Friendly Societies.

Otago Witness, Issue 1499, 7 August 1880, Page 22

Friendly Societies.

REPORT OP THE REGISTRAR. (FROM OUR OWN CORKESrONDBNT.) Wellington, August 3rd. The third annual report of the Registrar of Friendly Societies was tabled to-night. It commences with statistics of business of the Registry Office Department, the work of the year, the societies registered &v. In reference to the registration of new branches, the Registrar remarks :— " The object of registration is to register rules specially applicable to the body desiring registration. As tho Act stands, if the branch does not frame some rules specially applicable to itself as a district branch it cannot bo placed on the register. Branches have been informed that in order to enable them to effect registration, rules] of most simple character will be accepted, such as rules for the constitution of the branch, for its name, for due subordination to the district aaid (if it is not desired to make laws in detail) adopting general district laws relating to branches as special laws of that branch, provided that such district laws make provision for all matters required by the second schedule to "The Friendly Societies Act, 1877 " Although that would only involve the necessity of making two or three short rules, yet 22 branches have not thought proper to adopt the suggestion. It is true that in the case of these branches few additional rules would have been necessary to comply with tho provisions of the Act of 1877, as district rules had been registered under the former Friendly Societies Act. This suggestion has been found useful in other cases, and by the adoption of that course, several brandies have been able to secure registration. It is to be regretted that so large a number of blanches should, on account of a difficulty which they could so easily get over, shut themselves out from the benefits of registration. As however, there is apparently a strong objection on their part to make rules, it is worth consideration whether by a slight modification of the Act this obiection could be met. As a general rule, the laws of districts are divided into two parts. (1) Those general laws relating to the construction of the district, and general matters to be dealt with by the central executive, and by representatives of aggregate lodges. (2) Special subordinate lodge laws regulating their internal economy to a certain extent by giving them power to make bye-laws supplementary of these subordinate lodge laws. It may therefore be matter for consideration whethor the Act might not be modifled by providing that whenever notice is given of the estftbliehment of a branch, for the purpose of such

