STATE SUPERANNUATION

New Zealand Herald, Volume LXIX, Issue 21297, 26 September 1932, Page 11

STATE SUPERANNUATION

DEFICIENCIES IN FUND SUGGESTIONS BY ACTUARY MODIFICATIONS OF RIGHTS Suggestions to redeem more rapidly the deficiency in the Government subsidies to the Public Service Superannuation Fund are contained in the triennial actuarial examination of the fund tabled in the House. The report submitted by the Government actuary, Mr. C. Gqstelow, states that a higher subsidy could be fixed or, alternatively, the % fund could be strengthened by amendments to the Superannuation Act. It is stated that to lessen* considerably the liabilities of the fund without unduly prejudicing contributors, tho present right of members to retire by length of service could be modified. This could be done by restricting tho right to those who have attained a specified age, for example, 60 in the case of males and 55 in the. case of females, and also by increasing by five years the minimum age or length of service at which a female contributor has thg right to retire. Early Retirements A further suggestion is to eliminate all existing powers of extending the provisions of t}ie Act to provide for early retirements. " Such powers," says the report, •' appear in the past to have been wrongfully regarded by contributors as options to retire with the Minister's consent, but were clearly designed to cover only exceptional cases. Such provision should, of course, be made to obviate possible hardship in the case of those compulsorily retired through no fault of their own, especially if such retirements are the result of a general retrenchment policy. "Two methods of meeting this contingency suggest themselves, namely, to grant pensions based on service on the understanding that the Consolidated Fund pays the necessary retiring allowances until the attainment of the earliest normal retiring age; or, secondly, to provide such actuarially calculated pensions as will throw no additional strain on the Superannuation Fund. It will be seen that the Superannuation Fund is safeguarded by either method, the only difference being that in the first case the extra liability is borne by the State, and in the second case by the officer compulsorily retired." Another suggestion made by Mr. Gostelow is to alter the basis of calculation of -"final salary" to the average salary of the last seven or ten "years, instead of three years as at present; or, to disregard for pension and contribution purposes any salary increases after a specified age, say 55. Merits ol Proposals "Of these two," states the report, "the former has the merit of correlating to some extent the retiring allowance and the average salary received in the years preceding retirement, while from the viewpoint of the fund tho latter alternative has the advantage of being as effectual &3 the former in minimising violent fluctuations in the pension liabilities due to salary increases immediately preceding retirement, and at the same time does not penalise those retiring medically unfit to the same extent as the former basis would.

"In making this suggestion I am fully conscious that. it violates one of the canons of a good pension fund scheme, but, having regard to the constitution of the Public Service Superannuation Fund and its present parlous financial position I feel compelled to recommend it for urgent consideration."