each complete three-year period of his pensionable service

Old Pension Scheme

An additional sum is added to the annual pension of an officer who retires from service on abolition of office irrespective of the period of qualifying service completed. The rate of the additional sum is -

1/60 of an officer's highest pensionable emoluments for each complete three-year period of his pensionable service

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Enclosure 2 to FCR(97-98)29

Vietnamese Migrants Staff Redundancy Package

I. Staff eligible for retirement under the abolition-of-office terms

II. Projected financial implications (at 1997-98 salary level)

Note

# 50% of the projected amount
*amount projected to be 'zero' due to the low probability of these officers reverting to their former office in CSD.

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