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should amend the inequitable operation of the present regulations for UK pensions supplements (SPOS) for existing
Hong Kong pensioners affected by exchange rate fluctuations.
As David Mellor and I were unable to agree on this package,
we decided to split it up, first implementing the
compensation proposals, originally agreed between John Major
and Geoffrey Howe in 1988, and leaving the pensions issues
for further consideration.
3.
We have duly opened consultations in Hong Kong on the
compensation proposals. Initial HMOCS reactions are very critical of the limited nature of the proposals, and we can
expect some difficult discussions and public controversy.
However we now need to reach decisions on pensions. David
Mellor wrote to me on this point on 19 March. In view of
his paragraph 5 I should make clear that we do not assert
that HMG are necessarily under a legal obligation to
safeguard the sterling value of HMOCS pensions, but we are in no doubt that the White Papers and subsequent practice constitute a strong moral and political commitment by
successive British governments (decisions in respect of
which could well be the object of an application for
judicial review) to ensure that such a safeguard is provided
and, if the government of the territory concerned is unable
or refuses to provide it, to step in and provide it ourselves. I enclose a note setting out the precedents, of
which Hong Kong HMOCs officers are well aware.
4.
I would take issue with other points in paragraph 5 of David Mellor's letter too. For example, since 1984 Hong
Kong HMOCS have been expecting us to announce how we intend
to fulfil our commitments regarding pensions, ie the matter
has by no means been settled in their or our minds. However
the key point is whether or not the Hong Kong Government can provide a pensions safeguard or whether HMG will have to
provide it.
5.
In recent weeks the HKG and we have been exploring the
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