REDUCED INGOME

Evening Post, Volume CXVI, Issue 28, 2 August 1933, Page 8

REDUCED INGOME

SUPERANNUATION FUNDS

EFFECT'OF MORTGAGE RELIEF

Attention to the effect -which mortgagors' relief legislation has had ori the State superannuation funds is drawn by the executive of the New Zealand Educational Institute in a letter which it has forwarded to the Acting-Prime Minister (the Et. Hon. J. G. Coates). -•" " '■' '. After, drawing attention to the present condition 'of the funds, the'letter proceeds:— .': ■' ":/. • " The bad condition- of- the' funTds has recently been accentuated by 'the'application of, the legislation adopted for the relief of mortgagors. In explanation of this statement it . has been, pointed out that of the Teachers-' Superannuation I^und the sum of £884,345 was, on January 31, 1932, invested in. land mortgages, though tho Superannuation Board had no yoke in arranging them. These mortgages are subject, to. orders of the Supreme Court, and adjustment by the Adjustment Commisi sion. The result is that by reduction^ suspension, or remission, of interest tho fund has been subjected to very heavy, losses. '[ These losses have been accentuated by ; tho ■ policy pursued' by the mortgagees of stock—chiefly banks stock agencies. As they have *tha handling of all receipts from the produco of the land they have followed the practice of retaining all but tho bare necessaries of the cost of operating rtho farms, thereby securing: this payment of their own interest in full and applying any surplus to the reduction of the principal.. The result is that the mortgagee of the land does not get even the reduced interest ordered by tho Court, and may,' and iv some cases does, lose tho principal as well.. "It is thereforo submitted that measures should be taken to relieve tho fund of at least a portion of this loss. It. seems a reasonable request to mako that power should be given .to the Supreme Court to deal with stock mortgages at the. same time as it deals with' land mortgages, and in tho same way so far as that is applicable. It would thus bo possible, and equitable, to apportion tho losses between tho parties concerned. Failing some measure of this kind, it seems evident that n» option will be left to the Superannuation Board but to proceed to tho drastic step of foreclosure in order to preserve as much as possible of the fund entrusted to its care. It will* be obvious to you that such procedure is to be? avoided if .at all possible. "The executive of the institute has no hesitation in bringing this matter before you. The condition of the fund is a causo of anxiety to thousands of teachers, and they do not view with equanimity tho depletion of tho super* aiinuation funds for tho benefit of financial institutions."