STERLING SAFEGUARDS
BACKGROUND
CONFIDENTIAL
ANNEX B
1.
The 1954 White Paper stated that pensions of HMOCs officers should be safeguarded. In other dependent territories this has always been achieved by concluding a Public Officers' Agreement (POA) with the successor government just before independence, which provided for pensions to be paid to external residents at a fixed rate against sterling. There is thus a strong historical precedent that a sterling safeguard should be provided in the case of Hong Kong. HMOCS members certainly expect it.
2. At the time of Independence elsewhere, local currencies were tied to sterling. Hong Kong's position is unique in that the Hong Kong dollar is linked to the US dollar, not to
sterling, and because currencies are now generally allowed to float against each other. In the cases of countries such as Uganda, Nigeria and Ghana, whose currencies collapsed after independence, the pensions of HMOCS officers were protected by a sterling safeguard, and because HMG
eventually took over the payment of HMOCS pensions as part
of an aid package agreed in 1971. In the wealthy
territories (Bahamas, Bermuda and Brunei) where HMOCS
pensions were not taken over, the currencies have
appreciated against sterling and the sterling safeguard has
not therefore been invoked.
3.
In 1985 OD (K) agreed that we should aim to negotiate
safeguards for the sterling value of pensions earned by HMOCS members in Hong Kong up to 1997, with the cost being
met by the Hong Kong Special Administrative Region
Government; and that further study should be given to the nature and timing of such safeguards, in consultation with
the Hong Kong Government.
PICABC/1
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CONFIDENTIAL
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