TNAG-2097-FCO40-2986-HM-Overseas-Civil-Service-(HMOCS)-general-correspondence-1990 — Page 83

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(which are paid in Hong Kong dollars) should be protected by a sterling link. Their argument has been that in every other colony which has reached independence, HMG negotiated

with the successor government a Public Officers Agreement

(POA) which invariably contained provisions for pensions to

be paid at a fixed sterling exchange rate. No such

provision has been included in the Joint Declaration and is

unlikely to be negotiated in the run-up to 1997.

As a

result, HMOCS pensioners retiring in the UK, which are the

majority, have seen substantial fluctuations in the sterling value of their basic pension and in the last few years,

these fluctuations have been downwards.

5.

Until 1967 the Hong Kong dollar was pegged at 16 to £1.

It was then pegged for a short period at 14.54 to 1 and

linked thereafter floated. In 1983 however it was pegged to the US

dollar and has therefore since then tracked the US dollar's

movement. The value of the US dollar since 1985 has

fluctuated, but there has been a gradual depreciation and at

present the Hong Kong dollar/pound exchange rate is almost

15:1 the lowest it has been for over 20 years.

Sterling safeguards

6.

This is another difficult issue, not least because of

the potentially enormous cost to HMG. It would not be

appropriate or possible at this stage to go further than we

have in the past on this subject. The reply is on standard,

non-committal lines.

Supplementary Pension for Overseas Services (SPOS)

7.

This is also a complicated issue. The purpose of SPOS is to bring the pensions of former colonial civil servants

up to the level of the equivalent index-linked pensions paid to their British counterparts. But the topping up element

is adjusted to take account of local increases. Thus:

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