Papers Past | Parliamentary Papers | Appendix to the Journals of the House of Representatives | 1932 Session I-II | GOVERNMENT SUPERANNUATION FUNDS BILL COMMITTEE...

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1932-33. NEW ZEALAND.

GOVERNMENT SUPERANNUATION FUNDS BILL COMMITTEE (REPORT OF THE). (Mr. J. A. NASH, Chairman.)

Report brought up on 2nd March and ordered to be printed.

ORDER OF REFERENCE. Extract from the Journals of the House of Representatives. Tuesday, the 25th Day of October, 1932. Ordered, " That a Select Committee be appointed, consisting (by leave) of twelve members, to consider the Government Superannuation Funds Bill, to recommend such amendments therein as tliey may think proper, and to report generally upon the principles and provisions of the Bill; the Committee to consist of Mr. Ansel], Mr. Bodkin, Mr. Dickie, Mr. Hargest, Mr. McCombs, Mr. J. A. Nash, Mr. W. Nash, the Hon. Sir Apirana Ngata, Mr. Savage, Mr. Veitch, Mr. Wilkinson, and the Mover." (Right Hon. Mr. Forbes.) Tuesday, the 25th Day oe October, 1932. Ordered, " That the Government Superannuation Funds Bill be referred to the Government Superannuation Funds Bill Committee." (Right Hon. Mr. Forbes.) Tuesday, the Ist Day oe November, 1932. Government Superannuation Funds Bill Committee (Chairman's Report).—" I have the honour to report that the Government Superannuation Funds Bill Committee has passed the following resolution : ' That the proceedings of the Committee during the taking of evidence on the Government Superannuation Funds Bill be open to accredited representatives of the press, and that the Chairman do report this resolution to the House, and move the adoption thereof by the House.' " Ordered, " That the report be adopted and agreed to." (Mr. J. A. Nash.) Thursday, the 24th Day oe November, 1932. Ordered, " That the Government Superannuation Funds Bill Committee have leave to sit this day during the present sitting of the House." (Mr. J. A. Nash.) Tuesday, the 29th Day oe November, 1932. Ordered, " That the Government Superannuation Funds Bill Committee have leave to sit this day during the present sitting of the House." (Mr. J. A. Nash.) Tuesday, the 6th Day oe December, 1932. Ordered, " That the Government Superannuation Funds Bill Committee have leave to sit this day during the present sitting of the House." (Mr. J. A. Nash.) Wednesday, the 7th Day oe December, 1932. Ordered, " That the Government Superannuation Funds Bill Committee have leave to sit this day during the present sitting of the House." (Mr. J. A. Nash.)

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REPORT.

GOVERNMENT SUPERANNUATION FUNDS BILL. The Special Committee to which was referred the Government Superannuation Funds Bill lias the honour to report that, after hearing voluminous evidence and receiving numerous written statements, it regrets that the time at its disposal has been insufficient to enable the Committee to make a complete investigation into the proposals contained in the Bill and to consider the many alternatives placed before it; and recommends that the Bill be not allowed to proceed this session. 2nd March, 1933. J. A. Nash, Chairman.

SPECIAL REPORT.

I have the honour to report that the Government Superannuation Funds Bill Committee desires to place on record its appreciation of the very excellent service rendered by the Committee Clerk, Mr. E. A. Dobbie, and, further, that this resolution be recorded in the minutes of the Committee and be reported to the House. 3rd March, 1933. W. Nash, Member of the Committee.

FURTHER REPORT. GOVERNMENT SUPERANNUATION FUNDS BILL. I have the honour to report, That the Minutes of Evidence heard before the Government Superannuation Funds Bill Committee on 2nd March, 1933, and the Minutes of Proceedings of that date which were omitted from the Minutes of Evidence and Minutes of Proceedings laid on the Table of the House on 2nd March, 1933, do lie on the table and be added to the former minutes, and be printed. Bth March, 1933. J. A. Nash, Chairman.

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MINUTES OF PKOCEEDINGS.

