TNAG-0205-FCO40-241-Pensions-policy-1970 — Page 111

CONFIDENTIAL

APPENDIX 1

INDIA

Prior to independence in August 1947, Indian pensions payable outside India were paid either by the India Office on an agency basis, or by the High Commission for India in London.

2.

In 1948 the Government of India purchased from the British Government out of its sterling balances at a cost of £147,605,125 "tapering" annuities sufficient to cover its sterling pensions liabilities in respect of pensioners paid outside India. The Indian Government continued to pay these pensions from the annuity instalments paid by the British Government. These instalments were calculated as £6,300,000 in 1948/49

tapering to £72 in 2007/8.

3. In 1955 an agreement was concluded between the Indian and British Governments under which the British Government took over the responsibility for the payment of Indian pensions paid outside India against a lump sum settlement. The settlement provided for payment to the Indian Government of the balance of the 1948 annuity debt, some £130 million, less the capital value of the future cost of the pensions, about £90 million, resulting in a payment to the Indian Government of about £40 million plus about £6.3 million as compensation for loss of income tax spread over the years 1955/1964. The annual cost of these pensions in 1955 was £5.5 million with a liability for contingent pensions of approximately £135,000 pa.

4. Since 1955 the cost of these basic pensions and of the increases due on them have been met from British funds (the increases have in fact been met in this way since 1948 when India refused to pay increases to civil pensioners after the 1944 Pensions (Increase) Act).

5. In addition to those pensioners already being paid by the British Government and those who are a contingent liability for pick-up under the 1955 Agreement, account must also be paid to two other categories of Indian pensioner:

ů.

b.

India is still responsible for pensioners who retired after 1955 including non Asians who may have retired outside the sub continent. The numbers involved are not great and the cost is of the order of £50,000 pa.

There are also a small number of pensioners who retired before 1955 and who were excluded from the 1955 Agreement because they were then resident in India. Such pensioners have the right to have their pensions transferred to the British Government should they retire abroad against payment to us by the Indian Government of the capital value of their pensions. The cost to India of capital payments in such cases is running at the rate of some £10,000 pa.

6. It is likely that if HMG accepts the responsibility for the payment of overseas pensions and this includes the Indian pensioners

2. India may seek to recoup some of its outlay on the 1955 Agreement, and

b.

seek to include the pensioners in 5 a and b in these arrangements.

CONFIDENTIAL