The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo and The Sun THURSDAY, JULY 23, 1936. THE SUPERANNUATION SUBSIDY.

Auckland Star, Volume LXVII, Issue 173, 23 July 1936, Page 6

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo and The Sun

THURSDAY, JULY 23, 1936. THE SUPERANNUATION SUBSIDY.

For the cause that lacks assistance, For the wrong that needs resistanco t For the future in the distance, And the good that ice can do.

For another year the State superannuation funds are to be supported by an additional subsidy of £200,000 from the Consolidated Fund. . This sum, added to the annual subsidies, aggregating about £.385,000, will maintain the. State's contribution at the level of £585,000 to which it was raised two years ago. At the present stage the Government cannot be cxpectecl to do more to carry out its election pledge to "safeguard the superannuation rights of all civil servants." The funds long ago ceased to have any sound actuarial basis, and have been slipping further back each year. In 1932 the National Expenditure Commission reported that the actuarial liability in respect of the three funds was £23,000,000, and that sum has been substantially increased since. It is questionable whether any action taken now could restore a sound position within a limited number of years. The Government has inherited a problem which is the result of inaction by past Governments, and there is a possibility that it may seek a solution along lines which involve an increasing liability upon the State. Meanwhile the contributors and beneficiaries are assured of the good intentions of the Government. The funds are close to the peak of their liability in relation to income, and in the total have shown only a small variation of late years. At the end of March, 1935, the position was:— Amount of fund. Decrease. £ £ Public Service 2,917,452 *17,888 Railways 1,239,705 1,12(5 Teachers 989,310 13,875 ■"Increase. Here is shown a slight increase in the aggregate of £2887. Immediately before the addition of £200,000 was made to the subsidy the railways and teachers' funds were rapidly diminishing in size, and the Public Service fund Avas barely maintained. Thus it can be seen that the funds have ceased to be lakes of growing dimensions, as originally planned, but are really streams through which the payments of present contributors flow into the pockets of the beneficiaries. Of course such a state of affairs is contrary to provident fund principles. There are two main reasons for the weakness; one is the failure of the State, as the partner in the scheme, to shoulder its share of the burden in the past; the other is the overgenerous scale of pensions granted to many of the higher-salaried members of the service now retired. Diagnosis, however, is only the first step towards a cure, and in this case the situation is changed by the rise of a Labour Government which disclaims responsibility for the sins of its predecessors. There is another change, also important, in that the civil servants are now organising on union lines, and have a numerical strength which approaches 40,000. With this the Government, representing the interests of the taxpaying public, Avill have to reckon in working out a solution of the problem.