SUBSIDIES UNPAID

Waikato Times, Volume 127, Issue 21160, 9 July 1940, Page 9

SUBSIDIES UNPAID

STATE SUPERANNUATION I j “BORROWING FROM MEMBERS” INTEREST NOT ACCUMULATED [ Short payment of subsidies by the ' State to the Public Service Superannuation Fund has resulted in a capital deficiency of £5,396,000 in the I fund, according to the quinquennial j actuarial report submitted to the I House of Representatives by the Gov- I eminent actuary, Mr S. Beckingsale, I for the years 1935 to 1939 inclusive, j “The deficiency,” he says, “is a ! measure of the extent to which the : State has failed tr> meet its share of benefits paid in the past. The sub- . sidies paid in any year have rarely, I if ever, been sufficient to meet the balance of retiring allowances paid after allowing for the portion pr'ovid- 1 ed by members’ contributions, and the State, by short paying, has in effect borrowed from existing members a substantial proportion of their accumulated contributions.” The report states that it is doubtful if the capital value of the State’s liability in respect of the whole scheme is of more than academic interest, because the financial structure of the scheme does not provide for the funding of the State’s liabilities. It states, however, that if steps are not taken to meet the deficiency it will increase with the passage of time, because it represents funds that should be in hand accumulating at interest. Had the State paid the full subsidies required in the past the deficiency would not now exist, and payments from the State would not now be required. Subsidies Required The subsidies required from the State in the five years under review averaged £357,000 per annum. For the years 1940 to 1944 inclusive, the total annual subsidy required would be £573,000, of which £216,000 would be on account of subsidies short paid in the past. A tabulation in the report shows contributions for the five years to 1939 from the New Zealand Government at £813,802 for the whole term. The report shows that at March 31, 1939, the number of contributors to the fund was 26,337, of whom 22,382 were males and 3955 females. Their contributions amounted to £374,555. Retired contributors numbered 2374, of whom 1993 were males and 381 females. Retiring allowances took £490.851, and annuities to widows and children took another £-16,254. The effective rates of interest credited to the fund in each of the five years were:—l93s, £5 14s 8d per cent; 1936, £5 9s 3d; 1937, £4 17s 9d; 1938. £4 5s lOd; and 1939, £4 3s 4d.