L
APPENDIX A
STABILIZING THE EXCHANGE RATE FOR THE
PAYMENT OF HONG KONG OVERSEAS PENSIONS
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o accopt that overseas and indeed all pensions are awarded and payable in K dollars and wo fealise that it would be very difficult politically for the iong Kong Government to discriminat in favour (as it would be rogarded) of one category of pensioners namely the ovarsoas pensioners, an compared with all the other, and indeed the majority of, pensionors; and as a result the Hong Kong Governsent is likely to be unwilling to take any initiative to provide for overseas ponsions to be paid at a fixed rate of exchange. As indicated in the covering letter the British Govern- ment has obligations to ensure that the undertakings given to HMOCS officers, and thus overseas pensioners, are fulfilled. It seems to us that an arrangement along the following lines would overcome the problems, and it should be acceptable to both the British and Hong Kong Governments. The British Government should, under the provisions of the Overseas Ponsions Act, 1973, take- over from an early date all overseas pensions then in issue, and from the date of their retirement the pensions of IIMOCS and other overseas officers, and pay these pensions at an appropriate fixed rate of exchange. So that the payment of these pensions should not be a total burden on the British Government, the Hong Kong Government up to 1997 and thereafter the Hong Kong S.A.R. Govorn- ment should pay to the British Government the amount of these pensions as awarded in IK dollars at the current monthly rate of exchange. Obviously the details and mochanics of such an arrangement would have to be worked out and negotiated with those concerned, but it seems to us
to us that it would fulfill the British Government's obligations to overseas pensioners by safeguarding the payment of their pensions and at a fixed amount in sterling: while the ilong Kong Government could present it on the basis that it was still paying the amount of the pensions as awarded in HX dollars and that the special arrangements are required by the British Government in view of its long-standing undertakings to and responsibilities for overseas ponsioners. ment would of course stand to gain or lose according to the fluctuation of the K dollar/sterling exchange rate. The payment of overseas pensions at a fixed rate of exchange would remove the anomalies in the paymonts by the British Government of the Supplementary Pension for Ovorsoas Service in regard to which we have had considerable corrospondonce with the Overseas Development Administration on the subjoot, (my letter, rof. FIHP/ai/F18 of 20th Juno 1983 to 'r. A. Beattie summarised the . position).
The British Govern-