TNAG-2059-FCO40-2937-Hong-Kong-Overseas-Service-Pensioners--Association-(OSPA)-1990 — Page 84

"Wymering'

10

Sheet Common Nr. Petersfield Hants GU31 5AT

12 March 1990

A post-script to my letter of 27 February in response to your's of the 15th, because I am not happy with your conclusion that nothing better than Consumer Price Index A can be found as a base for pension increases.

What about the Hang Seng CPI ?

As you know, CPI ' A

covers monthly household expenditure of

HKD 2000 to HKD 6499, that is to say around £ 38 to £ 125 a week at current rates of exchange. There are I suspect few HK/UK pensioners with household expenditure of this order. Most of us have to spend far more to maintain a reasonable standard of living, without being wildly extravagant.

The Hang Seng CPI covers household expenditure within the HKD 10,000 to HKD 24,999 range, which would be more appropriate to our standards, and this CPI has increased from 100 to 142.1 since 1985, compared with an increase fromm 100 to 133.5 for the CPI A

'

If the Government does not wish to use a private sector index, although I cannot see why, then consideration should be given to relating pension increases to HKG salary increases, which are now tracking the private sector much more closely than in the past, particularly at the Directorate level.

As the private sector in Hong Kong is having to offer salary packages which are attractive to expatriates to fill vacancies caused by emigration, it follows that salaries, certainly at management level, are now being determined not by changes in the cost of living in HK but by salaries sufficiently attractive to expatriates. And from this it also follows that the pensions of civil servants who have very recently retired, or who will retire in the future, will include an element which effectively compensates for the fall in the exchange value of the HKD.

This raises the question as to why these people, and those who retired before the SPOS rules were changed in 1976, should be protected against the fall in the exchange value of the HKD, while those who retired in the intervening period are not. If pension increases were to be related to salary increases some of the current loss ( if not all of it) would I suspect be made good.