this is justifiable in the present climate.
the sterling pension safeguard rate of HK$16:£1 will
protect only a proportion of officers' pensions.
7.
My proposed compensation scheme would cost £2 million more
per year for 6 years than your proposal. The maximum
contingent liability arising from a pension safeguard set nominally at 16:1 looks substantial. But it would only apply if the Hong Kong dollar became worthless. In that apocalyptic situation, we would no doubt be having to help Hong Kong pensioners anyway since the successor government would have defaulted on pension payments. We have constructed our
safeguard proposal so that the Hong Kong dollar would in
practice have to fall well below 16:1 before HMG paid
anything. In my view, it would be a serious mistake for us to
put forward a scheme which stands no chance of being accepted
as reasonable by the HMOCS officers or pensioners and from
proposal which we would, as with the last scheme, be driven back.
8. In addition to the compensation scheme and sterling
pension safeguard we also need to proceed with the modest
revision to the Supplementary Pension for Overseas Service
(SPOS) Scheme proposed by ODA. The pension safeguard will not
work equitably, whatever the rate agreed, without a SPOS
revision. Existing Hong Kong HMOCS pensioners and the
Overseas Service Pensions' Association have been awaiting this
revision for some time. There is no reason to delay this
modest improvement for pensioners, which would cost about £1 million per year.
9.
I confirm that our initial legal advice is that the
compensation and sterling pension protection arrangements will require primary legislation. My postbag already shows that
HMOCS members and former members will be able to attract
Let.42hmocs.ADMIN
JEB