intended SPOS payments.
Since the devaluation of sterling in September 1992, the Hong Kong pensioner resident in the UK receives a genuine exchange rate surplus which can legitimately be used to reduce the SPOS on other pensions. This may be unfair to pensioners who are not UK residents because they suffer a reduction of SPOS without the benefit of the exchange rate surplus. However, this anomaly does not conflict with the intentions of the Act.
Conclusions
As a result of the correspondence I have had with the ODA, they have on at least two occasions obtained a legal opinion about their liability under the Act to supplement the overseas pension as a whole and not just the pension increases. From these opinions the ODA have concluded that what they are doing is not in conflict with the Act.
The problem is that there are some relevant sections in the Act which require judicial interpretation but the courts, which would not have access to the original unpublished policy documents upon which the Act was based, would have to rely mainly, but not exclusively, upon the literal or reasonable meaning of the words of the Act. Furthermore, the Act does not say anything about how overseas pensions should be converted into sterling. It was intended, according to Hansard, that the regulations would cover that and it was in the drafting of the exchange rate provisions of the regulations that the conflict with the Act's original intentions arose. My own view is that pensioners would have a fighting chance of winning a court case, either through a Judicial Review or more simple court procedures, but there would be a risk and the consequent cost of failure. This remains an option of last resort.
If the ODA were really interested in finding out what were the original intentions of the Pensions (Increase) Act 1971, there was no need for them to go to their lawyers. They should have consulted the original policy documents on which the Act was based and I feel sure that this would have confirmed that they are not following the intended policy. I believe that the Ministry Guide, referred to in the third paragraph above, was compiled from these policy documents as were the other agreements and statements that I have quoted. In any case, it should have been obvious that the basic pension and the pension increases are interrelated and to treat them separately for SPOS purposes does not make sense because higher increases are intended
to compensate for the depreciated value of the basic pension which is reflected in the exchange rate.
I believe that much more pressure needs to be put on the British Government to honour its commitments under the Act. They should be asked to make available the policy documents on which the Act was based and give a full explanation of the various contradictions in the way they have been exercising their responsibilities over pension supplement matters or otherwise come clean and admit publicly that they have reneged on those earlier commitments.
If the British Government fails to honour its commitments, the Hong Kong Government could be approached to see whether they would be willing to guarantee the sterling value of the Hong Kong
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