Manawatu Evening Standard. TUESDAY, SEPT. 27, 1932. THE SUPERANNUATION FUNDS.

Manawatu Standard, Volume LII, Issue 255, 27 September 1932, Page 6

Manawatu Evening Standard. TUESDAY, SEPT. 27, 1932. THE SUPERANNUATION FUNDS.

The report presented to Parliament, last week, by tlie Government Actuary on the Public Service Superannuation Fund gives the . public the taxpayers a clear indication of the actuarial unsoundness of the fund. The position is the same with the Teachers’ and the Railways Superannuation Funds. For some time past it has been realised that these three funds, established for the benefit of members of the Public Service, are in a serious position. In his Budget statement in 1929 the late Sir Joseph Ward, as Minister for Finance, expressed his concern in this matter. Investigations, he said, showed that the cash shortage on account of current pensions alone, which should have been covered by State subsidies in the past, was over £2,000,009. That shortage, he added, had ai’isen from the neglect in the past to pay the subsidies which the Actuary had certified from time to time to be necessary to make up the amount required to pay the pensions of Public Servants who had already retired. The pensions have been paid, but, as the late Prime Minister stated three years ago, payments have been made pai'tly out of the contributions of officers in the service which should be accumula--ting against their own pensions. The effect, of course, has been to impair the solvency of the funds. The outcome was the appointment in March, 1930, of a special committee to investigate and report to the Government. Much has happened in the political world since then, and the fact of the national finances requiring the most careful conservation has resulted in the retirement of Civil Servants at an earlier age than is usual, with the weakening of the funds by the creation of a greater number of beneficiaries. The committee had not reported to Parliament last session, and it is not now expected to do so independently of the National Expenditure Commission to which the matter was referred.

Fig'Ui'es given in the Year Book for 1932 show that for the calendar year 1921 the annual contributions to the Public Service and Teachers’ Superannuation Funds were greater than the annual value of the allowances. To the former, in the year mentioned, the contributions amounted to £248,020, and payments to beneficiaries ' to £163,355; in the latter the respective figures were £90,391 and £74,315. Financially the most unsatisfactory of the funds, the contributions to tlie Railways Superannuation Fund in 1921 were £135,661 and allowances £138,620. The balance of the conti’ibutions, together with interest from investments and Government payments, were added to the accumulated fund in the teachers’ and Public Service schemes. A decade later, the latest period for which figures were available for the 1932 Year Book, the .contributions in each fund were insufficient to meet the payments. The Public Service contributions were £270,316 and allowances £383,923; the teachers’ contributions were £143,392 and payments £235,902, while the railwaymen’s fund received £170,686 and paid

£296,045. It is obvious, tlierefore, that the capital of each fund is being called upon to make good the balance. This process cannot continue indefinitely, yet, as the Government Actuary points out in the report submitted to Parliament last week, retii’ing allowances are increasing and will continue to do so for many years to come, as regards the Public Service Superannuation Fund. He adds that the benefits paid out in the triennium under review exceeded the total Contributions and Government subsidy, and were 75 per cent, of the income fi’orn these two soui’ces aixd from interest. These high percentages, the Actuary further states, are disturbing, as the liabilities are of a deferred nature and funds should be increasing- rapidly while the fund is young and the membership is expanding. The total State liability at Mai-ch 31, 1930, to this scheme was nearly £8,000,000. It is estimated that the amount actually required to make all three actuarially sound is at least £20,000,000. The State’s anxiety in this matter is therefore easily explicable. The Actuary. has made x-ecommendations in his report regarding the rights of contributors to the scheme he reviewed, and legislation which is to be brought down this session on this question may,. it is reported, be based on his suggestions.