SECRET
PENSION SUPPLEMENT: SPOS
Under the UK Pensions Increase Act 1971 (which provides for pensions to rise in line with UK inflation) pension supplements (SPOS) are payable to certain overseas pensioners, to supplement in order to provide their locally awarded pension increases,
parity of treatment with their UK counterparts. It is proposed to change the way in which the supplement arrangements operate in fegard to Hong Kong pensioners.
The present arrangements can in certain circumstances lead to fall in overall pension abated payments of supplement and a income. The UK supplements are reduced if the Hong Kong Dollar exchange rate rises above the level prevailing at the pensioner's date of retirement, but no account is taken of exchange falls.
AMG
propose that such pensioners should in future receive the same level of UK increases as those paid to equivalent UK
modification This would involve
to the SPOS pensioners. Regulations which would enable SPOS payments to increase (but not above the maximum SPOS entitlement, ie the increase of their UK counterpart) to refect any devaluation in the sterling value of the basic pension.
This would not guarantee the purchasing-power-of-the-overall · pension but would remove the anomally which has vexed many of our existing pensioners.
The new arrangements will come into operation mid 1994
13
Sood 928*ON
40:ST £6/11/62
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