TNAG-2271-FCO40-3270-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-corr-1991 — Page 11

17-VEC-1991 18:37

HK GOVERNMENT HOUSE

+852 521 1868

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whether a future SAR government, whether democratically elected or not, can be expected to have much concern about the livelihood of a group of foreigners most of whom will have left the territory. The future government could adopt measures such as changes in taxation or exchange control which ostensibly could be regarded as being 'not less favourable' but in practice would have an adverse effect on the payment and value of pensions.

This Association is seeking an assurance from Her Majesty's Government (HMG) that, in the event of a default by the SAR governemnt HMG will accept its responsibilities for HMOCS officers by taking over payment of pensions as has been the case with other former dependent territories.

Value of Pensions

The Hong Kong dollar is pegged to the US dollar and, ás a consequence of the volatility of exchange rates, the sterling value of pensions varies from month to month and in recent years pensioners have suffered an overall loss. Former Hong Kong civil servants resident in the U.K. must be unique among British state pensioners in having pensions which have gone down in value. A selection of comments from pensioners is attached at Appendix I.

The Hong Kong Government takes the view that it can only pay pensions in Hong Kong dollars as authorised by the legislature and no special consideration can be given to any specific groups of pensioners. This is understandable but this Association considers that HMG should have some concern for HMOCS pensioners particularly as the U.K. Supplementary Pension for Overseas Service (SPOS) takes no account of losses caused by adverse exchange rates. More on that later.

In July 1991 this Association submitted a proposal to the Foreign & Commonwealth Office wherby HMG would pay pensions to HMOCS officers based on a fixed rate of exchange and HMG would in turn receive from the Hong Kong Government and future SAR government amounts equivalent to the Hong Kong pension payments in respect of those officers. This proposal is described in Appendix II.

Supplementary Pension for Overseas Service (SPOS)

Members of HMOCS are eligible for this additional pension under U.K. legislation. (Pensions Increase Act 1971, Overseas Pensions Act 1973 and Overseas Service (Pensions Supplement) Regs. 1973, 1977 and 1979).

SPOS is designed to top up the value of pension increases awarded by overseas governments to former Colonial Service pensioners to the same level as increases paid to a Home Civil Service counterpart with a basic pension of equivalent sterling value. For the former overseas officer the basic pension is taken as the sterling value of his pension on the day he retires.

Not attached to this copy,

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