TNAG-2060-FCO40-2938-Hong-Kong-Overseas-Service-Pensioners--Association-(OSPA)-1990 — Page 79

APPENDIX B

OVERSEAS SERVICE PENSIONERS' ASSOCIATION

RESIDENT:

The Lord Grey of Naunton, GCMG GCVO OBE

-SECRETARY.

Mr. C D. Stanton

63 CHURCH ROAD

HOVE SUSSEX

BN3 2BD

J

Telephone: Brighton (0273) 721630

Your Ref:

Our Ref:

HONG KONG

BASIC PENSIONS

RATE OF EXCHANGE

The importance' of the rate of exchange in relation to the award of basic pensions has been stressed on numerous occasions. The following example will draw attention more clearly to the effects, and the possible future effects, of the present arrange- ments whereby, for the purposes of calculating the Supplementary Pension for Overseas Service (SPOS), the basic Hong Kong dollar pension is translated into sterling at the rate of exchange prevailing on the date of retirement.

Assume

Officers A and B whose dates of birth, circumstances of recruit- ment, careers, salaries on retirement, etc. etc. are identical; except that A chooses to retire on 30th April, 1990, while B chooses to retire on 30th June, 1990.

The rate of exchange on 30th April, 1990 is HK$ 12 on 30th June, 1990 it has fallen to HK$ 16 = £1.

Basic pension of both A. and B - HK$ 48,000 p. a.

Then

Basic pension of A in sterling for SPOS calculations Basic pension of 3 in sterling for SPOS calculations

= £1; while

-

£4,000

-

£3,000

SPOS supplements since 1976 have been paid at the following

rates:

1977 17.7%

1982 11.0%

1978

7.4%

1983

3.7%

1979

16.0%

1984

5.1%

1980

16.5%

1985

7.0%

1981

9.06%

giving an average of 10.38% a year.

Assuming that during the 1990s the cost of living in the United Kingdom should fall to an average of 5% a year, then the 'pension