THE BRITISH GOVERNMENT'S FAILURE TO HONOUR ITS COMMITMENTS TO OVERSEAS PENSIONERS UNDER THE PENSIONS (INCREASE) ACT 1971 by R B Blanche
Introduction
I have recently concluded a two-year correspondence with the Overseas Development Administration (ODA) about the underpayment of pension supplement (SPOS) on certain overseas, mainly Hong Kong, pensions but the ODA have refused to move from what I regard as a rigid and unreasonable position. Their position is that the ODA will supplement the pension increases paid by the Hong Kong Government, if they are less than the increases paid to UK civil service pensioners, but will not supplement the basic pension itself. For a number of years inflation in Hong Kong has been higher than in the UK and the value of the HK dollar against sterling has depreciated correspondingly until September 1992. Therefore, the Hong Kong Government has been paying higher pension increases than the British Government has been paying to its pensioners. Consequently, no SPOS was paid to Hong Kong pensioners even though the value of the Hong Kong pension as a whole had depreciated in sterling terms. This failure to pay SPOS is contrary to the main principle of the Pensions (Increase) Act 1971 which is that the original purchasing power of the pension should be maintained in sterling terms.
This main principle of the Act is clearly set out in a number of official British Government documents and was acknowledged by the ODA in a letter to me as recently as November 1992, but their present practice of not paying SPOS on the basic pension contradicts this principle. The ODA has not explained this contradiction.
The intentions of the Act
A "Guide to the Pensions (Increase) Act 1971 and the Overseas Service (Pensions Supplement) Regulations 1972 to 1975" was issued in or about 1975 by the Ministry of Overseas Development setting out the policy and intentions of the Act together with the principles for the payment of SPOS, extracts of which are quoted below:
"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...Its main principle is that the original purchasing power of pensions should be restored and then maintained at that level through the award of increases in step with increases in the cost of living in Britain..."
The main principle of the Act is also referred to in paragraph 12 of the Memorandum on the Public Officers' Pensions (Tanzania) Agreement 1976, concluded between the British and Tanzanian Governments, which states:
"The supplement payable under the Pensions (Increase) Act 1971 is in broad terms the increase in pension necessary to maintain the original (sterling) purchasing power of the Tanzania pension."
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