STATE SUPERANNUATION BILL

Dominion, Volume 26, Issue 47, 18 November 1932, Page 4

STATE SUPERANNUATION BILL

Parliamentary Committee Inquiry INSTANCES OF HARDSHIP STRESSED Post and Telegraph Employees’ Evidence Instances of the hardships its members would suffer if the Government Superannuation Funds Bill became law were cited by the Post and Telegraph Employees’ Association in evidence given yesterday before the special Parliamentary Committee to which the measure has been referred. Further opposition to various provisions of the Bill came from employees of the Prisons Department, and also from the Public Service Superannuation Board.

Addressing the committee on behalf of the Post and Telegraph Employees' Association, Mr. J. T. Corr claimed that the contributors and superannuitants had been unfairly penalised, firstly because the inquiry by the National Expenditure Commission was conducted in an atmosphere of drastic economies, and secondly because the factor of urgency had been introduced, quite unnecessarily, at a time of financial panic. “All parties are agreed,” said Sir. Carr, “tiiat the causes of the present actuarial deficiency must be laid at the door of the Government and the Government alone; firstly by its failure to subsidise the fund in an adequate manner, and secondly by making the fund a convenient buffer when embarking from time to time on a policy of retrenchment.” Examples of how employees of the P. and T. Department would be detrimentally affected by the passing of the Hill were given by Mr. Carr, who stated that the average member would be deprived of five years’ retiring allowance worth about £750. In addition he would, be required to contribute to the fund during those five years approximately £55. Tims his total financial deprivation would be £BO5. This was a most conservative calculation, based on the existing rights and liabilities of two great classes, th? rhnk and file of the clerical and general divisions respectively. Higher paid officials would, of course, suffer a proportionately greater financial loss. Loss of Retirement Rights. Each ihember would have his period of retirement reduced by five years, continued Mr. Carr. In other words, the evening of his days, instead of being spent in that peaceful enjoyment which he had spent half a lifetime paying for, would be a time of drudgery, when advancing years had impaired efficiency. The general effect would be to load the department with a preponderance of elderly people, slow at their work, and in many cases suffering under a sense of grievance. Even under present conditions the rate of promotion in the Post Office was painfully slow. This wnh unavoidable in a department which depended for its efficient working on a large army of rank and file workers, directed by a small number of controlling officers. The natural result was that the percentage of controlling positions in the l J ost and. Telegraph Department was the lowest in the whole Public Service. If the present Bill became law the immediate effect would be to block practically all promotion for at least five years. ; Section 7, clauses 2 and 3(a) made provision for granting an actuarial pension to contributors who were compub gorily retired after not less than 2;> years’ service. At first sight this seemed to be a humane proposal, designed to make gome provision,. no matter how small, for people Who might otherwise be left destitute,' said Mr. Carr. There was, however, a very real apprehension among a large class of contributors that this section would be invoked for wholesale retrenchment purposes. He referred particularly to linemen and other members of the General Division, who had mostly joined the service after reaching adult age. . , A very large proportion were returned soldiers who probably averaged 30 years of age when' they became contributors. The work those men performed required strength and activity, and the belief was prevalent among them that once they had completed 25 years’ service and were beginning to feel the effects of age. and perhaps of war service, they would be quietly retired on a pittance. “No Immediate Cause for Alarm.” “My organisation takes the view that, notwithstanding the default of the State in the past, there is no immediate cause for alarm,” said Mr. Carr. "Even without a change of present conditions the fund can curry on for years to come, certainly for long enough to enable the country to recover from the present depression, and consequently to allow the Government gradually to increase its contributions to the fund, and so by degrees eventually overtake its liability .This would be infinitely preferable to rushing through legislation at an abnormal time which would impose on those least able to bear it a serious and permanent hardship. It would also have the effect of preserving to the State that reputation for straight dealing and national honesty which has for many years stood behind our many State activities, the loss of which would have an effect which could scarcely be imagined, but would undoubterly prove nothing short of a national disaster. This is no mere flight of fancy. New Zealand is a country heavily committed to various enterprises which depend for their success on the people’s absolute faith in the State guarantee. “We therefore request that the Bill be not proceeded with for the following reasons: (I) It is unnecessary; (2) it Is a breach of contract; (3) it will impose serious hardship on those ■ who Irnve fulfilled their share of the contract; and (4) it will do immense damage to the prestige and good reputation of New Zealand.” The Prisons Department. The views of the employees of the Prisons Department were presented by the Controller-General of Prisons, Mr. B. L. Dallard, who suggested that as the department was not primarily concerned from mi efficiency point of view and as some extra compensation was due to its

officers for the peculiar conditions obtaining, any additional contribution considered to be necessary should fall on the department concerned. It was considered that- provision along the following lines would meet the case:—.

