TEACHERS' SUPERANNUATION FUND. ACTUARIAL EXAMINATION FOR THE TRIENNIAL PERIOD ENDING 31st JANUARY, 1927.

Appendix to the Journals of the House of Representatives, 1929 Session I, E-08a

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1929. NEW ZEALAND.

TEACHERS' SUPERANNUATION FUND. ACTUARIAL EXAMINATION FOR THE TRIENNIAL PERIOD ENDING 31st JANUARY, 1927.

Laid before Parliament in pursuance of Section 38 (4) of the Public Service Classification and Superannuation Amendment Act, 1908.

REPORT BY THE ACTUARY APPOINTED BY HIS EXCELLENCY THE GOVERNOR - GENERAL TO MAKE THE ACTUARIAL EXAMINATION OF THE TEACHERS' SUPERANNUATION FUND FOR THE TRIENNIAL PERIOD ENDING 31st JANUARY, 1927. Government Actuary's Department, Wellington, 9th August, 1929. 1. I have the honour to submit the following report on the Teachers' Superannuation Fund as at the 31st January, 1927, required by section 38 of the Public Service Classification and Superannuation Amendment Act, 1908, as amended by section 54 of the Finance Act, 1922. 2. The fund was originally constituted under the Teachers' Superannuation Act, 1905, but has since been varied by legislative enactments, the most important being the Public Service Classification and Superannuation Amendment Acts, 1908 and 1912. Subsequent to the date of this valuation the several enactments affecting the fund have been consolidated by the Public Service Superannuation Act, 1927. 3. All persons automatically become contributors to the fund who are first permanently employed after the passing of the Act— (a) In the Education service as a teacher in any public school; (b) In any branch of the Education service which is also a branch of the Government service : (c) Under the University of New Zealand, Auckland University College, Victoria College, University of Otago, Canterbury College, or the Canterbury Agricultural College. Other persons first permanently employed in the Education service not included above have the option of joining the fund within six months of the date of their appointment. " Education service " means service in any capacity for not less than twenty hours a week— (a) Under an Education Board ; or (b) Under the governing body of a secondary school ; or (c) Under the Managers of associated classes under Part VII of the Education Act, 1908 ; or (d) Under the Education Department in the case of Inspectors of Schools, or of Inspectors, Managers, or visiting officers of industrial schools, or of teachers of any schools under that Department; or (e) Under the University of New Zealand, or under the Auckland University College, Victoria College, University of Otago, Canterbury College, or the Canterbury Agricultural College.

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4. During the triennium under review the constitution of the fund was modified by legislation, the most important alterations being covered by the following extract from the twenty-first annual report of the Teachers' Superannuation Board : — " Under the provisions of section 29 of the Finance Act, 1925, the value of a residence or board and quarters provided, or an allowance paid in lieu thereof, is now to be taken into account for the purpose of computing contributions and retiring-allowance. The new provision applies automatically to all who join the fund on or after the Ist October, 1925, but does not apply to those already on the fund unless they definitely elected that it should so apply. Upon election, back contributions with interest became payable on any house allowance, &e., received in the past period of membership. In the case of annuitants making the election, the allowance is recomputed as from the date of retirement, and it can be readily understood that in many cases the arrears of allowance due to such annuitants would largely exceed the arrears of contributions and interest due by them. Under the 1925 Act the time allowed for the making of the election closed on the 31st March, 1926, but under section 32 of the Finance Act, 1926, the time was extended until the 31st March, 1927. In all, 1,124 contributors and 374 annuitants have made the election, the increase in retiring-allowance in respect of the latter being at the rate of £7,750 per annum. " Under the provisions of section 38 of the Finance Act, 1926, the Board can now allow contributors who served with the Forces in the Great War to count service prior to the date on which membership commenced. A considerable number of ' soldier teachers ' have taken advantage of this provision, paying into the fund the equivalent of contributions for the additional period of service admitted, with interest thereon." 5. The contributions and benefits provided by the Act, together with statements showing the progress of active membership, discontinuance of membership from various causes, the progress of pensions for each } 7 ear, and the pensions granted since the previous valuation date, with the ages at which they were granted, will be found in Tables ItoIV of the appendix to this report. The number of contributors at the date of the valuation, with their ages, salaries, and contributions, are shown in Table V. 6. The preliminary particulars required for this actuarial examination have been obtained from cards supplied by the Secretary ,of the Teachers' Superannuation Board—a separate card being compiled for each member who was in the Service at the valuation date or who had died or withdrawn since the inception of the fund —and these particulars form the main basis of this investigation and valuation. 7. The number of pensioners on the fund at the 31st January, 1927, according to the cards supplied, was 1,003, drawing pensions amounting to £166,867 per annum, exclusive of 268 pensions, amounting to £4,399 per annum, granted to widows and children of deceased members. The number of contributors in active service at the Ist February, 1927, was 8,371, with aggregate salaries amounting to £2,308,561 per annum, and paying contributions at the rate of £126,725 per annum. 8. The income and outgo of the fund since the previous valuation were as follows : — Consolidated Revenue Account of the Teacheks' Superannuation Fund prom the Ist February, 1924, to the 31st January, 1927. Income. £ s. d. Outgo. £ s. d. Funds at Ist February, 1924 .. 858,661 18 10 Retiring-allowances .. .. 462,580 13 4 Members'contributions .. .. 364,412 10 3 Arrears of retiring-allowances under Arrears of contributions under Finance Finance Acts, 1925 and 1926 .. 17,616 12 6 Act, 1925 .. .. .. 20,278 12 6 Contributions refunded .. .. 65,514 9 1 Government subsidy .. .. 204,000 0 0 Transfers to other funds .. .. 1,209 13 5 Subsidy, Fiji Government .. .. 546 5 4 Commission .. .. .. 5,381 14 4 Subsidy under Finance Act, 1925 .. 6,108 19 4 Bad debts .. .. .. 355 3 0 Transfers from other funds .. .. 487 0 3 Reserve for doubtful debts .. .. 6,800 0 0 Interest on investments .. .. 172,544 4 1 Other payments .. .. .. 3,835 12 0 Interest on arrears of contributions .. 2,179 13 10 Funds at 31st January, 1927 .. 1,083,155 211 Interest on back contributions under Finance Act, 1925 .. .. 17,229 16 2 £1,646,449 0 7 £1,646,449 0 7 9. The effective rates of interest earned by the fund each year of the triennium were £6 2s. Id. per cent, for 1924-25, £6 Is. lid. per cent, for 1925-26, and £6 Is. Id. per cent, for 1926-27, as compared with an average rate of £5 16s. per cent, per annum for the previous valuation period. Subject always to the security of the investments, the highly satisfactory margin between the rate of interest earned and that assumed in the valuation should be ample under normal circumstances to cover any departures in the fund's experience from the valuation bases. No matter how carefully these latter may be fixed, it is not to be expected they will exactly coincide with the actual futureexperience of the fund. The progressive decline during recent years in the mortality-rates amongst pensioners will, if it continues, necessitate a good interest margin being earned on the funds. 10. The average annual outgo for pensions has increased by about £70,000 as compared with the previous valuation period. While this is to some extent due to an increased number of pensioners, which is the normal experience of a superannuation fund in its early years, it is mainly due to the increase in pensions resulting from the post-war rise in salaries and the addition of house allowances to salary for the purpose of computing the pensions. The effect on pensions of these salary-increases

