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Sec. 10/4406/47.
CONFIDENTIAL.
COLONIAL SECRETARIAT,
HONG KONG.
3
23
S-April,1949.
Dear Sidebotham,
The proposal that expatriate officers who were in the service when the salaries revision took place should be allowed to opt to have their pensions calculated and paid in sterling at the rate of sixteen dollars to one pound is giving rise to certain difficulties.
2.
A straight option now to have pensions calculated at a guaranteed rate of 1/3d to the dollar would put officers in the same position as they were in, when their salaries were expressed in sterling, and this, it seems to us, is all they can reasonably ask for. If such an offer had been made to the European Civil Servants Association with no conditions attached, it is probable that they would have accepted it. But the Secretary of State in his reply (telegram No. 640 of the 5th (21) '48 June) laid down a condition in paragraph 2. This caused the Association to press for the option to be exercisable at any time up to the date of retirement. Directly the Government tried to safeguard its position if a certain set of circumstances arose, it was not unnatural that the Association should endeavour to safeguard the position of the officer.
3.
I hope to be able to convince you that the condition set out in paragraph 2 of the telegram in question is not really necessary, and if the Association can be made to see that an option exercisable up to the date of retirement is not as attractive as it looks, the way should be open for the offer and acceptance of a straight option exercisable now,
without any conditions attached.
4.
The condition set out in the Secretary of State's telegram was designed to safeguard the position if the Hong Kong dollar dropped to 71⁄2d and salaries were doubled as a consequence. If anything of this sort did happen, the officer would presumably be given a choice of remaining on his old salary or accepting the new salary and the conditions that went with it. One of these conditions no doubt would be that pensions would be convertible into sterling at the new rate. There would therefore be no possibility of an officer who had opted for a guaranteed rate of 1/3d having his dollar pension doubled and by converting at 1/32 being able to draw a pension equivalent to his salary. In practice he would have the choice of retaining his old salary and the right to convert for pension purposes at 1/3d or of taking the new increased dollar salary and a new set of conditions.
5.
Similarly, the prevalent idea that an option exercisable up to the date of retirement would allow an officer to have it both ways is largely an illusion. An option is only really applicable during the currency of the officer's existing terms of service. If there were any major change in the value of the dollar, there would inevitably be a revision of salaries and an officer would only be allowed to draw the new scale of
J. B. Sidebotham, Esq., C.M.G.,
Colonial Office,
LONDON.S.W. 1.