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CONFIDENTIAL
4.
With regard to the depreciation of the Hong Kong dollar,
the Overseas Service Pensioners Association (OSPA) have long
argued that pensions for HMOCS members from Hong Kong should be protected by a sterling link. Their argument has been that in every other colony which has reached independence,
HMG negotiated with the successor government a Public Officers Agreement which invariably contained provisions for
No to be paid at a fixed sterling exchange rate. Such & necptide pensions in the reen an agreement has not been negotiated for Hong Kong and is
and co
unlikely
C
Incursion
(POA)
not included in the Joint Declaration.As a result, HMOCS
pensioners retiring in the UK, which are the majority, have seen wild fluctuations in the sterling value of their basic
pension and in the last few years, these fluctuations have
been downwards. Until 1967 the Hong Kong dollar was pegged
at 16 to £1. It was then pegged for a short period at 14.54
to 1 and thereafter floated. In 1983 however it was pegged
to the US dollar and has therefore since then tracked the US
value ite
ren fluctuated, but this how been. dollar's movement. The US dollar has since 1985 been a gradual depreciatedr
depreciating and the Hong Kong dollar/pound exchange rate as of writing is almost 15:1 ie. the lowest it has been for
over 20 years.
5.
The question of the sterling safeguards for pensions is
an extremely complex one which we are now considering. It
would not be appropriate or possible at this stage to go
further than we have in the past on this subject. The
reply therefore draws on material previously used to answer
criticism about the depreciation of the Hong Kong dollar.
SPOS
6.
The question of SPOS is also another complicated issue.
SPOS is a mechanism whereby minimum pension increases in
sterling terms are guaranteed, irrespective of what
rela
Post-
increase the original (colonial) Government awards, by being limited to the rate of all British public service
pensions: that is they are index linked. Thus a 10%
ROFANE/2
CONFIDENTIAL