TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 106

XCC (89) 22

13

In this

context,

Page

Members may recall that Hong Kong University (HKU) used to operate a currency fluctuation protection arrangement for its Staff Terminal Benefits Scheme. Government's objections to these arrangement s were that they

could

(a) suggest a lack of confidence in the Hong Kong

dollar and lead unnecessarily

to pressure on

(b)

its exchange value; and

generate similar demands from the civil service and other subvent ed organisations.

Having considered the position outlined in memorandum XCC (86) 9 28 Janaury 1986, the Council advised that HKU should be requested to review and modify its Scheme.

on

14

In February 1987, following a review of the Scheme' structure and management, HKU revoked the arrangements. New regulations were introduced whereby any supplementary payments would be based on an

an actuary's valuation of future liabilities. and investment performance.

Options

15

Against this background, possible options which would assist overseas pensioners by protecting the value of their pensions against currency

fluctuations have been considered. These options include -

(a)

(b)

(c)

granting overseas officers/pensioners an option

(i) to commute a higher percentage of their

pensions; or

(ii) for pensions to be paid in a currency

their choice;

of

pursuing with the British Government the introduction of a UK funded scheme, and

introducing an ex-gratia pension supplement

allowance.

16

As regards (a)(i), the New

the New Pension

Pension Scheme for the civil service introduced on 1 July 1987 provides for a civil servant to commute up to 50% of his pension as a lump sum. The Old Pension Scheme provides for a commutation of 25%. The 50% commut at ion limit was fixed following very careful examination of the budgetary considerations and the Government's objective of preserving the concept of a continuing pensionable public service. If arrangement's had been made for 100% commutation, this would have been extremely

extremely costly in the short term and could have been seen as encouraging civil servant s to leave, thus undermining confidence in the future SAR Government.