3. Sir Philip Haddon-Cave and Mr Haye thought it very poor that both HMG and the Hong Kong Government were still passing the buck to each other. Sir Philip Haddon-Cave said that, in his view, the responsibility clearly lay with the Hong Kong Government. He could not understand why HMG did not put pressure on the Hong Kong Government to make them accept that it was their responsibility. The Hong Kong Government's claim that the introduction of sterling safeguards for HMOCS pensioners would be divisive was merely a smokescreen. HMOCS pensioners were not asking for discriminatory treatment. The fact was that they had been
recruited to work in a colonial administration and had returned to the UK when they retired. The problem was that their outgoings were in sterling but their income was in Hong Kong dollars which now carried a US dollar risk. As local officers faced no foreign exchange risk, their position was in no way comparable. HMOCS pensioners had the right to expect that their pension in their place of retirement would not fluctuate because of the Hong Kong Government's decision to peg the Hong Kong dollar to the US
dollar.
4.
Mr Haye said that the problem had been made in Hong Kong and should be resolved in Hong Kong. During his recent visit to Hong Kong, he had made clear to the Governor and the Chief Secretary that overseas pensioners felt extremely bitter and demoralised. The problem of pensioners was also affecting morale among serving officers. Yet it lay within the power of the Hong Kong Government to solve this problem. Local officers enjoyed all the privileges of expatriates without any of the penalties.
5.
Sir Philip Haddon-Cave said that one reason the present situation had arisen was because of a tendency over the last 15 years to "expatriatise" the terms of service for local officers. Various measures introduced by the Hong Kong Government since the early 1970s, eg fare-paid leave abroad, had led to a blurring of the distinction between local and
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