STATE SUPERANNUATION

New Zealand Herald, Volume LXVI, Issue 20323, 2 August 1929, Page 15

STATE SUPERANNUATION

POSITION OF THE FUNDS.

SPECIAL INQUIRY ARRANGED.

SALARY ADJUSTMENTS DEFERRED.

[by telegraph.—special reporter.] WELLINGTON, Thursday.

Tho financial position of the State superannuation funds —the Public Service, railways and teachers' funds —was reviewed by the Minister of Finance, Sir Joseph Ward, in his Financial Statement. "My investigation showed that tho financial position of these funds is even worse than I had thought," said Sir Joseph. "The cash shortage on account of current pensions alone, which should have been covered by State subsidies in the past, is over £2,000,000. This liugo shortage has arisen from the neglect in tho past to pay the subsidies which tho actuary has certified from time to time, in terms of tho Superannuation Act, as necessary to make up tho amount re-, quired to pay the pensions of tho public servants who have already retired. Tho pensions, of course, have been paid, but partly out of the contributions of the officers at present in tho service, which contributions should be accumulating against their own pensions. Through the loss of interest thus entailed, the failure to pay tho subsidies required in the past has been cumulative in effect, with the result that a largo and permanent increase in the subsidies, with a corresponding additional charge on taxation, is now required to rehabilitate and maintain tho funds on their present basis. The position has been further accentuated by a mistaken policy of early retirements and other concessions granted, apparently without due consideration as to their effect on tho superannuation funds. It is certain that a change must be made in the policy of automatic early retirement now „ operating."

The Minister said t.he position of the funds was such that it was a question whether a radical change in the whole basis would not be necessary. It was proposed to hold an inquiry as soon as possible to investigate the position thoroughly. A report would be made to the Government on the state of the funds and as to what should be done to place superannuation on a satisfactory footing.

The Minister said he also had under consideration requests from Government employees regarding salary adjustments involving heavy liabilities. "The superannuation question, however, is in my opinion first in importance," he said. "Until the Government can see a clearingup of the requirements in this connection I find myself unable, in view of the financial position generally, to take any action in the direction of adjusting salaries, other than is brought about by promotion and regrading under the law."

UNEMPLOYMENT RELIEF.

GOVERNMENT EXPENDITURE.

INSURANCE TO BE INVESTIGATED.

[BY TELEGRAPH. —SPECIAL REPORTER.] WELLINGTON. Thursday.

An outline of the efforts made by the Government to minimise unemployment difficulties was given by the Minister of Finance, Sir Joseph Ward, in the Budget. The Act passed during the first short session of the new Parliament increased some of the votes granted in the last Appropriation Act in order that additional relief works could be put in hand without delay. At the same time authority was obtained for the payment of £IOO,OOO additional subsidies to local authorities for relief works in the cities a.nd towns. Instructions were also issued to the various labour-employing departments, such as the public works, post- and telegraph, and forestry, to provide work for as many men as possible, and these efforts had done much to relieve the position. The expenditure on special relief work last year totalled £729,034, in addition to which there remained commitments at March 31 last amounting to £45,223. Subsidies to local authorities amounted to £68,567, and at the end of the year there were also commitments amounting to £36,794. The total cost to the State of unemployment relief last year was £879,618. Unemployment loans raised by local authorities last year amounted to £102,533. Sir Joseph Ward said he had arranged for unemployment insurance to be fully investigated. He hoped the outcome would enable him to present next session a matured scheme to deal with the problem.

\ STATE ADVANCES INTEREST

NO PROSPECT OF 4J PER CENT.

ONLY GRADUAL REDUCTION.

[BX TELEGRAPH. —SPECIAL REPORTER.] WELLINGTON. Thursday.

Reviewing the operations of the State Advances Office, Sir Joseph Ward said that all the additional capital required had been obtained locally. "Having satisfactorily disposed of the more urgent matter of clearing up the arrears of applications, the next step is to concontrate on the question of interest rates," he continued. "This, of course, is a matter that will bo gradual, the governing factors being the rate at which fresh capital can bo raised, and tho cost of refinancing the existing loans when they fall due. It must also ho borno in mind that loans borrowed in recent years have been at relatively high rates, which, of course, have to be paid until the loans in quostion mature. "It is well known, however, by all who have any knowledge of finance that though tho nominal rate of interest on our last two London loans was 4j per cent., tho discount price would not permit- of lending out on that basis right away. Tho break in the old rate of 5 per cent, in May, 1928, indicated that according to circumstances governing world finance, rates would gradually work down to 4| per cent, at par, but it is impossible for anyone to say when that position will bo reached. I am hopeful that the lending rates for now advances can bo started on tho downward path before long." . The settlers' branch last year made a profit of £30,465, equal to 3s per cent, on tho capital invested, and tho workers' branch a profit of £10,887, equal to 2s Id per cont. on tho capital.

WORK OF THE HOUSE.

BUSINESS FOR TO-DAY.

[n\* TELEGRAPH.—SPECIAL REPORTER.] WELLINGTON. Thursday. Consideration of the Standing Orders Committee's report is expected to occupy the House of Representatives to-morrow afternoon. It is probable there will ho no evening sitting. The Budget debate will commence on Tuesday.