majority regard them as satisfactory. I am not convinced that there
is a case for changing them, although we naturally keep the matter
under review. As far as fluctuating exchange rates are concerned, we see no present justification for contemplating any sterling link or safeguard for pensions. The Hong Kong dollar link with the US dollar has proved extremely resilient. Most Hong Kong pensioners continue to do reasonably well, certainly in comparison with their UK public service counterparts and with HMOCS staff in receipt of pensions from other territories. The US dollar/pound rate has
certainly fluctuated but I do not believe that the fluctuations have led to cases of hardship. The Hong Kong Government have stated that if hardship cases were to arise, they would propose to ExCo that a small fund be established to provide one-off payments to pensioners in distress.
Thirdly, Mr McInnes refers to the possible erosion of the real value of pensions if exchange controls or punitive taxation were to be introduced after 1997. This point is fully covered in the Joint Declaration and the Basic Law which state that no exchange control policy shall be applied in the Hong Kong SAR. The Basic Law also stipulates that the Hong Kong SAR shall practise an independent taxation system, taking the low tax policy previously pursued in
Hong Kong as reference.
Fourthly, Mr McInnes asks about a General Compensation Scheme for
HMOCS officers who do not wish to serve after 1997. We are giving very careful thought to this matter and intend to make an
announcement as soon as possible.
Finally, Mr McInnes expresses concern about the career prospects of non-Chinese nationals in public service. It is true that a small
number of very senior posts will be reserved for Chinese nationals.
It was always envisaged that this would be so and the Joint
Declaration makes this clear. Although the number of posts restricted to Chinese nationals has been slightly increased in the final version of the Basic Law, the number of Civil Service posts thus affected is probably no more than 20 to 30.