SUPERANNUATION SCHEMES

Manawatu Times, Volume 63, Issue 74, 29 March 1938, Page 3

SUPERANNUATION SCHEMES

Tasks of Magnitude MANY IMPORTANT CONSIDERATIONS ►Superannuation, health and insurance schemes were reviewed in an address delivered to last evening’s meeting of the Feilding Chamber of Commerce bv Mr. A. J. Humphreys (president). He had anticipated that the Government’s schemes would have been outlined be fore he spoke but since this expectation had not been realised he intended to confine his remarks to a general outline of such statements as had been made by the Government and to tho memorandum on the subject prepared by the Associated Chambers of Commerce. lu his opinion, it was impossible for a working man on the basic wage to provide sufficient for an adequate living by his own unaided thrift when he reached 60 or 65 years of age. The actuarial value of an annuity of £65 per annum was £6BO and to accumulate that amount during the ages of 20 to 65 years would require a saving of 3s a week with interest at 3A per cent. For a married man to save 6s per week (for himself and wife) out of a small wage and at the same time roar a family and provide for sickness, accident and unemployment would cull for consistency of effort which few were capable of. It was necessary, therefore, for the community to evolve some method whereby old age, invalidity and unemployment would be robbed of some of their terrors to the Jess fortunate members of the community. There were alternative methods of dealing with the situation, and he quoted four: (1) Non-contribu-tory pension schemes with a means test as our old age pension; (2) non-contri-butory universal pensions; (3) compulsory contributory schemes for employed persons with possibly supplementary schemes for voluntary contributions as in England; (4) contributory (universal) scheme with subsidy. Mr. Humphreys said that ho had excluded voluntary schemes for the reason that they had been tried and failed. The working population had not failed to exercise degrees of thrift in small insurances but for a great number the degree of thrift required was generally beyond their capacity. Even subsidised voluntary schemes had failed, and Mr. Humphreys referred to tho National Provident Fund Act of 1911, stating that 52,000 had joined the scheme and 67,000 discontinued for various reasons. Some idea of tho magnitude of the task could be gathered from tho fact that for every 11 persons in New Zealand over 20 years of age there were two persons over 60 years of age. To provide the two persons with 25s per week <;ach of the other nine would have to contribute 4s Od each. It would require a fund of £120,000,000 and contributions of 3s per adult to place the scheme on an actually sound basis, but no Government could at once provide such a sum. He suggested that a subsidy of at least £5,000,0G0 a year would be more likely to be the method adopted for creating the necessary fund. He went on to refer to the Public Service superannuation scheme which needed about £8,000,000 to make it actuarily sound. In the case of the teachers’ superannuation scheme at least £5,000, 000 was needed to make it sound and £7,000,000 was needed to make the railway servants’ fund sound. The total of the required sums represented tho Government’s liability on these schemes alone. It would be appreciated, said the speaker, that any universal pension scheme would involve an enormous transfer of wealth from tho State and the individual to the fund, and it was a question whether it would not be preferable to provide only for those needing the provision, visualising possible extensions as experience appeared to justify. Mr .Humphreys went on to mention the Contributory Pensions (Voluntary Contributors) Act of England which came into operation in January last. This measure extended the scope of the Pensions Act to nori-manual workers whose means were between £250 and £4OO. This Act made two million people eligible and the cost to tho Exchequer for the first 350,000 would be £23,000,000. After detailing the methods of contribution as well as the conditions to be fulfilled to qualify, Mr. Humphreys said that the weekly contributions would not, in themselves, pay for the benefits and the difference was to be paid by the Exchequer. It was estimated that the benefits for a married man of 54 years joining the scheme in the first year would cost, through the usual channels, as much as 15s per week, so the cost to the Exchequer would be 13s 9d per week. A contributory universal scheme had many difficulties surrounding it, said Mr. Humphreys. Por example, the collection of contributions from married women, relatives voluntarily unemployed with no definite income and numerous others in the several w'alks of life. Non-contributory schemes tended to overload existing sources of taxation revenue so that by an increase in the rates of taxation the aggregate yield tended to shrink. Concluding, Mr. Humphreys suggested that the existing pensions scheme could not survive in face of the statistical evidence which revealed that a steadily increasing number of people were qualifying for the old age pension each year. There were 20,060 fewer children of 14 years of age in 1936 than in 1926, while there were 40,000 moro people between the ages of 60 and 80 years in 1936 than in 1926. It appeared that a partial contributory scheme was I desirable, and lie rather favoured cou--1 tributions by both employee and employer with a Government subsidy. In reply to Mr, P. G. Guy . Mr.

Humphreys questioned whether any real advantage would be gained by raising a loan from the Reresve Bank. Air. G. J. Fitzpatrick doubted whether there existed any general desire for a universal superannuation scheme apart from those who desired “something for nothing. ” Air. J. S. Tingey paid a tribute to Air. Humphreys for the study he had given the subject, and expressed regret that the (government had not put something before tho public to enable the scheme, or schemes, to be considered. However, it was the duty of the Government to go into the whole question, and he considered wisdom had beeu displayed in placing the whole question before a Parliamentary committee. On the motion of Messrs A. C. Buist and T. Collins (Mayor), Air. Humphreys was accorded a hearty vote of thanks.