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will be more fully apparent in the next and succeeding triennia, but some idea of tlie increased liability may be gained by tlie fact that the average normal pension granted during the triennium under review was £233 per annum, as compared with £189 during the previous valuation period. 11. It is somewhat disturbing to note that the outgo for benefits during the triennium exceeded 90 per cent, of the total contribution income and the Government subsidy, and was more than 70 per cent, of the combined income from contributions, interest, and Government subsidy. This is not what might normally be expected in a young superannuation fund, since the liabilities are essentially of a deferred nature, and consequently the funds should at this stage be increasing very rapidly. Possibly the most convincing method of demonstrating this elementary fact—so often questioned by otherwise well-informed persons —is to take groups of actual contributors and ascertain what sum the fund requires to have in hand to be able, with the assistance of their future contributions and interest-earnings, to pay their retirement pensions and other subsidiary benefits, and, by dividing such sum by the number of members in the group, thence obtain the fund's average net liability per member. 12. I submit hereunder a table showing for specimen age-groups the average net liability per member for teachers actually in the Service at the valuation date : — Average Net Liability . per Member. Age-group. Malea> Females. £ £ 15-19 .. .. .. .. .. 80 56 25-29 .. .. .. .. 209 166 35-39 .. .. .. .. 537 560 45-49 .. .. .. .. .. 1,113 1,148 55-59 .. .. .. .. .. 2,158 1,464 The net liability for each member in a given age-group will not necessarily remain constant from valuation to valuation, since changes are likely to occur in the incidence of average salary, length of service, and other factors, but the amount of variation is found in actual practice to be fairly small under normal circumstances, and the figures may be considered sufficiently close to the future experience to base general conclusions. For example, the table shows that to be solvent the fund required to have in hand at the valuation date a sum of £209 in respect of each male teacher aged 25-29, and during the next ten years should, from the balance of contributions, interest, and subsidy after paying for benefits falling in for death, physical breakdown, &c., accumulate an additional amount of approximately £328 in respect of each such male teacher still in the Service. It will be seen, therefore, that increasing funds do not mean progress unless the amount of such increase keeps pace with the increase in the liabilities. The net liabilities given for the youngest age-group, 15-19, are also interesting in that as each such member has only made an average contribution of about £6 to the fund, the figures give a very good idea of the initial deficiency introduced by each such new teacher—or, to put it another way, of the capitalized liability of the State to the Superannuation Fund in respect of each such new appointment. The table is also of interest in demonstrating that in respect of those who do not withdraw from the Service the female teacher is a greater liability to the Superannuation Fund than the male, in spite of the fact that male teachers receive the higher salaries (on which pensions are based) and are, in addition, covered for widows' and children's benefits. This is clearly shown for the central ages, but it is to some extent masked at both ends of the table, for the following reasons : At ages under 30, due to marriage and other causes, the withdrawal-rate of female teachers far exceeds that in respect of males, and as the return of contributions paid to those who withdraw is considerably less than the value of their accrued pension benefits., and the net liability is an average based on the present value of withdrawal benefits and pension benefits in their expected proportions, it follows that for female teachers at these ages the net liability per member is a much smaller proportion of the pension liability per member who does not withdraw from the Service than in the case of males. By the time age 50 is reached the majority of female teachers have either retired or will do so within the next five years. Those remaining in the Service are in general only those with small salaries or short service, whereas in the case of males the effect of retirements on the average of the accrued pension benefits of members left in the age-group does not become marked until a later age, and moreover is counteracted to a great extent by the higher salaries paid and the greater prospects of future promotion prior to retirement. The greater pension liability in respect of female teachers is due to the early ages at which they retire and the superior vitality of female pensioners generally, combined with the fact that they only pay, as contributions to the fund, the same percentages of salaries as do the males. 13. It would be possible, though very laborious, to ascertain what might be termed the " share " of each individual member in the total funds, and proceed to deduce by how much such amount held in the fund on his behalf was, on the average, insufficient or oversufficient to provide his benefits. The sum total of such an analysis in respect of all members —contributors and pensioners—would give the same results as are achieved by the more direct process of actuarial valuation of the fund. The Valuation. 14. The main object of an actuarial valuation is to ascertain whether the current funds, together with the present value of the*future contributions, are sufficient to meet the future liabilities. Before the valuation can be carried out it is necessary to make a careful estimate of the various factors on

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which the payment of the benefits and contributions is dependent. These factors may be briefly summarized as follows :— (a) Eate of interest; (b) Mortality-rates of pensioners ; (c) Average salary scales ; (d) Mortality-rates of contributors ; (e) Withdrawal-rates of contributors ; (f) Retirement-rates of contributors ; (</) Marriage-rates of contributors ; (//) Probability of a member leaving children under fourteen years 01 age, and the average number of children ; (i) Remarriage-rates of members' widows. 15. The rate of interest used in valuing benefits and contributions is 4|- per cent, throughout. Judged by the present interest rates of over 6 per cent, earned by the fund, the valuation basis may appear conservative. The rapid increase in interest-rates since the late war, however, was only what was expected by every financial authority, and it is just as certain that a peak point will be reached —if it has not already been reached—and that interest rates will then fall, although the process of returning to normal must necessarily be slow. It might also not be out. of place to point out that, in fixing a valuation rate of interest, due allowance must be made for the purposes for which the valuation is made. If, for example, actuarial valuation of a fund was being made mainly for the purpose of testing the adequacy of the contributions or of considering the extent to which increased benefits could be granted, the valuation rate of interest would require to be based on the expected rates over the full period of pension-fund membership—say, from sixty to eighty years — and in such a case 4f per cent, would be an optimistic forecast. When, however, as in this instance, valuation is being made of a deficiency fund requiring an annual State subsidy, and it is unlikely that for many years any additional subsidy will be required to cover interest short of 4-J per cent., there is some justification for anticipating a portion of the interest profit in order that the taxpayer of the day should only shoulder his fair share of the burden. I accordingly decided that the nature and circumstances of the fund warranted the valuation being made on a financial basis of 4J per cent. 16. The mortality-rates adopted for pensioners were based on an investigation of the combined experience of the three Government Superannuation Funds (Public Service, Railways, and Teachers') for the period 1919-27, supplemented where necessary by the earlier experience of the funds. From a careful study of the figures, combined with the results of concurrent investigations into similar funds and in the general population, it is clear that there is an improvement of vitality which has been progressive over a long period of time, and accordingly it has been deemed advisable in fixing the valuation bases to make some allowance for probable future improvements in the vitality of pensioners. 17. The next factors which entered into the calculations were the scales of average salaries in respect of male and female teachers for the year immediately following the valuation date. The salary scales constructed from the current experience of the fund were not themselves assumed in making the valuation, but the ratios of increase from age to age were applied to the actual salary of each contributor as at the Ist February, 1927. 18. The rates of mortality, withdrawal, and retirement of contributors used in the valuation were based on an examination of the fund's experience since the previous valuation, males and females again being investigated separately. Details of the Experience Tables adopted and the Life and Service Tables deduced therefrom are given in Tables VI and VII of the appendix. 19. The factors necessary for the valuation of widows' and children's benefits were calculated from population statistics combined with the experience of the fund itself. Results of Valuation. 20. The Act (section 38 (2) ) requires the actuarial report to be so prepared " as to show the state of the fund at the close of the period, having regard to the prospective liabilities and assets." The valuation has been made accordingly, and the results are shown in Table VIII of the appendix, but they may be shortly summarized as follows : — £ £ Present value of existing pensions and allowances .. .. .. 1,770,374 Present value of prospective benefits .. . . . . 5,388,605 Less present value of members'contributions .. .. 1,428,026 3,960,579 Total net liabilities .. .. .. .. .. 5,730,953 Funds in hand .. .. .. .. .. .. 1,083,155 Present value of total liability of State .. .. .. .. 4,647,798 Less present value of present subsidy of £68,000 per annum (if treated as a perpetuity) .. .. .. .. .. .. 1,511,111 Value of future subsidies to be provided for by the State over and above the present subsidy of £68,000 per annum .. .. .. .. £3,1-36,687 21. It will be seen from the above statement that there is a total* State liability of £4,647,798. It may not be out of place on this occasion, when a valuation basis of 4|- per cent, has been employed for the first time, to briefly explain the main causes of so large a deficiency.

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22. In the first place, the fund commenced operations with an initial deficiency, which I estimate at not less than £800,000, due to the free gift of that portion of the pension based on service prior to the establishment of the fund. Short of paying a capital sum into the fund, the soundest method of dealing with this deficiency would have been to have provided for its redemption within a specified period. For example, a payment of about £50,000 a year would have redeemed the deficiency in thirty years. In addition to this, the teachers' contributions should have been subsidized by an annual amount approximating to a pound-for-pound subsidy in respect of females and Bs. in the pound in respect of males. When the required annual payment of £50,000, in addition to the above-mentioned subsidies in respect of teachers' contributions, is compared with the actual subsidies, equivalent to only about ss. in the pound on total contributions, the reason for the deficiency increasing at each valuation becomes apparent. 23. A factor of no less importance than the preceding is that the rate of subsidy which would have been adequate when the scheme was established now requires to be considerably augmented on account of the great increase in pension liability due to the economic effect of the war on salary levels, and to the inclusion of house allowance as salary for the purpose of computing pensions. This aspect is so important that I make no apology for submitting the following table showing the average salaries paid to teachers at three valuation dates, which might be said to represent pre-war, war, and post-war conditions : —

