CORRESPONDENCE

Evening Post, Volume CXXVI, Issue 60, 8 September 1938, Page 8

CORRESPONDENCE

COST OF BENEFITS

(To the Editor.)

Sir, —I have'read with some interest the observations made upon Mrs. Knox Gilmer's address last week. Without delving into the matter in detail, it would appear that Mrs. Knox Gilmer was conservative in her estimates. In estimating a sum of this nature I consider it fair to assume that the money involved, if not paid as taxes, would be paid into (a) another type of insurance policy, or (b) some concern giving interest on money received. For the purpose of illustration, I have assumed this to be 5 per cent, compound interest, although I realise that this is somewhat high. To place my figures on a parity with Mr. A. Rowan's I have also assumed that the person earns £5 per week for 44 years. His yearly income is therefore £260, and he pays 260s or £13 taxes, plus £1 levy, or a total of £14 per annum. At the end of the first year therefore he is entitled to 14s interest. At the completion of the second year he receives interest on £14 14s plus £14 (second year's tax). At the end of 24 years he has already passed the figure given by Mr. Rowan (which should be £596, not £614), and if he made no further payments at all he would receive at the expiration of 44 years some £1610.

I should also like to point out for the benefit of "Standard II" that in the case of the Government controlling this sum it has the benefit of the interest accruing during the time it is paying the pension. At 5 per cent, this would almost, if not quite, balance a 30s per week demand. —I am, etc., STANDARD 2A.