Sessional_Paper_1908 — Page 410

313

were to be substantially equal in amount, no loss or gain would accrue to the Fund through the variation of the dollar; but this will not be the case, as the ratio of the annual sterling contributions to the annual sterling pensions will obviously decrease, at least, as soon as all the posts to which sterling salaries are attached are filled by officers on sterling salaries.

6. I have therefore come to the conclusion that the original proposal that the Govern- ment should take over the Fund and guarantee Pensions on the Ceylon Pension Tables in return for the four per cent contributions must be adopted, and I have to request that you will take steps at an early date to introduce and pass the necessary ordinance.

7. Although, as I have explained, it is not possible to carry out a valuation of the Find which would be actuarially accurate, I consider that in order to treat the Hongkong officers as nearly as practicable in the same way as those of the Straits Settlements and the Federated Malay States it is desirable that a valuation should be made in order that the surplus, if any, disclosed by it may be distributed among the beneficiaries of the Fund in the shape of increases to the pensions. For this purpose an arbitrary rate of exchange must be assumed for the purposes of the valuation. The exchange value of the dollar has recently fallen from about 2/3 to below 1/10. As the value of the sterling liabilities must be greater than the value of the future sterling contributions, the higher the sterling value assumed for the dollar the more favourable to the Fund will be the results of the valuation, and I should be prepared to allow the valuation to be carried out at a rate, not exceeding 2/3, which you and the Legislative Council may consider fair and reasonable.

Governor

I have, &c.,

Sir F. D. LUGARD, K.C.M.G., C.B., D.Š.O.,

Ge..

&re..

(Signed) ELGIN.