HM OVERSEAS CIVIL SERVICE (HMOCS) : HONG KONG :
COMMENTARY ON OPTIONS PAPER
I.
OPTIONS FOR HMG-FUNDED ARRANGEMENTS
- We have looked hard for satisfactory alternatives to HMG-funded arrangements, but in vain. Section II sets out what might theoretically be done, but in terms of practical politics the real choice for HMG is either to fund
arrangements or to leave Hong Kong HMOCS officers in the
lurch.
A.
STERLING SAFEGUARDS FOR PENSIONS
Option A:
- This is the nearest equivalent to the arrangements traditionally provided for HMOCS officers by the local government (or, where necessary, by HMG), whereby all officers receive their pensions at the same fixed rate to sterling. UK pensions legislation already incorporates the concept of HMG paying supplements on top of local pensions.
- But choice of the trigger-point for HMG to intervene is difficult (the present rate is about $195 : £1):
12.5
(a) $13.76 is arguably closest to traditional practice, which fixed the exchange-rate current at the time of constitutional change (usually a long-standing fixed rate). In the Hong Kong case neither the HMOCS officers nor we can afford to leave settling an exchange-rate until 1997. The HMOCS Association would no doubt argue for the 20-year average rate since the Hong Kong dollar was floated (1972), ie $11.54 ; but they would be likely to accept $13.76, the average rate for the last full calendar year, 1991, which we have already put forward as a basis for calculating Compensation payments. However this would make for an unacceptably high contingent liability.
(b) $16 would be opposed by the HMOCS Association, but would be likely to be seen as a tolerable compromise between the interests of the UK tax-payer and those of the HMOCS officers. There is a logic to the figure as it is the rate at which the Hong Kong dollar was for long pegged to the pound sterling. Any higher figure would be rightly seen as arbitrary, and correspondingly more difficult to defend. We need to propose a figure, albeit an unpopular one, to which we can stick. is natural for HMG to set a figure somewhat above current exchange rates, which discounts the fact that Hong Kong
It
options.comm.1. HMOCS
MVS
1