NATIONAL ANNUITIES SCHEME.

Wanganui Herald, Volume XXXX, Issue 11979, 24 September 1906, Page 6

NATIONAL ANNUITIES SCHEME.

THE GOVERNMENT'S PROPOSALS. BILL INTRODUCED IN PARLIAMENT. A COMPREHENSIVE MEASURE. LIBERAL PROVISION FOR OLD AGE. DETAILS OF THE SCHEME.

(From Our Parliamentary Special). (By Telegraph).

WELLINGTON", September 21. | The National Annuity Hill, in troduced by the Premier in the House of Representatives yesterday, is a measure of 24 clauses. The preliminary clauses of the Bi\l provide that the national annuities scheme is to form a branch of the Government Insurance Department, and the j Commissioner ia empowered to enter into ( any contract for the granting of deferred life annuities and annuity assurances, and in the words of the Sill itself, "for insurance on a life or lives and for the sale of annuities for life or otherwise, and for the granting of endowments out of superannuation allowances or pensions, and any contract whatever dependent on the contingencies of human life not repugnant to public policy." Clause 4 provides that on December 31st, 1906, there shall be transferred to the national annuities branch of the business of the Department (a) all contracts then existing on the books of the Department of the following classes : (t) immediate annuities, (2) deferred annuities, and (3) endou'mouts and investments; and (b) the full reserve attaching to Mich contracts on that date (contracts by the State). The Bill provides that the Colonial Treasurer shall pay annually irom the Consolidated Fund into the nai lional annuities account the estimated amount of subsidies according to the second schedule of the Bill. In order that the proposals of the Government may be intelligibly followed, it is well to set oi't here what the precise nature of these subsidies is. In the firbt place, it is provided that the minimum annuity to be granted is 4!13 par annum. If the subsidised deposits at the deferred age do not amount to a sum sufficient to purchase an annuity cf <£13. the subsidised accumulations will be returned, with compound interest at a rate of interest not higher than 3', per cent, and not lower than 2} per cent, per annum. The subsidy will ho based upon the premium payable, and ,£'ls6 per annum' is the maximum annuity for which the premiums will be subsidised ; so that when the subsidised annuity reaches the maximum of ,£156 per annum any pro miums paid to purchase additional amounts of annuity will not be subsidised. The full subsidy will be given if the a»c at time of starting deposits is not lesa than 15 years of the deferred age, otherwise the maximum subsidy of 10 per cent, only will bo given. HOW FRIENDLY SOCIETIES ARE AFFECTED. In like manner subsidies are to be payable to any society or branch registered under the Friendly Societies Act of 1882 in respect of tbe weekly allowances made by it during the preceding year (ended , December 3 1st) to members who have atI tamed the age of 65 ypairs, on account of | sickness, or other infir?nity. In the case | of weekly allowances made by such focieties for sickness or other infirmity to members under the age ,of 65 years (where the incapacitated member receives- allowancs for 12 months or upwards) subsidies shall be paid on the fallowing Jba«ir : (1) where the incapacitated member s age is between fifty-fivo and 'sixty-five years a subsidy equal to 50 per centi of the total allowances made dnring the preceding year ended December* 31st, (2) between jrirty-five and fifty-five I '^years a subsidy equal to 60 per cent. the allowances, ('■)) between thirty-five and 1 forty-five years 7i) per ceat. of thtt allowances, (4) between twenty-five and 'thirtyifive years 80 per cent, of the allowances! and (5) where his age is under 25 yearc a subsidy of 4)0 per cent, of the allowanced. SCHEDULE OF PAYMENTS. The Bill is weighted with rine pages of schedules, all undoubtedly informative to a student of accountancy or an actuary, bx»t beautifully technical. It is, however, made clear that in thd- event of death at any time before the 'deferred age all dep >sits (with subsidies) will bo returned with conlpound interest at the rate of 3 per cent, per annum. If death occurs during the first five years after deferred age the balance of five years' annuity will be paid to the repsesentatrvc of the annuitant. If death occurs after the first five yearß a proportionate payment of the annuity will bo made to the date of death. In the event of a policy taken out in accordance with Table I. or Table 11. being surrendered after it has been two years in force 50 per cent, of the deposits will- be returned, after three years 75 per cent, of the deposits, and after five years all the deposits (without subsidies) will be returned, with compound interest at the rate of 2,\ per cent, pcr 'annum. In the event of a policy taken out in accordance with Table 111. being surrendered after having been two years in force, the surrender value will be returned, or at, the option of the assured a paid-up policy will be issued in exchange. A FEW EXAMPLES OF WORKING. In order that the references to tables ' 1, 11, and 111, ill the last paragraph may j be better understood a few examples of the working of the scheme will be appreciated. Table I. has reference to a minimum scale of deferred annuities for single premium deposits of ill. Take the case of a child whose age next birthday is 5 I jchts. If the deferred age of the ani unity wr>3 to be 60 years, the anawity jiayable from the age of 60 would be 9s 4d, or a cash payment of ,£6 4i> 3d; at a deferred age of 65, an annuity of 12s lid, or a cash payment of £7 7s 7d ; and at a defrred age of 70, an annuity of 18e 4d, or a cash' payment of £8 15s 3d. If tho

