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7. The position is now changing and there is no doubt that a number of current pensioners, such as Mr Rainbird, are losing out because the value of their basic unprotected pension is falling below the point where Hong Kong increases, or SPOS, can make up the difference. The Overseas Service Pensioners' Association are pressing the FCO, largely in
in the context of looking after serving HMOCS staff in Hong Kong, to introduce a sterling safeguard for basic pensions. I do not believe that HMG will be able to deny to Hong Kong pensioners, a benefit which they have insisted upon for all other territories. We are at present locked into a debate with the Treasury and Hong Kong about the issue. The Treasury are adamant that we should not underwrite the sterling value of these pensions because it could be very expensive, and in any case they believe that Hong Kong is still wealthy enough to meet the cost. The message from Hong Kong is that sterling safeguards is a matter for HMG; the Hong Kong Government would not feel able to offer special treatment for HMOCS officers without causing unrest elsewhere in what is a unified public service.
8.
to
My view is that we shall be unable to resist the pressure for a sterling safeguard and that the main point of contention will be the level at which protection is offered. Hong Kong salaries are rising fast and the Treasury will argue, with every justification, that HMG is under obligation to protect pensions at levels which bear no relation
UK public service. pensions. There are difficult negotiations ahead. We are working closely with the Diplomatic Wing on the whole question of what needs to be done for HMOCS officers (past and present) in the run-up to 1997. It should be possible to put proposals to Ministers before the end of the year, although it is not yet clear whether the Treasury can be persuaded to accept what will be a significant contingent liability.
9. I submit a draft reply to Mr Patten, which I hope makes the best of what is not an easy position to defend.
विकर
D S FISH
Overseas Pensions Department
12 October 1990
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