"That the Governor-General-in-Council may allow specific classes or groups of employees, on account of the special nature of their duties, to retire at age 60 on pension, based on one-sixtieth of average salary for the last ten years tor each year’s service, subject to the conditions that where the Government Actuary certifies that an undue strain will thereby be imposed on the superannuation fund such additional subsidy as the Actuary certifies is necessary in respect of such employees shall l>e paid into the fund by the department to which the specified group of employees is attached.” The Board’s Evidence. The views of the Public Service Superannuation Board were expressed by Mr; R. S. Wogan, acting-secretary. Mr. IVogan rend a memorandum addressed to the committee from the acting-chairman of the board (Mr. J. W- Macdonald), in which it was stated that while the board did not wish it to be understood that it necessarily approved of the principles of the Bill, it submitted the following comments in case it was decided by Parliament that no better means could be found of rectifying the present position of the superannuation funds. "Clause 4. —Computation of actuarial retiring allowance: The principle embodied in this clause has been already adopteu to a limited extent la the existing legislation but under the new legislation the application of the principle will be greatly extended, ffhis being so. the board Is strongly of opinion that the formula on which any particular pension is actuarially determined should be made aval able to the board if the amount of the pension granted is questioned by the contributor. “Although the board believes that every care will be taken by- the Government Actuary and his officers “jessing the pensions payable, nevertheless, if any error in computation did occur t the detriment of the contributor, there would be no possible remedy unless the formula on which the computation is based is made available. The board is satisfied that unless some provision of this kind is made, there will be a lar„e measure of dissatisfaction among contributors to the superannuation funds. “Clause 4 (3). —The board considers that this Provision is at variance with the first part of the sub-clause, and suggests that the words ‘actually received by tho contributor’ In Hue 23 be deleted, and the following words substituted therefor. ( on which he was contributing to the *«“<!• “Clause 6, future retiring a llowan ee..The provisions of section 11, Public Ex pendlture Adjustment Act. sec tion S Finance Act, 1931, and sec tlon 9, National Expenditure Adjustment 4ct 1932, conferred on contributors a right to contribute on a higher ’j‘‘ sls . tl ;, a “ actual salary. It Is considered that these provisions bo expressly saved In a proviso to the clause. "Clause 7 (1). Contributor retired as medically unfit.—The board is of the opinion that this clause should be amended to make It clear in those cases where a. contributor to tho fund Is retired on the ■ground of medical unfitness the provisions of this clause do not apply to his case, i-e., that he will receive a retiring allowance comnuted In accordance with the provisions of clause 6 (1) and not on an actuarial ba “Cfause 12 (1) (a)—Review of existing retiring allowances.—Tho board considers with respect, to contributors who retired oa March 31, 1921. and whose allowances from the fund commenced on the following day that this clause should specifically s.ate whether the cases come within the provisions of sub-clause 1 or sub-clause — “An Anomalous Position.” “Clause 12, Sub-clause 2.—This sub-clause provides for existing retiring allowances to be recomputed on the average rate of salary received by the contributor during the ten years immediately preceding his or her retirement, etc. The board considers that where a contributor contributed to the fund on a salary] basis as provided for by section 11, I’ubllc Expend ture Adjustment Act 1921-22, section 8, Unance Act, 1931, and section 9, National Expenditure Adjustment Aet, 1932, the rights under these sections should be preserved by a proviso to the clause. „„ . ... "Clause 12, Sub-clause 4.—lhe board desires to point out that tho provisions of this section of the Bill will create an anomalous position as between contributors to the fund who have already been rtt red without completing the service entitling them to the full retiring allowance and contributors who may retire in tae same circumstances after January 1, 1033, In the case of those contributors who have been retired prior to January 1, 1933, if even only a few days earlier the allowance will, as the Bill now reads, be reduced by -0 per cent., whereas In tho case of contributors retiring after January 1, 1933—it might be a few days later—the retiring allowance will be on an actuarial basis and consequently less favourable. “The board Is of the opinion that unless both present and future retiring allowances are calculated on the same basis a vvlde differentiation will result between the two classes of contributors, and that unless the same limitations are imposed in regard to both classes officers at present in receipt of retiring allowances will benefit at the expense of the present contributors. Tlie board is of the opinion that there should be no differentiation between present and future retiring allowances; “Clause 1: Guaranteed rate of interest on Investment of the Fund.—The board is of the opinion that any payment to the fund under the provisions of this clause should be statutory, and not subject to appropriation by Parliament. It is suggested that the words ‘out of moneys to be appropriated by Parliament for the purpose' be deleted and the following words substituted therefor: ‘and out of the Consolidated Fund without further appropriation than this Act.” The committee adjourned until Tuesday next.