1 MARCH
#Februar
February 1991
DIEU-ET
Foreign & Commonwealth
Office
Anthony Thorne Esq 3 The Pheasantry Down Ampney Cirencester
Gloucestershire GL7 5RE
London SW1 2AH
Finne
Thank you for your letter of 18 February to Lord Caithness about pensions and SPOS arrangements.
Lord Caithness is well aware of the concerns of overseas pensioners about fluctuating exchange rates. These matters are the subject of current discussions between the relevant departments of the British and Hong Kong Governments. Your comments about the SPOS arrangements were therefore timely and helpful.
I should however point out that it is in fact not the case that the Government has a statutory responsibility to maintain the purchasing power of overseas pensions. The SPOS arrangements were drawn up under the Pensions Increase Act 1971 to allow an overseas pensioner to receive the same pension increases as his UK counterpart. SPOS therefore maintains the purchasing power of an overseas pension against UK inflation; it is not designed to compensate for any loss in the value of the basic pension resulting from exchange rate fluctuations.
PJZAVY/CC
A R Paul
Head, Hong Kong Department
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