TNAG-0205-FCO40-241-Pensions-policy-1970 — Page 101

OVERSEAS PENSIONS

CONFIDENTIAL

HMG SHARE OF THE COMMUTED PENSION LOANS

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EXTENT OF LIABILITY

It has been agreed that the proposed extent of HMG's financial responsibility for overseas pensions should be increased to the "pre-independence" portion of any pension plus the "OSAS" element of the post-independence portion. It has also been agreed that, as a result of this major change, the modification of the formula for calculating the OSAS element of pension proposed in paragraph 35 of Cmnd 3994 "Public Service Overseas" would not become operable. Both the "pre-independence" and the "OSAS" elements would be calculated by reference to total pensionable emoluments (and not final pensionable pay) as follows:-

HMG SHARE OF PENSION:-

PENSION X TOTAL PENSIONABLE EMOLUMENTS ENJOYED LESS TOTAL BASIC SALARY ENJOYED SINCE INDEPENDENCE

TOTAL PENSIONABLE EMOLUMENTS ENJOYED

SIZE OF LOAN

2. The commutation loans are granted to oversea governments to enable them to meet their share of the commuted pension gratuities of entitled overseas officers retiring under the Compensation Schemes. With the exception of Tanganyika and Uganda who were granted loans of only 84% 80% of the expected local costs the loans were expected to provide 100% cover.

APPLICATION OF APPORTION FORMULA

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3. The application of the formula at paragraph 1 to the four major loans to Kenya, Uganda, Tanganyika and Malawi (all the rest are less than £200,000) shows that HMG would bear 85/87% see Annexures 2 to 5 of them and, in fact, if regard is had to the amounts of interest and principal already paid by the oversea countries the loans can be regarded as extinguished see summary at Annex 1. Tanzania has already indicated that it regards the Tanganyika loan as having been extinguished.

SMALLER LOANS

4.

With the exception of The Gambia no recipient of a loan of less than £200,000 is required to make any payment to HMG until 1974 and therefore in their case there is a small percentage which will be left for the local government to bear. In the case of The Gambia it has already had to pay interest of about £11,000 and this plus the HMG share should extinguish its loan. The Dominica, Lesotho, Mauritius and Swaziland loans ought to be able to be apportioned by local accountants and auditors. The Aden loan is all pre-independence for practical purposes and can be extinguished.

SUMMARY

5 If the Kenya, Uganda, Tanganyika, Gambia and Aden loans are regarded as cancelled and the oversea share of the others set at about 10%, the recoverable amount of the £10 million of commuted loans will be of the order of £60,000 only.

CONFIDENTIAL