TNAG-0992-FCO40-1211-Policy-on-salaries-and-pensions-for-civil-service-in-Hong-Ko-1980 — Page 338

430/1

for discussion

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on 11th November 1980

Background

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XCR(80)252 01 Copy No

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19

MEMORANDUM FOR NOV 1980,

NOV 18TIVE COUNCIL the Hold of

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WEFICER

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REGISTRY

REVIEW OF ROLICY ON CIVIL SERVICE

PENSION INCREASES

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On 2nd December 1975, after considering memorandum XCR(75)236 (Annexed) the Council advised and the Governor ordered that, subject to the criterion at paragraph 5(f) of the memorandum being amended to read "The award of any increase in pensions is subject to the provision of funds in the normal way and must have regard to the general financial and economic situation", the six criteria recommended in paragraph 5 of the memorandum should be formally accepted as the basis for assessing increases in civil service pensions.

2

see (911 CAL

In accordance with the accepted criteria, civil service pensions (including widows and orphans pensions) are reviewed annually, based on changes in their purchasing power as measured by Consumer Price Index (A) during the period from 1st July of the previous year to 30th June of the year of review. Any resultant increase is applied to pensions in payment on 1st July of the year of review, but takes effect from 1st October of the same year. The reason for the 3-month gap between 1st July and 1st October, as explained in paragraph 5(e) of the attached memorandum, is to bring Hong Kong pension increase arrange- ments in line with the practice in the United Kingdom and to allow sufficient time for the Treasury and the Ministry of Overseas Development to make appropriate adjustments to pensions and (in the case of the Ministry of Overseas Development) to UK supplements to eligible overseas pensioners.

Present position

3

On the whole, the arrangements approved in 1975 have been working satisfactorily, except in two respects. First, the criterion in paragraph 5(e) of the attached memorandum, under which payment of pension increases is implemented from 1st October of the year of review with no retrospectivity, has given rise to considerable criticism from pensioners. They argue that since the review period runs only to the end of June each year it is unfair of the Government to deliberately defer giving pensioners the benefit of any award until 3 months later.

4

Another criticism of the present arrangements is that while increases in civil service salaries are normally effective from 1st April, pension increases apply to pensions in payment on 1st July, with the result

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