CONFIDENTIAL
ANNEX D(I)
STERLING SAFIGOAL
Traditional Arrangements
The 1954 White Paper stated that pensions of HMOCS officers should be safeguarded. In other dependent territories this has been achieved by concluding a Public Officers Agreement (POA) with the successor government just before independence, which provided, inter alia, for pensions to be paid at a fixed sterling rate. The Joint Declaration on Hong Kong contains many of the safeguards also found in POAS: but does not tackle the question of sterling safeguards (or early retirement).
2. 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 HKSARG; and that further study should be given to the nature and timing of such safeguards, in consultation with the HKG.
3. Traditional arrangements would allow HMOCS officers to retire in 1997 with early payment of earned pension at a fixed sterling rate. Together with compensation for loss of career, this would be an attractive option which many (most?) HMOCS officers would take.
4.
The level of any sterling safeguard would be
controversial. The average exchange rate over the last 20 years has been 11.5 to 1. Over the last 30 years it has been 12.8 to 1. It is currently 14.5 to 1. But sectors of the HKG do well by UK civil service standards and it would be difficult to set a rate more favourable than the current rate. A rate of 16 to 1 would nevertheless be defensible in Parliament: and the Hong Kong dollar has never sunk below 16
to 1.
NC3AAB
CONFIDENTIAL
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