deposit was made ■when tlie annuitant wa« 20 years of age, at a deferred, age of 60 y^ars, the annuity payable would, be Es 7d or <£3 14s 2d casJi ; at a deferred age of 65, an annuity of 7s 9d or ££ 8» Id cash; and at a deferred ago of 70 yeara, an annuity of 10s Lid or a cash payment of £o 4e 7d. As the age at which the deposit is mado 'increases the annuity dwindles in sympathy with illustrations given. Table 11. provides for a minimum scale of deferred annuities for yearly premiums of £l. A person of tho age of 5 years who entered into a contract under the scheme to pay £1 per annum on a deferred age ot b 0 years v/ould gel an annuity of Jill 14s 9d or on a cash payment of Xl 5& 19s 7d; a similar contract on a deferred age of 65 years would produce an annuity of Jl6 l"c 9d, or a cash payment of- £19 Cc Dd, and on a deferred age of 70 years an annuity of ,£24 39 3d or £231 7i lid cash. If the annuitant entered into the contract on tte same basin \ when lie was 20 years old, on a deferred i age of '60 be would get t an annuity of I <£6 ?6 4d or a cash payment of .±'Bl 18a j K'd; on a deferred age of 60, an annuity of £<i los 8d or .£lO2 10s 4d ; on a deferred ago of 70, an annuity of J&l3 3d Id or £126 l&s Id; and so on downwarda. Table 111. gives the premiums for annuity nv.uranccfi with assurance y payable at death before deferred a«?e of <£100, and a minimum annuity payable after deferred ag^ of .£l3 per annum. It is unnecessary to give the scale of premiums, however, as ihev are based on the ordinary rates fixed by life insurance companies during business the colony. CONTINGENT GRANTS. Tiio Bill, which is entirely based on the scheme propounded by tho late Mr Seddon, makes provisions lor liberal grants on the "keep the cradle, full" idea. For instance, an unmarried man g^eta^a subsidy of ID per cent on his deposit, a married man 12£ per cent if he has one child living, 15 per cent if his family consists of two children. 17.] per cent, three children, 20 per teat four. 22 \ per cent five, 25 fo** cent soven to nine. IJO per cent, ten to twelve, 32 } per cent, end the proud father of over 12 \\i\\ get 35 p«r cent. The scheme is a!eo assigned to help the poor man rather than the rich. 1 It is provided, for instance, that an annuitant whose earnings are under £156 per annum will get an extra subsidy of 5 pc rcent over .£13(5, and under .€260 an extra subsidy of 2\ per cent. A widower or a widow get an extra slibsidy of 5 per Cent over amount, a member of a friodly society an extra subsidy of 5 per cent, aad the annuitant who excels in a persistency in deposlins; 2\ per c«nt. It is not the intention of lr-» Gove"iiineu); to go on with the Bill this session. It has been introduced in order that the opinions of friendly societies and others may be obtained on the scheme which was outlined on May 22nd by the late Mr Seddon.