Friday, the 28th Day op October., 1932. The Committee met pursuant to notice at 2 p.m. Present: Mr. Ansell, Mr. Bodkin, Right Hon. Mr. Forbes, Mr. McCombs, Mr. J. A. Nash, Mr. W. Nash, Mr. Savage, and Mr. Wilkinson. Order of Reference. —The order of reference setting up the Committee was read by the Clerk. Election of Chairman. —On motion of Right Hon. Mr. Forbes, seconded by Mr. Ansell, Mr. J. A. Nash was elected Chairman of the Committee. Mr. J. A. Nash accordingly took the Chair, and thanked members for the honour paid him in electing him Chairman. Resolved, on motion of Mr. J. A. Nash, That Committee reporters be engaged to take down the evidence and that fourteen copies of the evidence be taken off for use of the Committee. Resolved, on motion of Mr. Ansell, That the Public Service Commissioner and Government Actuary be asked to prepare typewritten statements for the Committee, and these gentlemen be called to give evidence on next sitting-day. The Clerk was instructed to circulate the statements as soon after receipt as possible. Resolved, on motion of Mr. W. Nash, That copies of 8.-4 a, D.-sa, E.-Ba, H.-26a, D.-5, E.-8, and H.-26, together with all legislation and commission reports concerning superannuation, be procured for use of the Committee. Resolved, on motion of the Right Hon. Mr. Forbes, That the organizations of contributors to the Superannuation Funds desiring to give evidence be advised to prepare typewritten statements and to hold themselves in readiness to be called before the Committee. Resolved, on motion of Mr. W. Nash, That the Government Actuary be asked to prepare a table for D.-5a (Railway Superannuation Fund) similar to Table IX in E.-8a (Teachers' Superannuation Fund). Resolved, on motion of Mr. Savage, That the proceedings of the Committee during the taking of evidence on the Government Superannuation Funds Bill be open to accredited representatives of the press, and that the Chairman do report this resolution to the House and move the adoption thereof by the House. Resolved, That the Committee meet on Wednesday, 2nd November, 1932, and Thursday, 3rd November, 1932, at 10 a.m. The Committee continued to sit until 2.30 p.m., and then adjourned until Wednesday, 2nd November, 1932. Thursday, the 3rd Day of November, 1932. The Committee met pursuant to notice at 10 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Bodkin, Right Hon. Mr. Forbes, Mr. Hargest, Mr. McCombs, Mr. W. Nash, Hon. Sir Apirana Ngata, Mr. Savage, Mr. Veitch, and Mr. Wilkinson. The minutes of the previous meeting were read and confirmed. Orders of Reference.— An order of reference, referring the Government Superannuation Funds Bill to the Committee, was read. Another order of reference, dated Ist November, 1932, That the proceedings of the Committee during the taking of evidence be open to accredited representatives of the press, was read. The Chairman explained that he had directed that the meeting set down for Wednesday, the 2nd November, be postponed until the following day. Absence.—Mr. Hargest apologized for the absence of Mr. Dickie, who was attending another Correspondence. —A letter was read by the Chairman from Professor H. G. Denham, President of the University Teachers' Association, asking that a deputation from that association be permitted to appear before the Committee on Friday, the 4th, or Saturday, the sth. Resolved, on motion of Mr. Ansell, That the association be informed that the Committee was unable to meet the request, but that a later date would be arranged so that the representatives could be heard. A letter from Mr. William Coster to the Prime Minister was read. Resolved, on motion of Mr. J. A. Nash, That the letter be received. The Chairman also read a letter from Mr. John Caughley, asking permission to appear before the Committee. , . , _ . . , .. , Resolved, on motion of Mr. J. A. Nash, That Mr. Caughley be informed that he should make a written statement, and that he could appear before the Committee when called. Mr. Hargest handed in a letter from Ethel G. Dugleby. Resolved, on motion of Mr. Hargest, That the letter be regarded as evidence, and be brought forward at a later date. Mr. P. D. N. Verschaffelt, Public Service Commissioner, and Mr. C. Gostelow, Government Actuary, appeared before the Committee and gave evidence, and were questioned by members of the Committee. . „ . ' ... Resolved, on motion of Mr. J. A. Nash, That the secretaries of the Amalgamated Society of Railway Servants and New Zealand Railway Officers' Institute be written to informing them that representatives will be heard on Wednesday, the 9th instant; and the Secretaries of the New Zealand Locomotive Engineers', Firemen's, and Cleaners' Association and New Zealand Railway Tradesmen's Association be informed that representatives will be heard on Thursday, the 10th instant. The Committee continued to sit until 12.45 p.m., and then adjourned until Wednesday, 9th November, 1932.

