3.
The Intentions of the Pensions (Increase) Act 1971
Since the main purpose of the Act is to restore the purchasing wer of a basic pension, there is an underlying assumption in Section 2(6) that the sterling value of that basic pension will in fact remain constant. If through exchange rate shortfalls the basic pension is reduced, it is implied that it will be made up one way or another. If there is a Public Officers' Agreement the overseas government will, under the agreement, direct specific increases towards restoring its value. If not, I think it would be reasonable if the increases that the overseas government does pay be applied first towards restoring the value of the basic pension before calculating the supplement. That this was the intention is evident /treatsfrom the way the Act/exchange rate gains. If the exchange rate
moves in the pensioner's favour and the basic pension is increased, it is stated in Section 11(4) of the Act that "additions to the value of those pensions" should be taken into account before calculating the supplement. Section 11(4) also requires that the supplements authorised by regulation should take account of any increase or supplement payable by an overseas government. I consider that the increase to be taken into account should be the net increase left. after restoring the value of the basic pension if that was necessary. The ODA actually takes account of the gross increase paid by the Hong Kong Government. The ODA would take account of only the net increases for those overseas governments that come under a Public Officers' Agreement (if there any left) and under the principle of consistency the same should apply to Hong Kong pensions. There is, therefore, an ambiguity in Section 11(4) of the Act that requires judicial interpretation.
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9. In de Smith's Judicial Review (page 98) the principles of interpretation are covered in some detail. It states that "courts have recently tended to move away from a purely linguistic analysis, and have been prepared to blend it with an approach to interpretation that takes account of the historical context of the legislation, and the extent to which a literal reading would do violence to the legislative intention inferred both from other provisions of the measure and from accepted notions of good government and
administration. One manifestation of this trend is the more extensive range of materials to which the courts are willing to refer as aids to interpretation."
10. As mentioned in paragraph 4 above, the ODA have acknowledged the principle that UK and overseas public service pensioners with the same level of basic pension should be treated equally. Furthermore, various officially promulgated British Government documents support the interpretation that I have suggested in paragraph 8 above, namely that the HK basic pension should be protected against adverse exchange rate movements. The way to do that would be to convert the monthly basic pension payments at the current rather than the historical exchange rate for the purpose of calculating supplements.
11.
The Ministry of Overseas Development Guide to the Pensions (Increase) Act 1971 is quoted in paragraph 3 above. If overseas pensioners are to "receive 'topping-up' sums from British funds of amounts necessary to bring their pensions up to the levels of their British Counterparts", then the HK basic pension has to be protected against adverse exchange rate movements. In paragraph 9 of the Guide, headed "What effect have currency exchange rates on the supplement?", it states, "The 1971 Act contains provisions which ensure that supplements payable to overseas pensioners are of amounts consonant with the policy of 'topping up' and which produce the same total income regardless of the manner in which overseas pensions are paid."
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