33
Mr Ricketts
Mr Whitmen
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HMOCS: STERLING SAFEGUARD SCHEME significanth to the trous schemes,
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1. As you know, Paul Fifoot has provided a draft sterling safeguard scheme. There are a number of technical points to be sorted out before the scheme can be finalised, but you may like to be aware of the main principles which, subject to agreement with the Treasury, are likely to underlie the scheme. They are as follows:
(i) the safeguard will come into effect on 1 July 1997
(ii) the safeguard will apply to a notional and not an actual pension. The notional pension will be calculated with reference to the pensionable emoluments on 1 January 1992 for the officer's grade on retirement, converted into sterling (at an exchange rate of 13.76 ie the average for 1991) and increased in line with the UK RPI.
(iii) the safeguard will apply to a percentage of the notional pension. This percentage would be equivalent to the
non-commutable element ie 75% for officers on the old pension scheme; 50% for those on the new scheme.
(iv) the safeguard will apply to the pensions of serving officers, retired officers and dependants.
(v) to provide consistent treatment for serving and retired officers, retired officers will have only a proportion of their pension protected equivalent to the non-commutable element.
(vi) also for consistency pensioners will have a notional and not an actual pension protected.
The notional pension would be their pension at the date of retirement converted into sterling and increased in line with RPI.
(vii) the same arrangement as in (v) and (vi) will apply to dependants' pensions.
(viii) pensioners residing in the Hong Kong will not be eligible for supplements under this scheme.
2.
Even with a safeguard rate set at 16:1 HMOCS officers are going to object strongly to this scheme given that it will protect only a percentage of a notional pension (likely to be considerably less than their actual pension) and at an rate far worse than the current exchange rate. They will view the scheme as very different from previous safeguard arrangements (which it is) and will argue that they will only recieve supplements if there is a dramatic fall in the value of the HK Dollar or if the SARG fails to pay pensions (also correct). There is no question
ster.schem. ADM.JRB