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Wednesday, the 9th Day of November, 1932. The Committee met pursuant to notice at 10 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Bodkin, Mr. Dickie, Eight Hon. Mr. Forbes, Mr. Hargest, Mr. McCombs, Mr. W. Nash, Hon. Sir Apirana Ngata, Mr. Savage, Mr. Veitch, and Mr. Wilkinson. The minutes of the previous meeting were read and confirmed. Correspondence : Letters were received from the following organizations and persons : W. Anderson, Dr. Herbert Chesson, William Cooper, J. Dalziel, H. Lundius, G. Lawn, E. B. Lea, T. L. Oswin, Returned Soldiers Association, T. C. Robinson, Railway Superannuitants Association, Arthur G. Reece, T. B. Strong, Superannuitants (Palmerston North), E. Phillips Turner, Wellington Harbour Board, A. S. Wansborough. The following were also present: Mr. H. T. Armstrong, M.P. ; Hon. Mr. Pagan, M.L.C. ; Mr. Verschaffelt, Public Service Commissioner ; Mr. Gostelow, Government Actuary ; members of the press ; and representatives of the following organizations : Public Service Association, Superannuated Civil Servants, Railway Jradesmen's Association, Locomotive Engineers', Firemen's, and Cleaners' Association, Railway Officers' Institute, Amalgamated Society of Railway Servants. Mr. Gostelow, Government Actuary, read two letters to the Committee and was questioned by members. Mr. E. J. Dash, President of the Amalgamated Society of Railway Servants of New Zealand, briefly addressed the Committee ; and Mr. L. Mcllvride, Secretary of the same society, read the evidence of the society and answered questions of members of the Committee. Resolved, on motion of Mr. Wilkinson, That information be obtained for the Committee in regard to the total amounts contributed by all recipients of superannuation above £300 a year, together with an actuarial computation of the pension these recipients would have received on the amount contributed. The Committee continued to sit until 1 p.m., and then adjourned until Thursday, the 10th November, 1932. Thursday, the 10th Day of November, 1932. The Committee met pursuant to notice at 10 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Bodkin, Right Hon. Mr. Forbes, Mr. McCombs, Mr. W. Nash, Hon. Sir Apirana Ngata, Mr. Savage, Mr. Veitch, and Mr. Wilkinson. The minutes of the previous meeting were read and confirmed. Resolved, on motion of Mr. J. A. Nash, That letters from Mr. J. D. Gray and the Secretary, Wellington Harbour Board, be received, and that they be written to asking for written evidence, and advising them that they will be called at a later date.' Resolved, on motion of Mr. J. A. Nash, That the Chairman of the Government Railway Superannuation Fund Board be requested to attend at 12 noon on Tuesday, the 15th November, 1932, to give evidence. The following were then admitted to the meeting : Mr. P. D. N. Verschaffelt, Public Service Commissioner ; Mr. C. Gostelow, Government Actuary; accredited representatives of the press; and representatives of I üblie Service Association, Federated Superannuitants' Society, Railway Officers' Institute, New Zealand Railway Tradesmen s Association, Amalgamated Society of Railway Servants, and New Zealand Locomotive Engineers', Firemen's, and Cleaners' Association. The following gave evidence and were questioned by members of the Committee : Joseph Hensley Sim, President, New Zealand Locomotive Engineers', Firemen's, and Cleaners' Association ; Thomas Houghton Stephenson, Secretary, New Zealand Locomotive Engineers', Firemen's, and' Cleaners' Association ; Victor Robert John Stanley, President, Railway Officers' Institute. The Committee continued to sit until 1.15 p.m., and then adjourned until Tuesday, 15th November, 1932. Tuesday, the 15th Day of November, 1932. The Committee met pursuant to notice at 11 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Dickie, Mr. Bodkin, Mr. W. Nash, Hon Sir Apirana Ngata, Mr. Savage, and Mr. Veitch. The minutes of the previous meeting were read and confirmed. Resolved, on motion of Mr. J. A. Nash, That several letters be received. The following were then admitted to the meeting ; Mr. C. Gostelow, Government Actuary; accredited members of the press ; and representatives of various Government organizations and superannuitants. The following gave evidence, and were questioned by members of the Committee : William Joseph Leitch, President, New Zealand Tradesmen's Association; Samuel Ingram, Secretary, New Zealand Tradesmen's Association ; Henry Valentine, Chief Accountant, New Zealand Government Railways • Alexander Cruickshank, Retired Police Officer. ' The Committee continued to sit until 1.10 p.m., and then adjourned until Wednesday the 16th November, 1932. J ' Wednesday, the 16th Day of November, 1932. The Committee met pursuant to notice at 10 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Dickie, Mr. Hargest, Mr. McCombs Mr W Nash, Hon. Sir Apirana Ngata, Mr. Savage, Mr. Veitch, and Mr. Wilkinson. The minutes of the previous meeting were read and confirmed. The following were then admitted to the meeting : Mr. Verschaffelt, Public Service Commissioner • Mr. Gostelow, Government Actuary; Hon. Mark Fagan, M.L.C.; accredited members of the press : and representatives of various Government organizations and superannuitants.