The table, which demonstrates the general nature of the salary-increases, gives a clear indication of the increase in the estimated pension payments as compared with those expected when the scheme was framed. For example, a female contributor with thirty-five years' service retiring now at age 55 —over one-half of the total retirements of female teachers take place before age 55—has an expectation of twenty-one years of life, and will accordingly draw on the average approximately £700 more in cash from the Superannuation Fund than a similar contributor retiring in 1919, and approximately £2,000 more than a similar contributor retiring in 1913. 24. In order to fully appreciate the effect of the post-war salary-increases on the liabilities of the fund it is necessary to bear in mind that pensions are determined by the salaries only of the three years prior to retirement, whereas contributions are based on salaries throughout the whole period of service. In other words, the teacher reaps the same pension benefit for a given salary - increase irrespective of whether it is received early or late in life, whereas contributions on such increased salaries are limited only to future service. It follows, therefore, that when there is an allround increase in salaries, those contributors near retirement will pay practically nothing for the consequent increase in pension benefit, those in middle age will make a larger contribution, and only those who are just commencing service under the increased salary-scale will contribute any material proportion of the cost of the increase in pension. This lack of correlation between the value of contributions and pensions is not confined to the Teachers' Superannuation Fund, bat is common to nearly all pension funds based on terminal salary, and supplies one of the reasons why an employer's subsidy to such a scheme is essential. 25. The importance of the ascertainment of the state of the fund in the form given in paragraph 20 lies in the fact that the shortage in the fund to be met by the State—namely, £4,647,798 —is equivalent to an annual interest income (at 4J per cent.) of £209,151. It follows that if any less sum than £209,151 is paid in by the State as subsidy the total deficiency will increase, and the subsidy must accordingly, by way of compensation, rise later on to a much higher figure than £209,151 per annum in respect'of present contributors alone. If, however, any annual amount in excess of £209,151 be paid in, the fund would in respect of present members attain solvency within a definite period of time. It should be clearly understood that this minimum amount of £209,151 is a perpetuity and does not cease with the lifetime of the present members, nor does it include any subsidy to new entrants. Ascertainment of State Subsidy. 26. The Act, however, does not provide that the subsidy should be determined from the foregoing actuarial ascertainment required by section 38 (2). The same clause directs the actuary to also show in his report " the probable annual sums required by the fund to provide the retiring and other allowances falling due in the ensuing three years without affecting or having recourse to the actuarial reserves appertaining to the contributors' contributions." As the contributions are insufficient to provide the full benefits in respect of service after joining the fund, I take this to mean that the

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Males. Females. | k— : Ages. Average Salaries. of Average Salaries. Inoreage ol -j ; 1927 over 1913 — — , 1927 over 1913 1913. I 1919. j 1927. Level. 1Q13 m9 i 1927 Level. i L 1 i ' ! I i £ £ £ £ £ £ £ £ Under 40 .. .. 195 273 287 92 121 189 208 87 40-49 .. .. 270 363 454- 184 159 250 313 154 50 and over .. 288 390 491 203 162 | 265 | 323 161 Total .. 232 322 350 ' 118 ' 131 206 | 228 97

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principle underlying the section is that the State need make no contribution till benefits are actually entered upon, and then pay for the full amount of pensions in respect of all service prior to the establishment of the fund and for such portion of the pensions arising out of subsequent service as is not covered by the contributors' contributions. I estimate the pensions falling due during the financial years 1927-28, 1928-29, and 1929-30, the amounts provided by the contributions, and the subsidies payable on the basis indicated by the Act, to be as follows :— 1927-28. 1928-2!). 1929-30. £ £ £ Estimated pensions .. .. .. .. .. 184,524 193,788 204,894 Amount provided by contributions .. .. .. .. 48,815 53,163 58,532 Amount due to be paid by the State in respect of the three years mentioned (but see also next paragraph) .. .. .. £135,709 £140,625 £146,362 27. The above figures would give for the years 1927-28, 1928-29, and 1929-30 an average subsidy of approximately £141,000 per annum, or £73,000 per annum more than is at present being paid. The following considerations, however, must be taken into account: — (a) The actuarial recommendations made in the past in pursuance of the Act have not been fully carried out, the actual payments into the fund to the 31st January, 1927, being short by £420,251 of the amounts recommended. From Table IX of the appendix it will be seen that this shortage accumulated at 44 per cent, interest to the end of this year amounts to £607,528, and I consider that £30,000 per annum requires to be added to the future subsidies on this account. (b) The State subsidy should also provide year by year the amount charged to the Superannuation Fund in administration expenses, less possibly the amount of commission due in connection with investments which might be regarded as a deduction from interest. The payment of expenses by the fund is a definite departure from the original scope of the superannuation scheme, and my interpretation of section 38 (2) of the Act is. that expenses amounting to, say, £2,000 per annum should form part of the subsidy. 28. I have accordingly to report that pursuant to the system laid down by the Act the annual subsidy required for each year of the period ending 31st January, 1930, is as follows : — £ Subsidy now being paid . . . . . . . . . . .. 68,000 Further annual subsidy required— £ Paragraph 27 .. .. .. .. .. 73,000 Paragraph 27 (a) above .. . . . . 30,000 Paragraph 27 (b) above .. .. .. .. 2,000 105,000 Annual subsidy required for the years 1927-28, 1928-29, 1929-30 .. £173,000 When making provision for this annual subsidy it is important to see that it is back-dated to 1927 and that interest at 4A per cent, is added to any portion paid late. Remarks upon Method of aekiving at State Subsidy. 29. As indicated in the preceding paragraph, the Act appears to lay down a certain method of arriving at the State's subsidy, the effect being that while teachers contribute upon the basis of paying their share of the liabilities in advance, the State pays its share only as the pensions mature from year to year. This principle of deferring payment is defensible in theory, but in practice suffers from, the defect that it necessitates a rapidly increasing State subsidy for many years to come. This is almost self-evident not only from the fact that in a young fund the number of pensioners increases year by year, but also because the longer the redemption of any financial obligation is postponed the greater will be the cash required by reason of the operation of interest. When, in addition to deferring payment, the State fails to pay the amount reported as necessary to meet its share of. the current pensions, the burden thrown on the future increases still more rapidly. The cumulative effect cannot be better exemplified than by the following table : —

It lias to be admitted that the two latter valuation periods have had to bear the brunt of economic and other forces not likely to recur in the near future, and that the rate of increase was in consequence abnormal, but even though the rate of future increase may not be so rapid, the subsidy must keep on rising.

Average Annual Subsidy required for Triennium succeeding Valuation Date. Valuation Date. — AT i r> • i \ Actual (allowing for Past JNormal (tor Pensions only;. Cl , , - v ,, a , & , « , . , N v J ; shortages m the otate subsidy). £ £ 31st December, 1919 .. .. . . 60,000 68,000 .31st January, 1924 .. .. .. 120,000 137,000 31st January, 1927 .. .. .. 141,000 173,000

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30. It would be a great improvement if the present highly technical method of arriving at the subsidy were abolished in favour of a simple automatic basis that would not only be more in accordance with the actual deficiency, but would avoid sudden, increases in the subsidy and reflect salaryfluctuations. 31. Before making a recommendation on these lines it may be helpful if I point out that the modern trend of pension-fund, schemes is in the direction of equal division of cost between the employer and the employee. This applies not only to Government schemes, but also to funds established by large commercial institutions. As examples of Government funds I might mention that the Public Service Superannuation Fund of the Union of South Africa receives a pound-for-pound subsidy and is further protected by the Union in respect of early retirements due to policy measures. The Public Service superannuation scheme of the Commonwealth of Australia provides that when the retiring-age is reached by new entrants or members joining the scheme under age 30 only one-half of the pension is paid from the Superannuation Fund and the other half from the Consolidated Fund, while in the case of employees over age 30 when the scheme was introduced an equitable amount less than one-half of the employee's pension becomes payable by the Superannuation Fund, the Consolidated Fund finding the balance. The Local Government and other Officers' Superannuation Fund Act, 1922, of the Imperial Government, designed to meet the pressing demand of local-government officials for a comprehensive superannuation scheme, followed in the main the recommendations of the strong Departmental Committee, including leading pension-fund authorities, which was set up to report, and accordingly may be taken as a good example of modern opinions. The Act, which provided benefits not differing very much from those granted by the Teachers' Superannuation Fund, required the local authority to subsidize the employees' contributions pound for pound, and, in addition, to make equalized annual, payments to liquidate within a period not exceeding forty years any initial deficiency due to the grant of back-service rights. Recommendations. 32. After carefully considering the position of the Teachers' Superannuation Fund I recommend that a State subsidy of 10 per cent, of the salary roll be provided and paid, over monthly to the Superannuation Fund along with the deductions from contributors' salaries. The difference between the amount required by the Teachers' Superannuation Fund and an amount on the basis of an equal apportionment of the cost between the employer and the employee is due to the initial deficiency created by the free gift of back service in calculating the pensions payable to employees in the Service when the fund, was established., and the very considerable amounts by which past subsidies have fallen short of the contributions paid by employees. 33. A subsidy of 10 per cent, of the salary roll would mean an annual payment commencing at about £231,000 per annum ; and although this is somewhat higher than the amount payable in accordance with the present method laid down by the Act, it may be said to represent the lowest possible cost to the State of placing the fund on a firm footing. It has the added advantage of subsidizing at the outset the contributions of new members, which must result in a steadier progression in future subsidies. 34. I should perhaps point out that the suggested automatic subsidy of 10 per cent, of the salary roll is in the nature of a perpetuity, and consequently my recommendation will require revision if at any time the present constitution of the fund is altered. For example, if the fund were to be closed to new appointees or membership were made voluntary, a subsidy of 10 per cent, of the salary roll would be insufficient. 35. Should it be desired to go further than I have indicated so as to more quickly redeem the deficiency, a higher subsidy than 10 per cent, of the salary roll could be fixed, or, alternatively, the fund could be strengthened by suitable amendments of the Act. For example, without unduly prejudicing contributors the fund's liabilities could be considerably lessened by eliminating the teacher's right to voluntarily retire after a definite period of service, and substituting a minimum voluntary retiringage. At the present time male teachers have the unqualified right to retire at age 65 or after forty years' service, and females at age 55 or after thirty years' service, and, in addition, the Superannuation Board, with the approval of the Minister of Education, has power to grant pensions earlier. How this has operated in practice may be seen from the following table showing for quinquennial age-groups the number of contributors retiring during the last four valuation periods as the result of attaining pension age oi length of service, together with the percentages which the number of retirements at each group bears to the total retirements : —

Retirements (excluding the Medically Unfit), 1914-1927.

