Chief Secretary
HONG KONG HMOCS
CONFIDENTIAL
FROM: Secretary of State
DATE: 9 March 1992
1. Thank you for your letter of 4 March.
2.
are still
We remain far apart on sterling safeguards. It remains my view that HMG are under an obligation to ensure that the sterling value of Hong Kong HMOCS officers' pensions is safeguarded after 1997. In previous cases where the government of the territory concerned was unable to provide such a safeguard because the territory was too poor, HMG stepped in: it was right in these cases to handle HMG's contribution as an aid measure. In the case of Hong Kong the government of the territory is unable to provide such a safeguard because of insuperable political obstacles: HMG must step in here too, though, given Hong Kong's economic position (confirmed by last week's budget speech), clearly not as an aid measure.
3. We agree that we must resolve the inequitable operation of SPOS regulations for Hong Kong HMOCS pensioners. However I cannot accept that this would be a sufficient solution to the sterling safeguard problem. It is true that in some cases at present these UK pension supplements can amount to a substantial part of the total pension received, ie for those officers who have been retired for a long period during which UK inflation and therefore UK pension increases have been running at a high level. Looking to
JIFABG/1
CONFIDENTIAL
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