The Grey River Argus SATURDAY, September 24th, 1932. SUPERANNUATION CRISIS.

Grey River Argus, 24 September 1932, Page 4

The Grey River Argus SATURDAY, September 24th, 1932. SUPERANNUATION CRISIS.

That a reckoning day for the three main schemes of superannuating servants of the State was coming quickly was evident before the depression. The speeding up of retrenchmnt; since has hastened the necessity for a “show down.” It is now reported on good authority that a sum so vast as between twenty and twenty five millions sterling would have to be found either entirely by the State or by it jointly with its employees in order to make acturially sound the public servants, teachers, and railways superannuation funds. Needless to say this is to-day an impossibilty. There are several alternatives. The Governmnt could make a substantial subvention—though it would need to be several times larger than previous subsidies over and above regular State contribution—in order to enable the schemes to continue temporarily at the existing rates of pension. There might, on the other hand, be a substantial increase required from the superannuitants in their contribution. Thirdly, there might be a combination of these changes, together with a regular pension reduction all round, but even with all of these combined, the effect upon the contributors would be very drastic, and not even then might the position be made actuarially sound. One question suggsted is whether the Government has been prudent in fostering during the past two or three years such a rush of retirements among its employees. At the same time Ministers have refused to allow the public to ascertain the precise position of the several funds. It is evident that, they have had at the back of their minds a scheme to pluck the contributors in the name of economy, and the rush has been encouraged with just that object in view. As remarked by our Parliamentary Reporter, Sir Joseph Ward did adopt a more candid and prudent attitude three years ago when he called attention to the utter faulure of his predecessors in office to keep the funds sound by paying adequate subsidies into them. He exposed the fact that upon the current pensions also the shortage in the subsidy amounted to no less

than a couple of millions. But to. day we find the three funds have gone more than twenty millions to the bad. A few figures might be quoted. It is about 24 years since the system began, and in the ease of the public servants scheme the three-yearly actuarial examination showed that in 1910 the subsidy paid by the State was £22,500 a year, an increase of £2500 on the original figure; in 1913 it had increased to £48,000 per annum; and in 1919 to £86,000 Yet it was found that the subsidy in 1914-16 was £lB,OOO too low; in 1917-18 it was £30,000 too low, and in 1925 it was £144,000 too low to keep the scheme sound whereas five years ago the shortage had aggregated over £BOO,OOO, although two extra contributions of £lOO,OOO between 1924 and 1930 were made and the Consolid. ated Fund took over increases in the pensions of dependents. This fund is cited merely as an illustration, and at the end of the 1927 financial year it showed an alarming position. It was shown by the actuary that at that stage the value of future subsidies required to be provided by the State over and above the present regular subsidy was no less than four and three-quarter millions. The report of 1927 estimated that, even apart from providing for the shortage of previous years, the subsidies for the years 1928, 1929 and 1930 should amount to about £700,000. The contributors last year numbered 18,197, and the value of allowances was £383,923, of which the Government contributed £101,361 while the public servants contributed £270,000, but the total amount expended during the year ended March 31st, 1931, was £483,190 including £46,754 in refunds of contributions, costs of administration £8,526 and loss on securities £8,621. The, teachers’ fund has now had over a million sterling paid into it by the State, whilst the particulars available as to the railways fund are meagre. If the Government penalises present contributors in favour of those already drawing pensions, it will be quite unfair. There is doubtless room for economy in the case of the pensions of large dimensions. These could be brought down very considerably. A notorious instance might be quoted, such as those connected with the Railway Department, and it is to be hoped that when the “show down” does come, it will be thorough, and that economy shall begin at the top where it can best be corne. Pensions of £lOOO a year are indefensible.