TNAG-2271-FCO40-3270-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-corr-1991 — Page 235

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and other pecularities in the indexing, pensioners were receiving pension increases far in excess of what was

intended.

8.

In 1977, therefore, after negotiations with the Overseas Service Pensioners Association, the arrangement was

changed. Those retiring on or before 30 June 1976 had

the basic pension calculated on the basis of the

exchange rate on this date. Those retiring after this

date would have their basic pension calculated on the

basis of the exchange rate on the day of their

retirement. In practice this has meant that those

retiring on or before 30 June 1976 when the exchange

rate was roughly HK$8 to £1 receive a higher level of

SPOS than those who retire after this date.

9.

Hong Kong HMOCS pensioners have long pointed out the deficiencies of the SPOS system as it applies to those who retired after 30 June 1976. It is arbitrary, since whether or not pensioners benefit from it depends in large measure on the prevailing rate of exchange between the Hong Kong

dollar and sterling on the day of their retirement. The higher the then sterling value of their pension, the more likely they are to benefit from SPOS. Secondly, it is seen

as inadequate because it does not address the central

problem of exchange rate fluctuations: it is solely

concerned with pension increases and not the basic value of

the pension. Mr Blye and Mr Watson both ask for something

to be done to protect the sterling value of their pensions.

Way Forward

10. In the present circumstances, there are the following possible options:

i) despite the obvious injustice, we could continue to treat the matter as a low priority, taking the

PJ ZAVL/3

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