Males. Females. Retirement Age. Number Per Cent, to Total Number Per Cent, to Total i of Retirements, i Retirements. of Retirements. Retirements. Per Cent. Per Cent. 50 and under .. .. .. 12G 27-8 51-54 .. . .. 4 1-4 124 27-3 55-59 .. .. .. 83 29-8 "| 164 36-1 60-64 .. .. .. 84 30-1 33 7-3 65. and over . .. 108 38-7 7 1-5 279 100-0 454 100-0 .

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The extent of the use made of the options to retire before what might be termed the standard pension age is shown by the fact that 61-3 per cent, of the total retirements of male teachers took place before age 65, and 55-1 per cent, of the female teachers who retired entered on their pensions before age 55. The table also shows that in respect of males 31-2 per cent., and in respect of females 91-2 per cent., of the total retirements take place before age 60. 36. I am not in a position to state how many of these retirements are voluntary and how many are influenced by pressure from the Education Department in the interests of efficiency. Although the effect on the Superannuation Fund is independent of the motive underlying retirement, it is scarcely necessary to point out that the suggested amendment to the Act to abolish the right of voluntary retirement before specified ages (not necessarily those at present in the Act) would in no way lessen the power of the Education Department to take whatever steps it deems necessary in the interests' of efficiency, and to grant a pension to worn-out teachers with long service. The rights given by the Superannuation Act might be said to assume that in general the period of inability to render efficient service is reached by female teachers ten years earlier than in the case of male teachers. Whether this is in accordance with the facts—the Education Department alone can express an authoritative opinion on this point—it seems quite clear that actual length of service can have little or no effect on efficiency, and that the main factors are age and physical fitness. There is conclusive evidence that the early ages at which female teachers retire are responsible for a considerable portion of the fund's deficiency, and that if the rate of contributions which they are paying were increased throughout by 2 per cent, of salary it would do no more than place them on a parity with the male teachers. 37. I also suggest consideration of an amendment to the Act providing that no new teacher appointed after, say, the Ist January next be admitted to membership of the Superannuation Fund until the attainment of a specified age —say, age 25 in the case of males and age 20 in the case of females. The simple expedient of only counting service after these ages would automatically secure that any enforced retirement before age 65 (or age 60 for females) was at a pension less than the maximum rate of two-thirds of the terminal salary. General. 38. The question arises periodically whether the State is under any obligation to contribute towards the pensions of its servants. The correct answer in my opinion is that any such contribution by the State is not in the nature of a gratuity but rather the price it is compelled to pay to attract the best type of officer and conduct the services efficiently. The world-wide increase in the establishment of subsidized pension-fund schemes by banks, insuran'ce companies, and other commercial institutions appears to indicate that the employer is satisfied he is receiving value for the amount of his subsidy. Possibly in no field is a pension fund so necessary for efficiency as in a Government teaching service. It is of vital importance that those entrusted to mould the minds and characters of future citizens should be the best talent obtainable, and that in the interests of both students and teachers there should be a satisfactory method of dispensing with their services as soon as their efficiency is impaired by age or physical disability. The following extract from Bulletin No. 12 of the Carnegie Foundation for the Advancement of Teaching is only one of many carefully-weighed expressions of opinion that can be quoted to the effect that a pension scheme benefits employer and employee alike and makes for efficiency and true economy : — " There are many reasons for teachers' pensions. Economically, the work of an organization is not effective unless there is a satisfactory method of retiring aged or infirm workers, with the consequent freedom from anxiety concerning such risks on the part of the workers. Only a satisfactory pension system can prevent either the dismissal of aged or infirm teachers without resources, or the sacrifice of the best interests of the schools in order to continue the employment of teachers who are not longer capable. Socially, men and women of character and intelligence are willing to undertake difficult public service that is poorly paid ; but it is too much to expect them also to sacrifice the prospect of security and dignity in old age and disability. Educationally, there is great need to attract and retain and advance able people in teaching as a permanent career. A good pension system helps to do this." 39. The Teachers' Superannuation Fund compares more than favourably in many respects with other pension funds, but its usefulness as a means of attracting the very best talent offering is seriously impaired by the arbitrary pension limitation of £300 per annum imposed on teachers joining the service after the 24th December, 1909. Arbitrary pension limitations which, so far as lam aware, do not feature in the pension schemes of other Governments or of large commercial institutions have no theoretical justification, and lead in practice to many contributors being called upon to pay more than their benefits are worth. To the broader, and to my mind the more important, aspect that such a limitation defeats one of the main objects of a pension scheme I referred in my last report, and I need hardly add anything further beyond the confident statement that the abolition of the present pension limitation would be in the best interests of the Education Department. 40. In conclusion I have to acknowledge the assistance of the small but efficient staff engaged in carrying out the work of the valuation. C. Gostelow, Fellow of the Institute of Actuaries (London), Government Actuary.

9

EBa

APPENDIX. TABLE I. The Benefits and Contributions provided for by the Act. (These benefits are slightly modified in the case of persons employed in service under the universities on the 7th November, 1912, who joined the scheme before the Ist July, 1913.) C The contributions vary according to the age at the time when the first contribution becomes payable, and are as follows :— j Age 30 and under .. .. .. 5 per cent, of pay. Contributions J Over 30 and not exceeding 35 6 I j, <30 ~ 4U . . . . . . 7 ~ ! „ 40 „ 45 8 ! „ 45 „ 50 9 I „ 50 10 'I. On Attainment of Pension. Males at Age 65, or after Forty Years' Service ; Females at Age 55, or after Thirty Years' Service. (1) A pension of one-sixtieth of yearly salary for each year's service, with a limit of forty-sixtieths (two-thirds) of salary. Maximum pension for entrants after the 24th December, 1909, £300. (2) Or the option, in lieu thereof, of a return of total contributions. (Note. —The Board may, with the approval of the Minister of Education, retire contributors on pension in the following cases : — (a) Where the age of a male contributor is not less than 60, or of a female contributor not less than 50. (b) Where the age of a male contributor is not less than 55, if his length of service is not less than thirty years. (c) Where the length of service of a male contributor is not less than thirtyfive years. In any such exceptional cases the Board may, with the approval of the Minister of Education, impose upon the retiring contributor such terms and conditions as to payments into the fund or otherwise as the Board thinks fit.) 11. On retirement before Pension Age (on the Grounds of being Medically Unfit for „ „ Future Duty). Benefits .. J (1) At any time after fifteen years service, on the certificate of two doctors approved by the Board, a pension of one-sixtieth of yearly salary for each year's service, limited to forty-sixtieths. (2) Or the option, in lieu thereof, of a return of total contributions. 111. On Retirement before Pension Age (on other Grounds than Medical Unfitness). (1) On voluntary retirement or dismissal for misconduct, a return of total contributions. IV. At Death, ivhether before or after becoming entitled to a Retiring-allowance. (1) Leaving no widow or children : A return of total contributions less any sums received from the fund during lifetime. (2) Leaving a widow : — (а) £18 yearly during widowhood; or (б) A return of total contributions, together with such compensation (if any) as the contributor would have been entitled to receive from the Consolidated Fund on compulsory retirement, less any sums received from the fund during lifetime. (If death occurs before retirement the compensation is paid from the Consolidated Fund ; if after retirement, from the Superannuation Fund.) Leaving children : ss. weekly to each child until age 14. (Note. —The contributions and pensions are payable monthly, and the pensions are computed on the average salary for the last three years.) In addition to the widows' and children's benefits shown above, section 27 of the Finance Act, 1925, provides for additional allowances of £13 per annum in respect of the widow and of each child, to be paid from, the Consolidated Fund. Subsequent to the valuation date, section 114 of the Public Service Superannuation Act, 1927, established these as definite benefits of the fund, to be recovered from the Consolidated Fund by special subsidy. These additional benefits do not therefore fall to be valued till the 31st January, 1930, but they cannot, of course, affect the financial position of the fund.

2—E. BA.

E.—Ba.

