THE FINANCE OF FRIENDLY SOCIETIES.

New Zealand Herald, Volume XXXI, Issue 9493, 24 April 1894, Page 3

THE FINANCE OF FRIENDLY SOCIETIES.

TO THE EDITOR. Sir,—ln further consideration of the question of friendly society finance, I desire now to point out what ought to be the aims and objects of friendly societies, so as to secure for the future permanent stability. With this object in view, I desire to draw attention to the fact that from 1882 up to the present time each and all of the public valuers in New Zealand have pointed out that the sickness Experience of societies in New Zealand is less than the standard (that is, the experience of the Manchester Unity in Great Britain for the years 1866-70) for the younger ages, but that the sickness experience for the older ages is far more than that expected.- What the effect of this experience will be upon the younger societies when their members arrive to old age, it is difficult to determine. > My fear is that some of these younger societies that are charging inadequate contributions, will find in later years that their financial position was worse than the valuation disclosed, and I also fear that some of the branches of societies which, after valuation,

I have had a surplus brought out, and and dividing that surplus, may (unless a reserve fund be established which will meet the 1 increased sickness that has been experienced by all the old societies in New Zealand) also find themselves in a bad financial position. To guard against any such calamity I recommend that an agitation be set on foot to induce the Government to collect and tabulate the experience of the sickness and mortality in New Zealand; also to endeavour to obtain from the New South Wales Government a tabulated statement; of the sickness and mortality experience of that colony. Why I suggest New South Wales is that on examining the mortality experience of that colony with the experience of the other colonies forming the Australasian group as compiled by Mr. T. W. Bremner, FLA. and A.1.A., I find that the mortality of New South Wales and New Zealand are almost the same up to age 32, that from age 32 to 70 the mortality experience of New South Wales was higher than the New Zealand experience; but it must be remembered that the number of persons over 32 years of age in New South Wales would be much greater than those in New Zealand, and that therefore the mortality experience would be more reliable. From this tabulated experience a sickness table up to 65 years of age should be constructed, and every society should for the future only provide for a sick allowance up to 65 years of age, because th« line which divides sickness and old age, after age 65 is so fine that it is very difficult to distinguish, and in most cases it is old age infirmity and not sickness which is claimed for. In lieu then of the sickness allowance an annuity of not less than 10s per week should be provided to which all members who attain age 65 or upwards should become participants. Now the present value at age 21, that is the amount which is required to be paid in one sum for a deferred annuity of 10s per week on attaining the age of 65, according to the Manchester Unity experience, is found to be £17 14s 3d, but as the mortality of our New Zealand brethren is very much lower than that of the Manchester Unity experience there will {consequently be a larger "number living at that age to participate in the annuity ; for the numbers living at that age according to the Manchester Unity experience out of 100,000 joining at age 18 is found to be 48,343, whilst from the New Zealand experience out of the same number—loo,ooo joining at age there would be 56,369 entering upon their 65th year of life, consequently the present value would be increased by £2 Bs, making the present value of each annuitant for age 21, New Zealand experience, to be £20 2s 3d. The providing for this annuity benefit need not be such a bugbear as it is made out to be, if persons would only join when young : but a better plan, if parents could be so persuaded, would be for them to subscribe to a fund which would be applied towards purchasing this annuity for their children on their attaining age 21. This could be done at a small cost, provided they commenced to subscribe for each child upon attaining their 11th birthday, that is the age at which the lowest rate of mortality is experienced, for from that age up to age 100 the rate of mortality increases year by year—the amount required is7£d per week for age 11 to age 21. This amount, improved at the rate of five per cent, per annum, would purchase the annuity. A rule would have to be introduced agreeing to pay back all contributions paid into the fund if the child died before attaining the age of 21. The contributions for a sickness benefit up to age '65 and a funeral benefit at death need not exceed sevenpence per week. Now, as very few societies charge more than sevenpence per week for entrants at age 21 ? and as that payment can only provide for sickness up to age 65, together with the funeral benefit, it should be noted that all sickness that will be experienced by their members who have attained their 65th birthday is altogether unprovided for; hence the cause of the deficiencies shown. It therefore behoves every young man who intends joining a friendly society, or who may belong to friendly societies, to ascertain whether the contributions charged are likely with interest added to provide the sickness benefit after he has attained 65 years of age. The public valuers make this calculation for you, and they have stated time and again that the contributions are inadequate to provide for the sickness of old age. Are you then in a position to show that the estimate they have made is incorrect? If not, then you should for your own safety enquire into the matter, and endeavour to induce your society to apply the remedy. I sincerely hope that this question of friendly society finance will be fully and seriously considered by all members, but especially by the leaders of friendly societies, for I feel ceraain that once the question is entered upon, discussion and analysis will lay bare the truth, and i;hat those who from an imperfect knowledge of the science have j opposed reform, will «very shortly become | converts, and endeavour to force their comI victions upon others, for their own good and '■ the stability of the society to which they may ! belong.—l am, etc., Chas. Samuel Wright, One of the Public Valuers that was ap painted under the Friendly Societies Act. 1 |