Reed. 14/2/91
OVERSEAS SERVICE PENSIONERS' ASSOCIATION
PRESIDENT:
The Lord Grey of Naunton, GCMG GCVO OBE
SECRETARY :
63 CHURCH ROAD
HOVE SUSSEX
Mr. C. D. Stenton
BN3 2BD
Telephone: Brighton (0273) 721630
45 14/12
Your Ref:
Our Ref:
10th February, 1991
R.A.Burns Esq.,
Mr Paul: HAD
Assistant Under Secretary of State (Asia)
Foreign and Commonwealth Office,
London. SW1A 2AH
Dear Mr Burns,
Draft-replypt. Mittelaren
TGP
314/2
Thank you for your letter of 25 January setting the Record ofthe meeting between a delegation of the Association and Sir David Ford, Chief Secretary Hong Kong, on 20 November 1990 straight from your point of view. My colleagues who were at the meeting took careful notes at the time, and these were referred to the collective memory soon after the meeting so as to produce the Record which I sent you.
There is now no doubt in their minds of the accuracy of the Record, both as to the content and tone of what was said. We wonder therefore whether Mr Shipley may have had second thoughts about what he said at the meeting, and this aspect has not been commented upon in subsequent correspondence which we have had with Sir David Ford.
Be that as it may, what clearly matters is your understanding of what had been said in the FCO to Mr Shipley; and the position of the British Government in any discussions with the Hong Kong Government of what may or may not be done to protect the sterling value of HMOCS pensions both now and after 1997. I feel that it is aSemantic point as to whether the British Government is prepared to consider, or would be receptive to, a proposal from the Hong Kong Government regarding the value of these pensions. As I see it there has been a real step forward from the previous position whereby each of the Governments seemed 'to wash its hands' and say it was the responsibility of the other. The important point is that the Hong Kong Government now accepts that there is a situation which should be rectified and is working on proposals to be submitted to the British Government, and that when received the British Government will consider them. Obviously at this stage we accept that the British Government must reserve its position and is not commited to a specific solution; and that if the proposals involve, as the Association has advocated, the take-over of the pensions, then the exchange rate at which they are taken over is a crucial issue.
In the correspondence which we had with the Minister of State in 1986-87 Mr. R.T.Renton (see the final paragraph of his letter of 21 April 1987 which refers to the appendix to my letter of 20 March), while indicating that a take-over should be at a fixed rate of exchange, we did not specify what that rate should be. Nor did the Association's paper of December 1988 to which Mr Haye referred in paragraph 4 of the Record. The most equitable arrangement would seem to be to take the rate of exchange effective on the date of the pensioner's retirement and which is taken as the basis for the continuing calculation of his SPOS (This 'rate being sometimes referred to as his 'Personal exchange rate' [PER] or 'Special exchange rate' [SER]). I think it perhaps over dramatises the position to refer to this as the "OSPA formula"; and I am sure that if a 'take-over' arrangement is developed then the exchange rate to be applied will be a matter of fundamental importance and discussion.