TABLE II. Statement of Progress of Active Membership.*

Particulars of Discontinuance of Active Membership.*

10

New Members. Increase by Promotion. Discontinued. Total in Force at End of Year. Gar " • Annual \ Annual Annual Annual •Number. | Salaries. Contribu- Salaries. Contribu- Number. Salaries. Contribu- Number. Salaries. Contributions. tions. I tions. tions. T __ £ £ £ £ } £ £ J £ £ 1906--7 .. 2,939 444,950 33,652 .. .. 127 18,095 1,604 2,812 426,855 32,048 1907-8 .. 211 34,600 1,860 14,446 914 141 29,294 1,952 2,882 446,607 32,870 Part 1908.. 197 19,083 1,075 14,000 825 148 25,044 1,713 2,931 454,646 33,057 1909 .. 334 37,327 1,185 41,670 2,975 113 ! 22,403 1,673 3,152 511,240 35,544 1910 .. 287 35,734 1,862 36,466 2,416 192 i 35,508 2,537 3,247 547,932 37,285 1911 .. 349 40,267 2,234 41,524 1,823 212 I 33,731 2,378 3,384 595,992 38,964 1912 .. 427 50,364 2,740 14,616 710 170 32,183 2,201 3,641 628,789 40,213 1913 .. 645 108,638 6,216 11,249 1,292 269 40,087 2,765 4,017 708,589 44,956 1914 .. 522 61,978 2,913 41,789 2,541 270 45,471 2,579 4,269 766,885 47,831 1915 .. 428 55,792 3,096 79,773 4,610 253 42,428 2,742 4,444 860,022 52,795 1916 .. 468 61,114 3,352 48,365 2,863 259 42,795 2,802 4,653 926,706 56,208 1917 .. 398 52,722 2,899 36,262 2,107 259 45,676 2,800 4,792 970,014 58,414 1918 .. 420 52,061 2,786 23,605 1,384 318 56,119 3,385 4,894 989,561 59,199 1919 .. 533 80,160 4,059 241,322 14,068 408 80,897 5,154 5,019 1,230,146 72,172 1920 .. 619 104,664 5,841 264,234 15,284 464 99,844 5,897 5,174 1,499,200 87,400 1921 .. 1,048 154,143 8,404 109,148 6,100 350 91,448 5,448 5,872 1,671,043 96,456 1922-3 .. 838 143,524 7,881 -(24,815) -(1,540) 414 112,240 7,517 6,296 1,677,512 95,280 .. 1,029 172,597 9,371 40,555 2,595 467 116,594' 7,155 6,858 1,774,070 100,091 1924-5 .. 1,044 165,489 8,984 142,812 7,303 459 114,576 6,893 7,443 1,967,795 109,485 1925-6 .. 976 162,789 8,740 85,546 4,463 451 110,679 6,283 7,968 2,105,451 116,405 1926-7 .. 967 160,963 8,721 129,074 7,009 559 143,641 8,334 8,376 2,251,847 123,801 Totals.. 14,679 2,198,959 127,871 1,391,641 79,742 6,303 1,338,753 83,812

By Pensions. By By Death. B »™3 al Total discontinued. 0rdinar y (Age Extended Medically Unfit. 0ther or Service). Provisions. Meaically Unnt " Funds. ear * 'd . IS • a tJ . J . '3 « . '3 -g m o § '3 -g „ o • *S * '3 -g § & ft 3 u ft § h 2ft 2ft § a £< © * ft § 2ft | «a! %% M « ' sf ' 'flS ■» 5 B a §* i I°I II i I°I i §i i n i i § i n i u i i g i ii * 3 S * I « a 0§ * J « <1 <o cj -<1 "^a> £ £ £ £ £ £ ' £ £ £ £ 1906-7 .. 13 128 287 30 206 78 4,207 .... 6 137 312 .. .. 127 471 4,806 1907-8 .. 12 296 266 105 938 20 1,182 .. .. 4 234 208 .. .. 141 1,468 1,656 Part 1908.. 10 415 279 120 1,202 9 503 .. .. 9 51 49] .. .. 148 1,668 1,273 1909 .. 8 460 215 76 1,338 22 1,825 2 224 4 .. 343 1 27 113 1,825 2,607 1910 .. 8 438 127 131 3,078 38 4,099 8 714 6j .. 559 1 3 192 3,519 5,499 1911 .. 9 530 189 152 4,184 32 2,816 7 1,271 lo! .. 630 2 83 212 4,797 4,906 1912 .. 11 895 62 100 3,717 43 3,421 6 725 10 .. 946 .. .. 170 4,612 5,154 1913 .. 13 492 290 190 4,587 40 3,903 12 1,510 14| .. 1,372 .. .. 269 5,079 7,075 .1914 .. 16 1,016 106 196 6,388 32 3,348 14 2,172 9 .. 784 3 48 270 7,452 6,410 1915 .. 35 2,167 285 169 4,922 28 2,320 9 1,648 8 .. 725 4 878 253 7,967 4,978 1916 .. 22 1.666 202 179 5,185 33 3,861 8 1,147 16 .. 1,442 1 212 259 7,063 6,652 1917 .. 43 2,749 217 172 6,010 27 3,060 4 544 10 .. 1,118 3 87 259 8,846 4,939 1918 .. 67 5,567 785 222 7,710 20 2,550 3 426 5 .. 704 1 27 318 13,304 4,465 1919 .. 19 2,750 372 292 12,386 73 10,534 4 406 18 .. 2,550 2 181 408 15,317 13,862 1920 .. 15 3,482 380 369 16,108 55 7,739 3 553 11 .. 1,489 11 552 464 20,142 10,161 1921 .. 14 2,105 206 271 13,604 48 9,170 4 527 11 .. 1,505 2 95 350 15,804 11,408 1922-3 .. 18 4,835 395 275 11,522 95 19,169 13 2,301 9 .. 2,084 4 394 414 16,751 23,949 1923-4 .. 24 3,015 405 339 16.052 79 16,617 15 2,767 8 .. 1,145 2 10 467 19,077 20,934 1924-5 .. 18 2,583 516 347 15,679 65 13,684 14 2,518 101,106 1,773 5 .. 459 19.368 18,491 1925-6 .. 14 1,991 507 364 18,298 56 10,659 4 374 8 .. 1,864 5 384 451 20,673 13,404 1926-7 .. 22 3,236 875 440 21,910 80 20,091 6 1,548 9 711 1,536 2 733 559 26,590 24,050 41140,816 6,966; 4,539175,024 973 144,758 13621,375 195;2,23923,580 49 3,714! 6,303221,793196,679 Adjustments .. .. 4,788 .. .. .. 8,218 .. 383 .. 1,450 .. | .. 14,839 Totals .. 41140,816 11,754 4,539 175,024 973 152,976 13621,758 195;2,23925,030 49 3,7ul 6,303221,793211,518 1 III * Compiled from annual reports.

E.— BA.

