HMOCS:
STERLING PENSION SAFEGUARD SCHEME
Purpose of the Scheme
The purpose of the proposed sterling safeguard scheme is to provide HMOCS pensioners with protection against a serious decline in the sterling value of their pension due to movements in the exchange rate between the Hong Kong dollar and Sterling.
Principal Features of the Scheme
A fundamental concern for HMG in devising a proposed sterling pension safeguard scheme has been the need to assess accurately the maximum contingent liability under the scheme and control as far as possible any increase in this liability.
HMG has therefore decided that it would not be appropriate for the scheme to apply to a pensioner's actual pension since HMG does not know what their pension level will be at their date of retirement or the amount of pension increases which will be awarded by the HKG/SARG thereafter. Instead, HMG proposes that the safeguarded "notional" pension should be calculated with reference to January 1992 HK salary levels uprated in line with UK Retail Price Index (RPI).
A second fundamental feature of this scheme is the exchange rate to be applied to determine the sterling value of the notional" pension which HMG will protect. HMG propose that the exchange rate should be HK$21: £1.
The scheme will come into operation on or before 30 June 1997.
How an officer can calculate the level at which his pension will be protected
The scheme is designed to protect the sterling value of a "notional" Hong Kong pension. For officers at present in post in Hong Kong without other service, this is calculated as follows:
1.
Determine what would have been the pension of the officer having regard to his actual grade and years of service at the date of his retirement but on the salary appropriate to that grade on 1st January 1992;
Divide the resulting figure by 21 to convert it into sterling;
2.
3.
The sterling figure is then uprated in line with the UK RPI to determine the sterling value of the "notional" pension at the time of the officer's actual retirement;
prps.nte.ADM
SLM
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