CODE 18-77
Mr M Stone
Hong Kong Dept/FCO
Reference...
CONFIDENTIAL
FROM: D S FISH
нив 233/1
1
(GTN 7 7243 3444)
DATE: 17 December 1990
cc Mr J V Kerby
(with copy of OSPA
papers)
Mr AR Paul, HKDept
۹۱
Thank you for sending me a copy of Nigel Pusinelli's letter of 7 December to Andrew Burns with which he enclosed a copy of the note of the meeting between Sir David Ford and various OSPA representatives.
2. I very much share your view that Sir David has given a less than accurate view of the real position and that he has left OSPA rather more optimistic than we would like. I do not think that the damage is too serious but the confusion does make it imperative that we begin to move things forward. OSPA simply will not allow us to continue to prevaricate for much longer. The loss in value of pensions is an immediate problem for a large number of current pensioners and it will not go away, even if in the unlikely event that the Hong Kong dollar appreciates significantly in value against sterling.
3. Alan Paul told me that the Governor had indicated to Lord Caithness that Hong Kong would probably not feel able to go down the road of capitalisation of HMOCS pensions. When are we likely to get a formal reaction to this proposal? When we have a response we need to consider our next move very carefully. As you will recall from my minute of 9 November, we could improve the position of current pensioners by adjusting the SPOS rules to take into account the reduction in the value of the basic pension. Such an arrangement would be costly (probably between £2-3 million at current exchange rates) and would require Treasury approval. Tactically, I think it would be wiser to look at the mechanics of SPOS at the same time as we attempt to make progess on compensation and sterling safeguards. Given the vehemence with which OSPA are pressing the sanctity of personal exchange rates, manipulation of the SPOS rules might be the only way in which we could justify a sterling safeguard at the sort of levels we have been discussing, ie between 16 and 20 HK$ to the £1.
D S FISH
quis
Overseas Pensions Department
17 December 1990
CONFIDENTIAL
MrStone
Ра
I suggest you
copy my minure ?
December to Mc
17 Occer
Fish
18/12
42