TABLE III. Statement of Progress of Pensions.*

11

Attainment of Pension Age or Length of Extended Provisions. Retired *Medically Unfit. Service. Granted. In Force. Granted. In Force. Granted. Death or In Force. Death. JJeatn. j Expiry. Year. ! - 5 a o' S S g g S3 g & d §3 g © g © 0 6 .2 ,Q .2 ,Q .2 rQ .2 ,Q .g .2 rO .2 .2 «2 a saga a sgsgsgsaggsg a gaga g a g a g a g a g 3 E a S P4 S?j PM £ £ £ £ £ £i££ £ 1906-1 .. 78 4,207 .. .. 78 4,207 I 6 312 .. .. 6 312 1907-8 ..20 1,182 4 220 94 5,109 4 208 1 52 9 468 Part 1908 9 503 3 156 100 5,516 .. .. 9 491 1 52 17 907 1909 .. 22 1,825 4 248 118 7,093 2 224 .. .. 2 224 4 343 4 237 17 1,013 1910 .. 38 4,099 8 693 148 10,499 8 714 .. .. 10 938 6 559 2 164 21 1,408 1911 .. 32 2,816 3 175 177 13,140 7 1,271 .. .. 17 2,209 10 630 1 163 30 1,875 1912 .. 43 3,421 3 163 217 16,398 6 725 .. .. 23 2,934 10 946 1 52 39 2,769 1913 .. 40 3,903 8 694 249 19,607 12 1,510 .. ., 35 4,444 14 1,372 3 260 50 3,881 1914 .. 32 3,348 12 861 269 22,094 14 2,172 .. .. 49 6,616 9 784 3 247 56 4,418 1915 .. 28 2,320 9 833 288 23,581 9 1,648 .. .. 58 8,264 8 725 3 341 61 4,802 1916 .. 33 3,861 6 570 315 26,872 8 1,147 .. .. 66 9,411 16 1,442 3 337 74 5,907 1917 .. 27 3,060 18 1,388 324 28,544 4 544 2 254 68 9,701 10 1,118 5 393 79 6,632 1918 .. 20 2,550 8 610 336 30,484 3 426 .. .. 71 10,127 5 704 3 211 81 7,125 1919 .. 73 10,534 9 525 400 40,493 4 406 .. .. 7510,533 18 2,550 5 646 94 9,029 1920 .. 55 7,739 18 1,963 437 46,269 3 553 2 600 7610,486 11 1,490 6 616 99 9,903 1921 .. 48 9,170 10 1,046 475 54,393 4 527 2 315 7810,698 11 1,505 8 760 10210,648 1922-3 .. 95 19,169 16 1,388 554 72,174 13 2,301 3 509 8812,490 9 2,084 3 515 10812,217 1923-4 .. 79 16,617 13 1,314 620 87,477 15 2,766 4 712 9914,544 8 1,145 5 818 111 12,544 Adjustments .. -50 87,427 -1 -277 .. .. 9814,267 +1 4206 .. .. 11212.750 1924-5 .. 63 13,684 16 2,612 667 98,499 14 2,518 5 633 10716,152 12 1,772 5 704 11913,818 1925-6 .. 56 15,909 18 2,394 705112,014 4 1,054 2 433 10916,773 9 2,482 2 215 12616,085 1926-7 .. 82 23,109 19 2,897 768132,226 4 1,529 3 379 11017,923 9 2,162 10 1,528 12516,719 Totals.. 973 152,976205 20,750 .. .. 133 21,758 23 3,835 .. .. 199 25,030 74 8,311 .. Death of Contributor or Pensioner : Family Pension. Total Pensions. Granted. I Vo „ id S In Force. Granted. Void. In Force. Year. j or expiry. Pension. Pension. Pension. Pension. Pension. Pension. £ £ £ £ £ £ 1906-7 .. .. 10 155 .. 10 155 94 4,674 .. .. 94 4,674 1907-8 .. ..20 310 3 39 27 426 44 1,700 8 311 130 6,063 Part 1908 .. 26 403 2 31 51 798 44 1,397 6 239 168 7,221 1909 .. ..32 476 5 65 78 1,209 60 2,868 13 550 215 9,539 1910 .. ..17 269 4 62 91 1,416 69 5,641 14 919 270 14,261 1911 .. .. 18 279 9 132 100 1,563 67 4,996 13 470 324 18,787 1912 .. .. 6 93 9 122 97 1,534 65 5,185 13 337 376 23,635 1913 .. ..33 489 4 57 126 1,966 99 7,274 15 1,011 460 29,898 1914 .. .. 19 307 15 210 130 2,063 74 6,611 30 1,318 504 35,191 1915 .. .. 30 450 12 161 148 2,352 75 5,143 24 1,335 555 38,999 1916 .. .. 20 300 12 176 156 2,476 77 6,750 21 1,083 611 44,666 1917 .. .. 21 333 14 207 163 2,602 62 5,055 39 2,242 634 47,479 1918 .. .. 61 893 14 197 210 3,298 89 4,573 25 1,018 698 51,034 1919 .. .. 24 372 17 251 217 3,419 119 13,862 31 1,422 786 63,474 1920 .. .. 25 380 18 249 224 3,550 94 10,162 44 3,428 836 70,208 1921 .. .. 12 206 10 140 226 3,616 75 11,408 30 2,261 881 79,355 ]922-3 .. .. 25 395 17 251 234 3,760 142 23,949 39 2,663 984- 100,641 1923-4 .. .. 25 405 11 168 248 3,997 127 [20,934] 33 3,013 1,078 [118,562] Adjustments .. .. .. •• •• .. .. 20,813 .. .. .. 118,441 1924-5 .. .. 32 516 20 295 260 4,218 121 18,490 46 4,244 1,153 132,687 1925-6 .. .. 18 3,848 21 516 257 7,550 87 23,293 43 3,558 1,197 152,422 1926-7 .. .. 30 875 17 477 270 7,948 125 27,675 49 5,281 1,273 174,816 Totals .. 504 11,754 234 3,806 .. .. 1,809 211,519 536 36,703 * Compiled from annual reports.

E.—BA.

TABLE IV. Classification of Pensions granted for Period from 1st February, 1924, to 31st January, 1927, inclusive, showing the Ages at which they were granted.*

12

Attainment of Pension Age TTnfif Retired under extended Widows and or Length of Service. -K-etirect Meciicaiiy unnt. Provisions. Children. lotaL Age at . which «g Pension Number. Number. Number. d Number. granted. Amount of Amount of Amount of £ § •§ Amount of Pension. Pension. I Pension. 2 o g Pension. M. F. M. F. M. F. £ M. I F. I Total. £ s. d. £ s. d. £ s. d. £ £ s. d. 77 .. .... .. .... .. 2 36 .. 2 2 36 0 0 76 .. .... .. .... .. 75 .. .... .. .... .. 3 54 .. 3 3 54 0 0 74 .. .... .. .... .. 73 ...... .. .... .. .... .. 2 36 .. 2 2 36 0 0 72 .. .... .. .... .. 71 .. .... .. .... .. 2 36 .. 2 2 36 0 0 70 .. .... .. .... .. 4 72 .. 4 4 72 0 0 69 .. .... .. .... .. 2 36 .. 2 2 36 0 0 68 .. 1 .. 152 4 0 .... .. .. .: .. 3 54 1 3 4 206 4 0 67 .. .... .. .... .. 2 36 .. 2 2 36 0 0 66 .. 6 1 2,220 18 0 .. .. .. 1 .. 12 10 0 2 36 7 3 10 2,269 8 0 65 .. 17 .. 4,295 16 0 .. .. .. 1 .. 284 2 0 3 54 18 3 21 4,633 18 0 64 .. 3 2 1,528 18 0 .. .. .. 1 .. 234 11 0 3 54 4 5 9 1,817 9 0 63 .. 4 1,591 16 0 .. .. .. .... .. 3 54 4 3 7 1,645 16 0 62 .. 6 1 2,305 16 0 1 .. 262 4 0 3 .. 576 14 0 1 18 10 2 12 3,162 14 0 61 .. 8 2 3,091 9 0 3 .. 718 5 0 1 .. 224 7 0 1 18 12 3 15 4,052 1 0 60 .. 5 7 2,883 8 0.... .. 4 .. 901 3 0 1 18 9 8 .17 3,802 11 0 59 .. 5 10 3,183 13 0 3 .. 778 1 0 .. .. .. .. .. 8 10 18 3,961 14 0 58 .. 7 4 3,278 12 0 1.. 180 9 0 1 .. 250 18 0 2 36 9 6 15 3,745 19 0 57 .. 10 12 4,972 13 0 2.. 449 19 0 .. .. .. .. .. 12 12 24 5,422 12 0 56 .. 6 8 3,338 17 0 .. .. .. .... .. 1 18 6 9 15 3,356 17 0 55 .. 1 17 2,953 18 0 2 .. 485 17 0 3 1 789 18 0 2 36 6 20 26 4,265 13 0 54 .. 1 5 1,275 17 0 .. .. .. .. .. .. .. .. 15 6 1,275 17 0 53 .. .. 11 2,226 7 0 1 .. 201 0 0 1 2 872 3 0 .. .. 2 13 15 3,299 10 0 52 .. 1 4 1,131 7 0 1.. 23610 0 .. .. .. .... 2 4 6 1,36717 0 51 .. .. 8 1,533 16 0 .. 1 118 19 0 .. 2 146 16 0 1 18 12 12 1,817 11 0 50 .. .. 6 1,136 12 0 .. 1 142 13 0 .. 2 126 18 0 1 18 .. 10 10 1,424 3 0 49 .. .. 7 1,200 16 0 .. 1 184 10 0 .. .. .. 2 36 .. 10 10 1,421 6 0 48 .... 7 1,160 7 0 1 .. 191 6 0 .. .. .. .. .. 17 8 1,351 13 0 47 .. .. 4 717 6 0.. 1 162 14 0 .... .. 1 18 .. 6 6 898 0 0 46 .. .. 4 719 6 0 11 286 6 0 .. .. .. .. .. 15 6 1,005 12 0 45 .. .... .. .... .. 44 .. .. 3 240 4 0 .... .. 3 3 240 4 0 43 .. ..1 143 7 0 .. .. .. 2 36 .. 3 3 179 7 0 42 . . I 253 7 0 .... .. .. .. 1 .. 1 253 7 0 41 . . .... .. .... .. 40 .. .... .. .... .. 1 18 .. 1 1 18 0 0 39 38 .. i . . 137 1 0 .... .. .. .. i .. 1 137 1 0 37 .. 2 228 1 0 .... .. .. .. 2 2 228 1 0 36 .. .... .. .... . . 35 .. .... .. .... .. 34 .. .... . . .... .. 2 36 .. 2 2 36 0 0 33 .. .... .. .... . . 1 18 .. 1 I 18 0 0 32 .. .... .. .... .. 31 .. .... . . .... .. 30 .. .... .. .... .. 29 .. .... .. .... .. 1 18 .. 1 1 18 0 0 28 .. .... .. .... .. 27 . . .... . . .... .. 26 .. .... .. .... .. 25 .. .... .. .. 24 .. .... .. .... .. 1 18 .. 1 1 18 0 0 14 . . .... . . .... .. 13 ' .. .... . . .... .. 4 52 4 4 52 0 0 12 .. .... .. .... .. 7 91 3 4 7 91 0 0 11 .. .... .. .... .. 1 13 I 1 13 0 0 10 .. .... . . .... .. 4 52 1 3 4 52 0 0 9 .. .... .. .... .. 1 13 1 .. 1 13 0 0 8 .. .... .. .... .. 2 26 2 2 26 0 0 7 . . .... . . .... .. 3 39 3 3 39 0 0 6 .. .... .. .... .. 1 13 .. 1 1 13 0 0 5 .. .... .. .... .. 4 .. .... .. .... .. 3 39 3 3 39 0 0 3 .. .. .. .. .. .. .. 2 .. .... .. .... .. 1 13 .. 1 1 13 0 0 1 .. .... .. .... .. 1 13 1 .. 1 13 0 0 0 .. .. .. .. .. .. .. Totals 81 120 46,899 12 0 20 9 5,400 13 0 16 7 4,420 0 0 80 1,300 136 197 333 58,020 5 0 ■ : * Compiled from cards.

