The Old Farmhouse,
Nethercote Road,
Tackley,
OXON, OXS 3AW
2 January 1989
Thank you for your letter of 20 December
which I received, appropriately enough, on New Year's Eve.
2
ม
So, without harbouring too many optimistic illusions, yet in the belief that there is a compelling case to be put to XCO, I look forward to hearing from you again later on this month.
But, whatever the outcome, at least we shall know where we stand.
3.
As I know what it is like to have to jump from
one quite unrelated subject to another in the course of a working day as Chief Secretary, and as the CSB file on the subject of this correspondence must have grown quite thick during the past 12 months, may I summarise the issue for you?
(I stress this issue for. I suspect that there is still a tendency to get it muddled up with the other, quite separate, issues I defined, in my letter of 21 June 1988).
A
*
or
Historically, the pensions of expatriate officers were paid in sterling (until the late 1940s); effectively in sterling (until 1967).. Then they were given once-for-all choice of having their pensions paid in sterling, computed at a fixed rate of 16 Hong Kong dollars to the pound, or in Hong Kong dollars (in late 1967).
Those who opted for Hong Kong dollars did so in the knowledge that, having been changed once, the parity with sterling could well be changed again.
At the same time, all post-1967 retirees were, reasonably, for they were Hong Kong Government employees, required to accept a Hong Kong dollar exposure.
The potential sterling risk involved became apparent some five years later, initially within the Bretton Woods framework (from mid-1972) and then in a world of floating exchange rates (from late 1974 until late 1983), but there could be no complaint about that.
5.
quite
The break with established practice some would say it amounted to a breach of faith came in late 1983. Expatriate perisioners, as a consequence of a monetary policy decision quite unrelated to pensions policy, had to accept an effective US dollar, exposure, despite the fact that pensions were, and seil1 are of course, expressed in Hong Kong dollars
(quite correctly, as the Hong Kong Government was, and still is,