Sessional_Paper_1908 — Page 409

HONGKONG. No. 25.

312

DOWNING STREET,

5th February, 1907.

SIR,-In continuation of my despatch No. 11 of the 16th of January, I have the honour to inform you that in view of the delay which has occurred in the transfer of the Widows' and Orphans' Pension Fund to the Government, it would be well to alter the date on which the valuation of the Fund should be taken from the 31st of December 1905 to the 31st of December 1907.

Governor

SIR M. NATHAN, K.C.M.G.,

HONGKONG. No. 275.

&c.,

&c.,

&c.

I have, &c.,

(Signed) ELGIN.

DOWNING STREET.

28th December. 1907.

SIR,--I have the honour to acknowledge the receipt of Mr. May's despatch No. 169 of the 24th of June with regard to the transfer of the Hongkong Widows' and Orphans' Pension Fund to the Colonial Government.

2. Mr. MAY states that the great majority of the contributors of the Fund are still opposed to the transfer, and he suggests that the proposal should be dropped and the actuary consulted as to whether the Ceylon Pension Tables can with safety be adopted by the Hong- kong Fund. He adds that the majority of the Directors and contributors are considering a scheme of compulsory insurance which would remove the unpopularity of the present Fund, due, I gather, to the fact that under the system upon which the fund is based the contributions of members who do not happen to leave widows or orphan children help to provide adequate pensions for the dependants of those who do. Mr. MAY also states that "the Directors and contributors feel that the Hongkong Fund has had such a specially favourable start and is accumulating so rapidly that they may confidently look forward to the possibility of an increase in pensions, even on the Ceylon rates, if the Fund is kept serparate and fresh valua- tions are made from time to time".

3. I may say at once that I am not prepared to consider the substitution of an insurance scheme for the Fund.

4. As regards the views of the members on the future prospects of the Fund, I fear that they have not paid sufficient attention to my despatch No. 11 of 16th January last and especially to the memorandum by Messrs. YOUNG and RYAN enclosed therein. But at any rate they must admit that the Fund cannot be maintained without periodic valuations; and, as I will proceed to explain, such periodic valuations are practically impossible.

5. The Fund is a dollar fund, the accounts are kept in dollars, and the balance of the Fund at any time is represented by a debt due by Government of so many dollars. case of a considerable (and increasing) number of officers, however, the contributions are fixed in sterling and the Widows' and Orphans' pensions will ultimately be payable in sterling currency. As the sterling contributions of officers on sterling salaries are credited to the Fund in dollars at the current rate of the dollar at the time when the contribution is paid, it follows that the value to the Fund of the future contributions of existing members on sterling salaries can only be estimated with accuracy if the future values of the dollar for (say) the next thirty-five years are known. Similarly the burden which may be imposed on the Fund in respect of the existing sterling pensions and the future sterling pensions of the widows or orphans of existing contributors also depends on the future fluctuations of the dollar. Of course if the payments and receipts in sterling during each year