3.
SUPPLEMENTARY PENSION FOR OVERSEAS SERVICE
3.1
3.2
3.3
3.4
Members of H.M.O.C.S. are eligible for a Supplementary Pension for Overseas Service (SPOs). (The U.K. legislation stems from the Pensions (Increase) Act 1971, Overseas Pensions Act 1973 and the Social Security Pensions Act 1975. The basic regulations are in the Overseas Service (Pensions Supplement) Regulations 1977, as amended in 1977 and 1979). SPOS payments are intended to maintain the purchasing power of a pension in sterling at its value when first granted. This is not achieved because of two major defects.
of
A
SPOS payments are determined by reference to a Base Rate calculated as the sterling equivalent of the value the Hong Kong dollar pension at the date of retirement. disadvantageous exchange rate at that time therefore has an effect on the sterling value of the pension receivable can never be recovered.
that
The monthly payments take no account of changes in exchange. rates so that the Sterling value of the pension suffers from large fluctuations which have no relation to the purchasing power in the U.K. Pensions increases in Hong Kong are taken into account in the SPOS payments so that it has not been uncommon for the Sterling value. of both the basic and supplementary pensions to go down while inflation in the U.K. is going up.
The current high value of sterling as against the Hong Kong dollar is not a new phemomenon and, whilst concern has been expressed in the past, it has been generally accepted that exchange rate movements have been based on economic factors that were often cyclical. However since October 1983 the Hong Kong dollar has been pegged to the U.S. dollar and the inflexibility of this peg
exacerbates the problem. This Association is of the view that the inconsistences in the SPOS arrangements could be reduced by the adoption of a fixed rate of exchange determined by reference to that prevailing at an acceptable key date.
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