certainly not in Hong Kong. Mr Blye said that Mr Shipley was mistaken: he should check the record (e.g. C S's speech in LEGCO on 5 November 1975) and there were other examples. Mr Haye confirmed that until the rules had been changed in 1975 pension increases had been related to salary increases in long Kong, and he gave Mr Shipley a paper which elaborated on the grounds for reverting to the practice. Mr Blye remarked that while reappraisal of pensions in line with current salaries might be a possible middle ground the only truly satisfactory solution would be compensation for past losses and, thereafter, pensions based on individual PERS.
10. Sir Philip said that he and his colleagues bitterly resented, in their retirement, finding themselves in a hostile, industrial relations type situation with their own government. They had put their case to the HKG in great and patient detail over the past three years, but the only responses had been either that HG was responsible for socalled HMOCS pensions correctly denied by the FCO - or that, anyway, local political considerations ruled out any moves to remove the discrimination suffered by this group of expatriate pensioners
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11. Sir David reiterated that, in his view, it was not possible to single out one small group of pensioners for what he described as special treatment. Serving expatriate and local officers had their worries too, viz: the value and security of payment of pensions post 1997. Sir Philip said that doubts about the future were a common concern to all, serving and retired expatriate and local officers alike; but the erosion in the sterling counterpart of the post- 1976 group of retired expatriate pensioners was an immediate concern; and it was misleading and quite contrary to the historical background to their situation to argue that they were seeking special treatment.
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Mr Shipley said that too much was made of the exchange rate system impact on expatriate pensions and that apart from the period 1974 1983, when the Hong Kong dollar was floating, the HKD had always been linked to another currency. Mr Blye said that again Mr Shipley was wrong there was a great difference between
linking and, in any event, the present managed link is a hybrid which bears no relationship to liong Kong's past exchange rate arrangements nor to any system anywhere.
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13. Mr Haye said that pensioners had indubitably taken substantial losses which had not been made too much of. Mr Shipley doubted that losses could be calculated. Mr Haye said the Treasury should have no difficulty computing total losses by using pensioners' PERS against fluctuating HKD/GBP exchange rates. He reiterated that pensioners expected compensation for these losses, and, thereafter, preservation of the sterling value of their pensions using personal rates of exchange. Any
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