E.—Ba.

TABLE V. Present Annual Pay and Contributions of Officers now in Service.*

13

TTiimW Present Annual Pay as from Present Annual Contributions ' 1st February, 1927. : as from 1st February, 1927. Ajze attained. I . attained. Males. Females. Males. Females. j Males. Females. £ £ £ £ 15 .... 1 .. 65 .. 3 .. 15 16 1. 1 52 75 3 4 16 17 .... 7 9 596 715 30 36 17 18 .. .. 42 101 3,575 8,060 179 403 18 19 •• .. 85 170 7,346 13.710 367 686 19 20 .. .. 115 225 12,198 21,277 610 1,064 20 21 .. .. 156 274 24,375 37,168 1,219 1,858 21 22 .. .. 175 328 36,230 58,354 1,811 2,918 22 23 .. .. 154 407 37,753 80,912 1,888 4,046 23 24 .. .. 119 388 31,671 81,408 1,584 4,070 24 25 .. .. 127 300 34,795 64,163 .1,740 3,208 25 26 .. .. 112 272 34,633 59,993 1,732 3,000 26 27 .. .. 106 207 33,122 47,929 1,656 2,396 27 28 .. .. 88 184 29,204 42,805 1,460 2,140 28 29 .. .. 81 174 28,489 42,913 1,424 2,146 29 30 .. .. 79 128 27,421 31,654 1,371 1,587 30 31 .. .. 77 161 28,385 41,596 1,425 2,097 31 32 .. .. 94 140 34,354 37,186 1,755 1,879 32 33 .. .. 72 133 27,722 34,799 1,419 J,778 33 34 .. .. 86 112 33,239 30,822 1,723 1,590 34 35 .. .. 78 112 30,547 31,851 1,569 1,655 35 36 .. .. 68 92 27,490 26,868 1,436 1.400 36 37 .. .. 78 97 32,760 27,463 1,728 1,444 37 38 .. .. 72 81 29,155 24,065 1,529 1,291 38 39 .. .. 61 72 27,365 22,580 1.488 1,236 39 40 .. .. 64 74 28,134 23,036 1,507 1,276 40 41 .. .. 62 75 26,856 22,580 1,477 1,286 41 42 .. .. 68 78 31,936 23,550 1.735 1,339 42 43 .. .. 57 65 25,584 19,917 1,448 1,151 43 44 .. .. 64 59 27,691 18,730 1,490 ! 1,111 44 45 .. .. 71 54 32,045 16,979 1.774 ! 973 45 46 .. .. 52 55 24,416 17,597 1,387 1,034 46 47 .. .. 68 77 32,324 24,743 1,857 1,488 47 48 .. .. 60 47 27,359 15,051 1,606 917 48 49 .. .. 44 57 20,796 18,152 1,247 1,114 49 50 .. .. 45 48 20,926 16,102 1,208 940 50 51 .. .. 47 50 22,830 16,023 1,455 1,069 51 52 .. .. 52 50 26,311 15,477 1,736 1,052 52 53 .. .. 48 42 20,476 13,822 1,343 918 53 54 .. .. 36 27 17,115 8,743 1,142 601 54 55 .. .. 47 29 23,490 9,212 1,487 645 55 56 .. .. 35 19 19,255 6,249 1,374 474 56 57 .... 37 7 20,943 2,713 1,529 204 57 58 .. .. 30 13 15,206 3,910 1,135 311 58 59 .... 26 5 13,067 1,527 964 124 59 60 .... 27 4 13,020 1,030 969 95 60 61 .... 22 3 10,004 1,245 814 98 61 62 .... 19 3 8,361 1,030 706 90 62 63 .... 13 4 6,275 1,300 520 117 63 64 .. .. 10 1 5,185 270 439 24 64 65 .. .. 6 .. 2,500 .. 208 .. 65 66 .... 4 1 2,685 160 257 16 66 67 .. .. 4 .. 2,140 .. 206 .. 67 68 .. .. .. .. .. .. .. .. 68 69 .. .. .. .. .. .. .. .. 69 70 .. .. 3 .. 1,300 .. 130 .. 70 71 .. .. .. .. .. .. .. .. 7I 72 .. .. .. .. .. .. .. .. 72 73 •• .. .. .. .. 73 74 .. .. .. .. .. 74 75 •• .. .. .. 75 76 .... 1 .. 275 .. 27 .. 76 Totals .. 3,256 5,115 1,141,047 1,167,514 64,326 . 62,399 77 * Compiled from cards.

E.—BA.

14

TABLE VI. EXPERIENCE TABLE. Probabilities per Cent. per Annum of Withdrawal, Death, and Retirement used in the Calculation of Valuation Factors for the Teachers' Superannuation Fund.

Contributing Members : Males. Contributing Members : Females. Probabilities of Withdrawal, Death, and Retire- Probabilities of Withdrawal, Death, and Retirement. within a Year (expressed as a Percentage ment within a Year (expressed as a Percentage of the Number existing in the Service at the of the Number existing in the Service at the Age. beginning of the Year). | beginning of the Year). Withdrawal. Death. Retirement. ! Withdrawal. Death. Retirement. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. 15 .. 3-20 0-18 .. 2-40 Oil .. 15 1(5 .. 3-20 0-18 .. 2-60 0-11 ' .. j 16 17 .. 3-17 0-18 .. i 2-80 | 0-11 .. j 17 18 .. 3-12 0'19 .. 3-10 ! 0-11 .. 18 19 .. 3-05 0-19 . . 3-60 0-11 • • 19 20 . . | 2-97 0-19 .. 4-20 0-11 • • 20 21 . . 2-86 0-20 .. 5-00 | 0-11 i .. 21 22 .. 2-76 0-20 .. 5-90 ! 0-11 .. 22 23 .. 2-66 0-20 .. 6-90 0-11 .. 23 24 .. 2-56 0-21 .. 7-80 0 11 .. 24 25 .. 2-46 0-21 .. • 8-60 0-11 .. 25 26 2-37 0-21 .. 8-90 0-11 .. 26 27 .. 2-28 0-22 .. 9-00 0-12 .. 27 28 .. 2-19 0-22 .. 8-80 0-12 .. 28 29 .. 2-10 0-23 .. 8-40 0-13 .. 29 30 .. 2-01 0-24 .. 8-00 0-14 .. 30 31 . . 1-93 0-25 .. 7-60 0-15 ! .. 31 32 . . 1-85 0-26 .. 7-20 0-16 .. 32 33 .. [-78 0-27 .. 6-80- 0-17 .. 33 34 .. 1-70 0-28 0-055 6-40 0-18 34 35 .. 1-63 0-29 0-060 6-00 0-19 .. 35 36 . . 1-56 0-30 0-065 5-60 0-20 .. 36 37 .. 1-50 0-31 0-070 5-15 0-21 .. 37 38 . . 1-45 0-32 0-075 4-70 0-22 0-30 38 39 .. ' 1-40 0-33 0-080 4-25 0-23 0-40 39 40 .. 1-35 0-35 0-085 3-75 0-24 0-50 40 41 .. 1-31 0-37 0-090 3-25 0-25 0-60 41 42 .. 1-28 0-39 0-100 2-70 0-26 0-80 42 ' 43 .. 1-26 0-41 0-120 2-10 0-27 1-00 43 44 .. 1-24 0-44 0-150 1-50 0-28 1-20 44 45 . . 1-22 0-47 0-180 0-90 0-29 1-50 45 46 .. 1-19 0-51 0-210 0-40 0-30 2-10 46 47 .. 1-15 0-55 0-240 .. 0-31 3-00 47 48 . . 1-10 0-59 0-280 .. 0-33 4-00 48 49 .. 1-03 0-63 0-320 .. 0-35 5-00 49 50 .. 0-95 0-68 0-400 .. 0-37 6-00 50 51 .. 0-86 0-73 0-550 .. 0-39 7-50 51 52 .. 0-76 0-78 0-750 .. 0-41 9-00 52 53 .. 0-66 0-83 1-150 .. 0-44 11-00 53 54 .. 0-55 0-88 1-850 .. 0-47 14-00 54 55 .. 0-43 0-93 3-000 .. 0-51 17-00 55 56 .. 0-30 0-99 4-500 .. 0-55 20-00 56 57 .. 0-16 1-05 6-500 .. 0-60 23-00 57 58 .. .. 1-11 8-500 .. 0-65 26-00 58 59 .. .. 1-18 10-000 .. 0-70 30-00 59 60 .. .. 1-25 11-000 .. .. 100-00 60 61 .. .. 1-33 12-000 62 .. .. 1-41 13-000 63 .. .. 1-50 15-000 64 .. .. 1-60 30-000 65 .. .. .. 100-000 I

E.—BA.

