CONFIDENTIAL
APPENDIX 2
PAKISTAN
Prior to independence in August 1947 Indian pensions paid outside India were paid either by the India Office on an agency basis or by the High Commission for India in London.
2.
In 1948 the Pakistan Government purchased from the British Government out of their sterling balances at a cost of £8,166,848 tapering annuities calculated to be sufficient to supply the sterling required to meet their sterling pensions liabilities during the lifetime of the pensioners. The Pakistan Government continues to pay the pensions from the annuity instalments. These instalments were calculated as £375,000 in 1948/9 tapering to £7,500 in 1997/98.
3. It had been hoped to conclude an agreement with the Pakistan Government similar to the 1955 Agreement with India under which the British Government would assume responsibility for the payment of the future pensions in return for a lump sum settlement. Calculations showed however that the capital value of the annuities was less than that of the pensions liability and in the event it was not possible to reach a mutually acceptable arrangement. Thus the sterling pensions are still paid by the Pakistan Government either through the High Commissioner for Pakistan in London or by the ODM. The present Pakistan pension bill is about £280,000 pa.
4. Pension increases to Pakistan pensioners are paid from British funds in view of the Pakistan refusal to pay increases to civil pensioners after the Pensions (Increase) Act 1944.
5.
Some pensioners have had their pensions suspended by the Pakistan Government due to an illiberal interpretation of an old rule regarding citizenship and about 10 of these pensioners are now being paid loan advances from British Government funds in lieu of their pension.
6. The Pakistan Government has therefore already effectively relieved itself of its sterling pensions burden at some cost to itself.
CONFIDENTIAL