RIGHT TO RETIRE

Evening Star, Issue 21218, 27 September 1932, Page 9

RIGHT TO RETIRE

SUPERANNUATION FUND AMENDMENTS PROPOSED Suggested amendments to the Public Service Superannuation Fund scheme for the purpose of lessening the liabilities of the fund without unduly prejudicing contributors are made in the triennial report on the fund made by the Government Actuary (Mr C. Gostelow). The report was presented to Parliament on Friday, and the suggestions are as follows (a summary only was published on Saturday) : “ (a) Modify the present right of members to retire by length of service by restricting it to those who have attained a specified age—e.g., age 60 in the case of males and age 55 in the case of females —and also increase by five years the minimum age or. length of service at which a female contributor has the right to retire. To enable the matter to bo more readily visualised I have set down the present position and that proposed : PRESENT RIGHTS. —Males. — li.) After age 65. (ii.) After forty years’ service. (Hi.) At any- age if medically unfit. —Females.— (i.) After age 55. (ii.) After thirty years’ service. (iii.) At any age if medically unfit. PROPOSED RIGHTS. —Males.—' (i.) After age 65. (ii.) After age 60 if combined with forty years’ service. (iii.) At any ago if, medically unfit. —Females.— (i.) After age 60. (ii.) After age 55 if combined with thirty-five years’ service.' (iii.) At any” ago if medically unfit. EARLY RETIREMENTS. “(b) Eliminate all existing powers of extending the provisions of the Act to provide for early retirements. Such powers appear in the past to have been wrongfully regarded by contributors as options to retire with the Minister’s consent, but were clearly designed to cover only exceptional cases. Some provision should, of course, be made to obviate compulsorily retired through no fault of their own, especially if such retirements are _ the result of a general retrenchment policy. Two methods of meeting this contingency suggest themselves—namely, to grant pensions based on service on the understanding that the Consolidated Fund pays the necessary retiring allowances until the attainment of the earliest normal retiring age set out in (a) above; or, secondly, to provide such actuarially calculated pensions as will throw no additional strain on the Superannuation Fund. It will bo seen that tlie Superannuation Fund is safeguarded by either method, the only difference being that in the first case the extra liability is borne by the State, and in the second case by.the officer compulsorily retired. “ (c) (i) Alter the basis of calcula- ■ tion of ‘final salary’ to the average salary of the last seven or ten years, instead of three years as at present; or (ii.) disregard for pension (and contribution) purposes any salary increases after a specified ago, say age fiftylive. Of these two the former has the merit of correlating to some extent the retiring allowance and the average salary received in the years preceding retirement, while from the viewpoint of the fund the latter alternative has the advantage of being as effectual as the former in minimising violent fluctuations in the pension liabilities due to salary increases immediately preceding retirement, and at the same time does not penalise those retiring medically unfit to the same extent as the former basis woidd. In making this suggestion, I am fully conscious that it violates one of the canons of a good pen-sion-fund scheme, but, having regard to the constitution of the Public Service Superannuation Fund and its present parlous financial position, 1 feel compelled to recommend it for urgent consideration. PROCEDURE ELSEWHERE. “It is not my function to comment on policy matters, but I would bo lacking in my responsibility if I did not enunciate the general principle that any additional financial strain on the Superannuation Fund duo to policy measures of Government should be a charge on the Consolidated Fund by way of special subsidy. Such a method, 1 may mention, is followed in the South African Public Service Superannuation Scheme, where, if an officer is forced to retire on pension duo to a retrenchment scheme or other policy measures, all pension payments up to the date of his attaining the normal pension age are paid out of public revenue and not

out of the Superannuation Fund. The Commonwealth of Australia safeguards its Public Service Superannuation Fund by fixing ago sixty-live as the normal pension age, with provision that if any officer is retired alter age sixty, either compulsorily or of his own wish, he is granted a reduced pension actuarially calculated. It is important to note that, although tlie problem is approached from different angles, both Governments agree in recognising that the Superannuation Fund must be financially safeguarded in the event of any departure from what might be termed its fundamental obligations to tho contributors.”