TABLE VII. LIFE AND SERVICE TABLE. Based upon the Probabilities per Cent. per Annum of Withdrawal, Death, and Retirement given in Table VI.

15

Males. I Females. Age. 0 Withdrawals. Deaths. Retirements. Withdrawals.; Deaths. | Retirements, j Age. - . 15 .. 100,000 3,200 180 .. 100,000 2,400 110 .. 15 10 .. 96,620 3,092 174 .. 97,490 2,535 107 .. 16 17 .. 93,354 2,959 168 .. 94,848 2,656 104 .. 17 18 .. 90,227 2,815 171 .. 92,088 2,855 101 .. 18 19 .. 87,241 2,661 166 .. 89,132 3,209 98 1 .. 10 20 .. 84,414 2,507 160 .. 85,825 3,605 94 I .. 20 21 .. 81,747 2,338 163 .. 82,126 4,106 90 1 .. 21 22 .. 79,246 2,187 158 .. 77,930 4,598 86 .. 22 23 .. 76,901 2,046 154 .. 73,246 5,054 81 .. 23 24 .. 74,701 1,912 157 .. 68,111 5,313 75 .. 24 25 .. 72,632 1,787 153 .. 62,723 5,394 69 .. 25 26 .. 70,692 1,675 148 .. 57,260 5,096 63 1 .. 26 27 .. 68,869 1,570 152 .. 52,101 4,689 63 .. 27 28 .. 67,147 1,471 148 .. 47,349 4,167 57 .. 28 29 .. 65,528 1,376 151 .. 43,125 3,623 56 .. 29 30 .. 64,001 1,286 154 .. 39,446 3,156 55 .. 30 31 .. 62,561 1,207 156 .. 36,235 2,754 54 .. 31 32 .. 61,198 1,132 159 .. 33,427 2,407 53 .. 32 33 .. 59,907 1,066 162 .. 30,967 2,106 53 .. 33 34 .. 58,679 998 164 32 28,808 1,844 52 .. 34 35 .. 57,485 937 167 34 26,912 1,615 51 .. 35 36 .. 56,347 879 .169 37 25,246 1,414 50 .. 36 37 .. 55,262 829 171 39 23,782 1,225 50 .. 37 38 .. 54,223 j 786 174 41 22,507 1,058 50 68 38 39 .. 53,222 745 176 43 21,331 907 49 85 39 40 .. 52,258 705 183 44 20,290 761 49 101 40 41 .. 51,326 672 190 46 19,379 630 48 116 41 42 .. 50,418 645 197 50 18,585 502 48 149 42 43 .. 49,526 624 203 59 17,886 376 48 179 43 44 .. 48,640 603 214 73 17,283 259 48 207 44 45 .. 47,750 583 224 86 16,769 151 49 252 45 46 .. 46,857 558 239 98 16,317 65 49 343 46 47 .. 45,962 529 253 110 15,"860 .. 49 476 47 48 .. 45,070 496 266 126 15,335 .. 51 613 48 49 .. 44,182 455 278 141 14,671 .. 51 734 49 50 .. 43,308 411 294 173 13,886 .. 51 833 50 51 .. 42,430 365 310 233 13,002 .. 51 975 51 52 .. 41,522 316 324 311 11,976 .. 49 1,078 52 53 .. 40,571 268 337 467 10,849 .. 48 1,193 53 54 .. 39,499 217 348 731 9,608 .. 45 1,345 54 55 .. 38,203 164 355 1,146 8,218 .. 42 1,397 55 56 .. 36,538 110 362 1,644 6,779 .. 37 ],356 56 57 .. 34,422 55 361 2,237 5,386 .. ! 32 1,239 57 58 .. 31,769 .. 353 2,700 4,115 .. 27 1,070 58 59 .. 28,716 .. 339 2,872 3,018 .. 21 905 59 60 .. 25,505 .. 319 2,806 2,092 .. .. 2,092 60 61 .. 22,380 .. 298 2,686 .. .. i 62 .. 19,396 .. 273 2,521 .. .. .. 63 .. 16,602 .. 249 2,490 .. .. , 64 .. 13,863 .. 222 4,159 65 .. 9,482 .. .. 9,482

E.—BA,

16

TABLE VITI. SUMMARY OF TEACHERS' SUPERANNUATION FUND RESULTS. Valuation Balance-sheet as at 31st January, 1927. Liabilities. Males— £ £ Value of 406 pensions for £91,712 7s. per annum already granted .. 830,804 ~ 183 pensions for £.3,294 per annum granted to widows of contributors or pensioners .. .. . . .. 33,390 ~ 85 pensions for £1,105 per annum granted to children of deceased contributors or pensioners .. .. .. .. 3,778 ~ prospective pensions for back service .. .. .. 1,514,193 ~ prospective pensions for future service .. .. .. 1,158,910 ~ prospective pensions to widows .. .. .. .. 107,797 ~ prospective pensions to children .. .. .. .. 17,261 ~ return of contributions on death .. .. .. .. 13,472 „ return of contributions on withdrawal .. .. .. 112,795 3,792,400 Females— Value of 597 pensions for £75,154 13s. per annum already granted .. 902,402 ~ prospective pensions for back service .. .. .. 1,119,274 ~ prospective pensions for future service .. .. .. 1,111,185 ~ prospective death benefits —viz., return of contributions and pensions to children .. .. .. .. .. 25,158 „ return of contributions on withdrawal .. .. .. 208,560 3,366,579 £7,158,979 Assets. £ Accumulated funds .. .. .. .. .. .. .. .. 1,083,155 Value of future contributions from males .. .. .. .. .. 841,025 ~ future contributions from females .. .. .. .. .. 587,001 „ subsidy of £68,000 per annum now being paid .. .. .. .. 1,511,111 ~ future increase in subsidy to be provided .. .. .. .. 3,136,687 £7,158,979

TABLE IX. Statement showing Subsidies paid as compared with Subsidies required under the System indicated in the Act.

Approximate Cost of Paper.—Preparation, not given; printing (1,600 copies), £27.

Authority : W. A. G. Skinner. Government Printer, Wellington.—l 929.

Price, 6(Z.]

I ! | Shortage aecumuYear ended Subsidy required. Subsidy received. Shortage. Cent to end^of 1929. i i I £ £ £ £ 31st March, 1906 .. Nil 5,000 -(5,000) -(14,380) 1907 .. 2,000 Nil 2,000 5,504 1908 .. 5,000 Nil 5,000 13,168 31st December, 1908 .. 5,000 Nil 5,000 12,601 1909 .. 8,000 7,000 1,000 2,412 1910 .. 11,000 7,000 4,000 9,231 1911 .. 17,000 7,000 10,000 22,085 1912 .. 17,000 7,000 10,000 21,134 1913 .. 17,000 17,000 Nil Nil 1914 .. 33,000 17,000 16,000 30,965 1915 .. 33,000 17,000 16,000 29,631 1916 .. 33,000 17,000 16,000 28,355 1917 .. 43,000 17,000 26,000 44,093 1918 .. 43,000 17,000 26,000 42,194 1919 .. 43,000 43,000 Nil Nil 1920 .. 68,000 43,000 25,000 37,152 1921 .. 68,000 43,000 25,000 35,553 31st January, 1923* .. 73,667 71,583 2,084 2,836 1924 .. 93,000 63,833 29,167 37,983 1925 .. 137,000 68,000 69,000 85,987 1926 .. 137,000 68,000 69,000 82,284 1927 .. 137,000 68,000 69,000 78,740 Totals .. .. 1,023,667 603,416 420,251 607,528 * Period of thirteen months.