TNAG-2097-FCO40-2986-HM-Overseas-Civil-Service-(HMOCS)-general-correspondence-1990 — Page 27

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arrangements are considered by some to be inequitable, but I believe that the majority regard them as satisfactory. not convinced that there is a case for changing them, although we naturally keep the matter under review. As far as

fluctuating exchange rates are concerned, we see no present justification for contemplating any sterling link or safeguard for pensions. The Hong Kong dollar link with the US dollar has proved extremely resilient. Most Hong Kong pensioners continue

to do reasonably well, certainly in comparison with their UK public service counterparts and with HMOCS staff in receipt of pensions from other territories. The US dollar/pound rate has

certainly fluctuated but I do not believe that the fluctuations

have led to cases of hardship. The Hong Kong Government have stated that if hardship cases were to arise, they would propose to ExCo that a small fund be established to provide one-off payments to pensioners in distress.

Thirdly, Mr McInnes refers to the possible erosion of the real

value of pensions if exchange controls or punitive taxation

were to be introduced after 1997. This point is fully covered

in the Joint Declaration and the Basic Law which state that no

exchange control policy shall be applied in the Hong Kong SAR.

The Basic Law also stipulates that the Hong Kong SAR shall

practise an independent taxation system, taking the low tax

policy previously pursued in Hong Kong as reference.

Fourthly, Mr McInnes asks about a General Compensation Scheme

for HMOCS officers who do not wish to serve after 1997. We are

giving very careful thought to this matter and intend to make

and announcement as soon as possible.

Finally, Mr McInnes expresses concern about the career prospects of non-Chinese nationals in public service. It is true that a small number of very senior posts will be reserved