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COMPANY'S CASE

EFFECT OF SCHEME

"FORCED REDUCTION

OF INCOME"

The possible effect of the Government's proposed superannuation scheme on workers who are already contributing to pension schemes was placed before the Select Committee on National Health and State Superannuation,this morning by representatives of the Shell Company of New Zealand, Ltd.

Mr. A. G. Johnston appeared for the company, with him being Mr. A. P. Corry as legal adviser, and he outlined the provisions already made for employees of his company. If they had to contribute to the State scheme on which they could have no claim, he said, it would mean a forced reduction in their income.

A provident fund was established by the combined petroleum companies at The Hague in 1912 and was administered by a board, he said, Each member of the staff of his company that joined the fund contributed 10 per cent, sterling "(about 124 per cent. New Zealand) of his salary or wages, and the company made an equal contribution. From time to time interest earned was added to the fund and, in the past, the associated companies had made extra contributions as bonus from time to time. The provident fund accumulations would go on until the member's account reached £10,000 sterling. Whatever the amount was it could be drawn in one sum when the member retired or resigned frdm the company, but only the member's contribution plus interest was paid if the service was under five years.

In conjunction with the provident fund, said Mr. Johnston, there was in operation a scheme from which employees could obtain the benefit of life or endowment insurance^ and, in addition to the* insurance and endow- ' ment schemes, a pension scheme had recently been established. . This scheme was non-contributory as far as the employee was concerned and applied to men only. This pension scheme replaced the uncertain "bonus" contributions. BENEFITS PAID. ' The benefits became available at 60 years of age or at 55 in tropical countries, Mr. Johnston said. The pension payable was 40 per cent, of the average salary during the last five years of service, less 4 per cent, on the company's contributions to the provident fund, with a maximum of £1200 a year. The pension was in addition to the provident fund which was drawn-in a lump sum on retirement. "It is not the desire of the company to make any particular representations to the Committee," Mr. Johnston, said. '■'It is their desire only that the Committee should know the existence of the benefits which the staff of the company' share in, andfiOf the strength and security of the funds from which these benefits are secured. It is also de. sired that the Committee should be aware of the contributions made by the staff themselves to these funds, so_ that this can be considered and taken into account when considering any further compulsory contribution lessening the spending power of members of the company !s staff. It seems certain that members of the company's staff, by reason of the provisions made for them by their employers, will not obtain the superannuation benefits under the Government scheme by virtue of the fact that a non-contributory pension is provided for ,them when they reach 60 years of age, and in addition they would have the income earned by their own contributions and those made by the Shell Company to the provident, fund.

"So long as they remain participants in these benefits, compulsory contribution to the Government scheme would mean a forced reduction in the net income of each member, which seems an unnecessary hardship, particularly

. ... as they cannot expect to participate in the national superannuation." ■ ' ■

In reply to a question by the Prime Minister (the Rt. Hon. M. J. Savage), Mr. Johnston' said the company had 850 employees in New Zealand, and over 600 of these were contributors to the fund. The scheme was purely for superannuation; there were no medical benefits.

Mr. Johnston quoted the case of a clerk earning £5 10s who would, on the assumption that he did not rise above £6 10s -a week, draw a pension of £34 a year at 60 and a lump sum of £3065. Another man with shorter service who was earning £500 a year would draw a pension of £115 and a lump sum of £2870. Employees with long service would draw most in cash, but those with shorter service would 'et larger pensions. '

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Permanent link to this item

https://paperspast.natlib.govt.nz/newspapers/EP19380407.2.81.1

Bibliographic details

Evening Post, Volume CXXV, Issue 82, 7 April 1938, Page 10

Word Count
736

COMPANY'S CASE Evening Post, Volume CXXV, Issue 82, 7 April 1938, Page 10

COMPANY'S CASE Evening Post, Volume CXXV, Issue 82, 7 April 1938, Page 10