SUPERANNUATION

Evening Star, Issue 20311, 21 October 1929, Page 8

SUPERANNUATION

COMPREHENSIVE REVIEW GOVERNMENT'S OBLIGATIONS PUBLIC SERVICE VIEW No. I. A statement in regard to the Public Service Superannuation Fund has been issued by Mr F. W. Millar, secretary of the New Zealand Public Service Association, with a view to enlightening the public as to the true position of affairs. His aim is to remove the impression that the public servant is a specially favoured person. The shortage in the fund at < March 3, 1927, was £1,060,325, including interest accretions. The Prime Minister has stated that it is proposed to" remedy the shortage; in fact, according to Mr Millar, he lias offered to do this as some compensation for the Government’s inability to restore the salary maxima to the 1920 basis, and contributors to the fund are anxious to know when the promise will be fulfilled. According to the last Government actuary’s report, what is required is an annual subsidy of £285,000, which would gradually extinguish the accrued shortage as well as provide for current retiring allowance AN INITIAL DEADWEIGHT. The fund was established on January 1, 1908, the Act providing that all continuous service prior to that date should be allowed to count for superannuation purposes without payment by contributors. This was done in order to induce all public servants, particularly officers who, under the terms of their appointment, were entitled without contribution to compensation on retirement, to join the fund and so ensure its success. Provision was also made for an allowance to the widow and children of a deceased contributor. The liability created by these benefits was assumed by the Government after exhaustive actuarial inquiry. Although membership of the fund was originally optional, it is compulsory on those who have joined the service permanently since. The contributions range from 5 per cent, to 10 per cent, of the annual rate of salary, according to age at the date of joining. The total amount thus contributed last year was approximately £254,000, and for the whole period up to March 31, 1929, £3,664,385. PROVISION FOR REFUNDS. As to benefits, proceeds Mr Millar, if a member resigns before qualifying for a pension he will receive a refund of his total contributions without interest. If he is retired compulsoiily for reasons other than misconduct after twenty years’ service he receives ; a refund of his total contributions, together with simple interest at 3} per cent. Should he bo retired as medically unfit, or retire after forty years’ service, or on reaching the age of sixty-five, he will receive an annual allowance equal to one sixtieth of the average of his salary for the three years immediately preceding retirement computed for each year of service. Should ho die, either before or after retirement, leaving a widow, she will receive an allowance of £3l a year during widowhood, and if there are any children under fourteen years of age, each of these will be paid 10s a week until reaching that age. Contributors who joined the fund after December 24, 1909, are limited to a pension of £3OO a year, but they are required to contribute on their full salaries at the ordinary rates. In addition, a male contributor may, with the consent of the Minister in charge of , the department in which he is employed, retire on attaining (a) sixty years of age, (b) fifty-five years of age if his length of service is not less than thirty years, or (c) thirty-five years’ service irrespective of age; and in the case of a female contributor on reaching fifty years of age. _ The retiring allowance in each case is computed as one-sixtieth of the average rate of salary for the three years immediately preceding retirement for each year of service. ♦ IN LIEU OF COMPENSATION. Members of the fund who joined the service between 1871 and 1886 were entitled, on compulsory retirement, to compensation, without contribution on their part, of one month’s salary for each year of sendee. On joining, the fund this compensation ceased to accrue, though the accrued rights were preserved subject to superannuation benefits. On retirement their pensions are set off against the amount due for compensation, and if death occurs before the total amount received by way of pension equals the total compensation, plus total contributions, without interest, the difference is payable ont of the fund to the widow or personal representatives, as the case may be. The total liability of the State for accrued compensation at June 30, 1908, was approximately £555,000, _ which would have increased by approximately £134,000 at this date had the officers concerned not joined the fund. SAVING TO CONSOLIDATED FUND Gratuities to officers on retirement or to the dependents of deceased officers were'a gradually increasing item of expenditure prior to the establishment of the superannuation fund. _ For the five years immediately preceding that date there was expended out of the Consolidated Fund, under this head, the sum of £26,210, while for the next succeeding five years only £6,065 was spent. It is safe also to'assume that, failing the compulsion to contribute for superannuation, many of the lower-paid public servants would be obliged to claim the old age pension on retirement. The annual saving to the Consolidated Fund under this head is conjectural, but it must be Allowances paid out of the fund to widows and childrei are included as income for purposes of the widows’ pension, and in some instances take the place of that benefit. The indirect saving to the Government in this direction also must be appreciable, though there, is no statistical record of the actual figures. Both the National Provident and Tub-

lie Service Superannuation Funds are established on an actuarial basis, but the method of keeping the funds solvent differs materially. The contributions to and benefits payable from the National Provident Fund have been so determined that a subsidy of 25 per cent, payable under the National Provident Fund Act without further appropriation will keep th© fund solvent. Thus the fund is State-guaranteed, fn addition, the variable it o ms of expenses of administration and maternity benefits are payable by the Government out of the Consolidated Fund from year to year, and are not a liability of tho National Provident Fund, fn the case of the Public Service Fund the Act provide’- that the liability assumed by tb© State shall he m«t as it arises, but State aid to the Public Service Superannuation Fund represents but 17.5 per cent, of the total revenue, while State contributions to the National Provident Fund represent 25 33 ner cent. It may be mentioned, also, that tha local ‘ authorities’ superannuation scheme under the National Provident Fund requires contributors to pat 4 ner cent, to 0 ner c°nt of salaries 'as against 5 per cent, to 10 ner cent in tii© Public Ser-ice scheme'' for practical] v the same benefits, aud in add't.on is not compelled to pay on more than Ptfio per annum. fA concluding a tide dealing'with th" "abject will be published to-mor-row.]