TNAG-2101-FCO40-2990-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 189

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CODE 18-77

CONFIDENTIAL

Reference..

5. I should be very surprised if the Hong Kong Government were willing to go

we Even if they are, down the capitalisation road.

shall be faced with

assurance

continued pressure from existing pensioners whose basic pensions have been eroded in value by 20% in only seven months. If Hong Kong reject the idea, I fear that we may not be able to reach agreement with the Treasury at official level. We shall not be able to hide behind the generous salary and pensions position for much longer, especially if the Hong Kong dollar continues to lose value against sterling.

form of some In any case,

pressure for about the future is bound to become irresistible and buck passing between Hong Kong and HMG will not satisfy anyone. At the end of the day, one or the other is going to have to provide some sort of guarantee.

cannot persuade Hong Kong to help solve the problem, then we are all that the pensioners have left. They would not get much political support for pensions protection at levels above that available for UK public servants. But they would get ready support for the proposition that HMG cannot allow them to be wholly at the mercy of exchange rate fluctuations.

6.

If we

The next step will be for the FCO to put the capitalisation proposal to Hong Kong. If it turns out to be a runner, we may need to try to help existing pensioners by means of a refinement of the SPOS system as it applies to current-rated pensions.

DS FISH

Overseas Pensions Department 26 October 1990

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CONFIDENTIAL