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their overall income falling in a manner clearly not intended by the Statute.
13. Cur proposal to minimise the deficiencies in the SPOS arrangements is described at Appendix C. We estimate that the cost would be £1 million per annum at current exchange rates and £2 million per annum at HK$16: £1 sterling.
In what were
very exploratory discussions with yout Superannuation Division, it was accepted that the present arrangements were difficult to defend, but your colleagues were not wholly convinced that Hong Kong should not meet the cost of a change in the way we operate the regulations.
FINANCIAL ARRANGEMENTS
14. We have considered very carefully whether it would be
or the right or feasible to ask the Hong Kong Government, Chinese on behalf of the future SARG, to bear the cost of a sterling safeguard or of a contribution to the UK Pension Increase equation. We have concluded that it would not.
15. We judge that there is no prospect of the Chinese agreeing to commit the SARG to sterling safeguards for the
The matter is not one for pensions of British expatriates. the Hong Kong Government alone, since it will cease to exist when the arrangements would be in force and the Chinese have made it plain that they do not feel bound to recognise any post-1997 arrangements entered into by HK Government without their agreement.
16. It is impossible for the HK Government now to introduce sterling safeguards for all civil servants. This would show a complete lack of confidence in the present link between the Hong Kong and US dollars. To do so only for expatriates would be highly divisive between local and overseas officers in Hong Kong's unified civil service. There would also be strong
The Hong Kong opposition in the community as a whole. Legislative Council would not vote the funds: ExCo have
And in any already stated that the matter is one for HMG. event such a safeguard could last only until 1997; there would be strong pressure for HMG to pick up the commitment thereafter.
17.
The only way to ensure that HK Government took on the liability would be for HK Government to capitalise all outstanding HMOCS pension liabilities and make over this sum
which to HMG before 1997. We have put this to HK Government, has rejected it: they could not do something for HMOCS members alone, the same treatment would have to be applied across the board; the Finance Committee of Hong Kong Legislative Council would not approve the funds; such a move would be a clear vote of no confidence in the future SAR's ability to pay; and it
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