C.S. 04
For discussion
on 2nd December 1975
XCR(75)238.
Copy No...!.
MEMORANDUM FOR EXECUTIVE COUNCIL
REVIEW OF POLICY ON CIVIL SERVICE PENSION INCREASES
Background
In Hong Kong it has been the general practice during recent years to review pensions immediately following a salary award, taking into account in such review the increase in the cost of living and any salary increases during the review period. The aim has been to ensure that pensioners can maintain a reasonable standard of living and that the purchasing power of their pensions is not unduly affected by rising prices.
2
No definite criteria for assessing such increases have ever been laid down, and they have all been granted on an ad hoc and ex-gratta basis, being referred to inaccurately as "temporary
increases.
3
The enactment of the Pensions (Increase) Bill 1975 will give statutory recognition to the fourteen ex-gratia increases in pensions which have been granted since 1946, and to any future in- creases. A Working Party was set up in June 1974 under the Chair- manship of Mr M.D.A. Clinton, with the task of recommending criteria on which future increases in civil service pensions should be assessed.
4
The Working Party examined the system at present in force in the United Kingdom, which is based on the Pensions (Increase) Act, 1971. It provides for annual reviews of pensions in the light of movements in the cost of living in the United Kingdom. If the cost of living has risen during the review period by 2% or more, a matching increase in pensions is awarded. No account is taken of any salary increase awarded to civil servants during the appropriate period, nor is the increase back-dated. Several commonwealth countries (Australia, New Zealand and Canada), conduct anal pension reviews.
Proposed criteria for future pension increases
5
The Working Party has recommended that the following criteria for accessing future increases in civil service pensions be adopted
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