branch being registered, if such notice is not accompanied by any branch rules, it shall be lawful for the register of such branch, provided (1) that a declaration duly made by the secretary of a society, and by the secretary of the branch, to the effect that such branch has not made any bye-laws, but is only a subordinate lodfe, bound by the laws of the district and annexed to the district rules forwarded for registration, and district rules so far as applicable be forwarded to tho registrar, with notice of the establishment of the branch, and (2) that the subordinate lodge bye-laws make provision for matters required by the Act to bo contained in the rules, and such subordinate bye-laws or any amendment thereof by tho society be deemed the registered rules of such branch, but that the branch shall have power of subsequently registering bye-laws made by itself as amendment of subordinate lodge laws or in substitution thereof. A provision to this effect would probably remove the objection felt by many branches cither to remodel their laws, or to make them where they do not at present exist, and would probably result in placing many branches on the register. Further on the report says:— "The Government has authorised the following as cases to which the facilities of the Friendly Societies Act ought to be extended. Promotion of otal abstinence from all intoxicating drinks. This special authority was given in response to a request preferred by the Independent Order of Good Templars, No. 1, being a benefit society. This Order could not register under section 7 of the Act, neither was it possible to bring it under the scope of subsections 3 or 4; but although authority was given on the Bth December, 1877, and the fact intimated to the secretary of the Grand Lodge 1.0. G.T. on the 9th, the Registrar had received no further communication from this society." Except in regard to two or three of its provisions, the Amendment Act so far worked smoothly and well. Information required under section 4 has been in general furnished, sometimes with cheerfulness, and certainly not with greater reluctance than information required under section 13 of the principal Act. In two particulars only has special reluctance been shown— in a few instances the furnishing of names of members and of information respecting wives of members. It is this section of it which appears to have given the greatest trouble. It has done so in two ways, and in each case the trouble has proceeded etirely from the Provincial District of Otago. The Odd-Fellows and Foresters of that district are both affected by this stctiou, thQiigh in different ways. The former had since 1874 adopted the practice 'of crediting all interest beyond 4 per cent, to the management funds of their lodges. Tho latter have been in the habit of paying their Court surgeon and other medical expenses out of the sick and funeral funds of the Courts. Both those practices became illegal by the Amendment Act of 1878. Yet the returns for 1879 show that in five out of six registered Courts of the United Otago District of Foresters from which returns have been received the malpractice was continued during that year, while in the case of the Manchester Unity Order of Odd-Fellows, although the law appears to have been obeyed by nearly all the lodges of the district, and their rules have been] remodelled so as to comply with the Act, a petition has been presented to Parliament praying that this special prohibition should be rescinded. The Foresters' Courts were communicated with on the subject of their breach of law ; but as the district had recently registered rules which would have the effect of preventing a repetition of the malpractice, no prosecution was instituted. In the case of the Odd-Fellows a letter was sent to the District Society explaining the object of the section referred to, and pointing out that their tables do not include provision for the possibility of adverse fluctuations in the Society's experience of sickness and mortality. The fluctuations are likely to be very considerable in the case of small lodges, especially in regard to the amount of protracted sickness ; hence if the Society were to enter on a given period of say five years, with exactly sufficient funds in hand to meet the liabilities, according to the tables, and were throughout five years to appropriate all interest beyond 4 per cent, to the management fund. It follows that apart from the profit accruing there would be an equal likelihood of surplus or deficiency at the close. The existence of surplus is not a matter to be deprecated, but deficiency is a serious disaster. To' permit two results to be equally probable is quite an inadmissable course. Life insurance offices regard it as a maxim that there ought never to be a deficiency at valuation. Experience should teach societies that it ia not an infrequent thing for life insurance offices to realise a rate of interest exceeding by two per cent or three percent, the rate assumed in valuation and in computation of premiums. Thus the Australian Widows' Fund was recently valued at 4J per cent, at a time when the annual interest was about 8^ per cent, on the aggregate funds. Such are the general principles which forbid the application to management expenses of interest earned by the Benefit Fund ; but in the case of the Otago District of the Manchester Unity Order of Odd-Fellows there are circumstances which would make such an appropriation, were it to be continued, especially disastrous. The rate of contribution which has hitherto obtained is one which all actuaries aro agreed in regarding as totally inadequate to provide the benefit promised. This rate it is understood will continue to be charged to all members installed prior to the Ist July, 1879. Even as regards new members the contributions to be charged are considerably lower than the minimum rate which it is considered prudent for societies to adopt. A rate of interest much higher than 4 per cent, would be needed to make these contributions adequate, hence it would be a most pernicious thing' to make 4 per cent, the maximum rate obtainable for the Sick and Funeral Fund. Lastly, although no lodges of the district have as yet been valued, a comparison of funds in hand with the number of lodges, number of ' members, and number of benefits will in many cases afford prima faoie evidence against their solvency. The Registrar remarks, however, that the officers of the Otago district are deserving of high praise for the large measure of success which has thus far attended their efforts to bring their lodges into compliance with the new Act. The new lodge rules are mostly models for imitation, excepting in the matter of rates of contribution, winch, though a great improvement on the old uniform rates, are still too low. Iv regard to deferred annuities commencing at 60 years of age, the Registrar says : "There is reason to believe that the mortality experienced in this Colony is , lighter than in England. This will, pro rata, increase the liability of the annuity fund, as a larger number of members will survive to claim benefit, and will claim it for a longer time. If the annuity is established, sick pay should cease from the time of its commencement. It is very desirable that the superannuation risk should be spread over the whole district, as funeral liability already is. Liability for payments in all cases of protracted sickness —say, after the first six months of sicknessshould be spread over the entire district, as in several districts of the Order of Foresters in England. A few cases of chronic sickness, even where contributions would have been sufficient for average experience, will soon exhaust the funds of small lodges Liability for payment in acute diseases can be borne with less danger by a small society, as it is not necessary to have a large number of members to insure a fair average. Members may be started at the magnitude of the number of contributions they will have to pay, but it is imperative that any annuity fund started must be so safo that failure to fulfil its obligations could be an absolute, or at least, moral impossibility. No rule for" providing annuities can be registered unless tho tables of contributions to meet them are certified by the actuary appointed by the Governor under section 10 (5) of tho Friendly Societies Act. In the cose of the Order of Rechabites, two tables of contributions for annuity of £10 commencing at the age of 00 (contribution being in one case returnable in the event of earlier death, in tho other case non-returnable), were formally submitted to the Actuary for his certificate under section 10. (5) This certificate he was unable to give, as the proposed contributions were found inadequate. The scales had in fact been copied from scales certified in South Australia, only that CO had been substituted for C 5 as the age for the commencement of tho annuity. The increase of liability produced by the alteration is greater than tho non-professional mind might imagine. For the smaller number of 1 premiums that will be paid they will havo shorter time to accumulate at compound interest ; a larger number of members will survive to claim benefit, and they will claim for a longer time. There are thus four 'distinct causes conspiring to produce increase of liability. The Actuary reported to the District Officers on the proposed scale, and strongly advised that superannuation should begin at 05, instead of at CO. This course, it is believed, will be adopted. The returns of sickness and mortality for the quinquennium, 1573-1877, have been subjected to careful examination, with a view of rectifying errors as far as possible, but chiefly excluding all data of an erroneous or buspicious nature. This work was entrusted to Mr Frankland, tho actuary, and is nearly completed. The result has been the exclusion from the proposed experience of returns furnished by a considerable number of lodges and courts of a number of lives, which may be stated approximately at 7000 to 8000. This is equivalent to betweon 20,000 and 30,000 years of life, an experience about equal to that on which Mr Ansell's Friondlj Societies' table is based,