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The following gave evidence and were questioned by Members of the Committee : F. W. Millar, General Secretary, New Zealand Public Service Association ; Dr. T. G. Gray, Director-General of Mental Hospitals ; Robert Martin, ex Postmaster, Palmerston North. The Committee continued to sit until 1.5 p.m., and then adjourned until Thursday, the 17th November, 1932. Thursday, the 17th Day of November, 1932. The Committee met pursuant to notice at 10 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Dickie, Right Hon. Mr. Forbes, Mr. Hargest, Mr. W. Nash, Hon. Sir Apirana Ngata, Mr. Savage, Mr. Yeitch, and Mr. Wilkinson. The minutes of the previous meeting were read and confirmed. Correspondence.—Resolved, on the motion of Mr. J. A. Nash, That several letters be received, and written statements be asked for from persons desiring to give evidence. The following were then admitted : Mr. Verschaffelt, Public Service Commissioner ; Mr. Gostelow, Government Actuary ; Mr. Kyle, M.P. ; Hon. Mark Fagan, M.L.C. ; accredited representatives of the press ; and representatives of various Government organizations and superannuitants. The following gave evidence, and were questioned by members of the Committee : John Thomas Carr, Accountant, Post and Telegraph Department, representing Post and Telegraph Association ; Rupert Samuel Wogan, Acting Secretary, Public Service Superannuation Fund Board; Berkeley Lionel Dallard, Permanent Head, Prisons Department. The Committee continued to sit until 1.8 p.m., and then adjourned until Tuesday, 22nd November, 1932. Tuesday, the 22nd Day of November, 1932. The Committee met pursuant to notice at 11 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Dickie, Mr. Hargest, Mr. W. Nash, Hon. Sir Apirana Ngata, and Mr. McCombs. The minutes of the previous meeting were read and confirmed. The following were then admitted : Mr. Verschaffelt, Public Service Commissioner ; Mr. Gostelow, Government Actuary ; accredited representatives of the press ; and representatives of various Government organizations and superannuitants. The following gave evidence, and were questioned by members of the Committee : William Fulton Abel, President, New Zealand Educational Institute ; Henry Ainsley Parkinson, General Secretary, New Zealand Educational Institute. The Committee continued to sit until 1.10 p.m., and then adjourned until Wednesday, 23rd November, 1932. Wednesday, the 23rd Day of November, 1932. The Committee met pursuant to notice at 10 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Dickie, Mr. Hargest, Mr. McCombs, Mr. W. Nash, Mr. Veitch, and Mr. Wilkinson. The minutes of the previous meeting were read and confirmed. The following were admitted to the committee-room : Mr. Verschaffelt, Public Service Commissioner ; Mr. Gostelow, Government Actuary; accredited representatives of the press and representatives of various Government organizations and superannuitants. The following gave evidence, and were questioned by members of the Committee : Miss Elsie Andrews, President, New Zealand Women Teachers' Association; Percival Martin Smith, Hon. Secretary, Secondary Schools' Association ; Arthur George Barnett, Secretary, Wellington Harbour Board; and John Francis Barr Stevenson, Barrister, Wellington, on behalf of the Wellington Harbour Board. The Committee continued to sit until 1.5 p.m., and then adjourned until Thursday, the 24th day of November, 1932. Thursday, the 24th Day of November, 1932. The Committee met pursuant to notice at 10 a.m. Present: Mr. J. A. Nash (Chairman), Mr.- Bodkin, Mr. Dickie, Mr. Hargest, Mr. McCombs Mr. W. Nash, Mr. Savage, Mr. Veitch, and Mr. Wilkinson. The minutes of the previous meeting were read and confirmed. The Chairman read a letter from Mr. H. A. Parkinson, Secretary, New Zealand Educational Institute, and it was decided to receive the letter, and at a later date to incorporate it in the minutes of evidence. The _ following were then admitted to the committee-room : Mr. Verschaffelt, Public Service Commissioner; Mr. Gostelow, Government Actuary; accredited representatives of the press; representatives of Government organizations and superannuitants. The following gave evidence, and were questioned by members of the Committee : Professor Thomas Alexander Hunter, Victoria University College, on behalf of University Staffs; Professor Robert John Bell, University of Otago, on behalf of University Staffs; Charles Edward Crawford, Secretary, Teachers' Superannuation Board ; Miss Nelly Euphemia Coad, Mistress, Wellington Girls' College. The Committee continued to sit until 12.30 p.m. and, on the motion of Mr. J. A. Nash, it was resolved, That the Committee ask leave of the House to sit in the afternoon. The Committee resumed at 3 p.m., when an order of reference granting leave to sit was read.

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The following gave evidence, and were questioned by members of the Committee : Charles John McKenzie, President, Civil Service Institute ; Malcolm Fraser, member of the Civil Service Institute ; A. S. Wansborough, Secretary, Civil Service Institute. Discussion ensued concerning the questioning of witnesses, and Mr. Savage moved, That the questioning of witnesses be confined to members of the Committee. Before the motion could be put the Committee adjourned, owing to the House division-bell ringing. The Committee having continued to sit until 4.45 p.m., then adjourned until Tuesday, 29th November, 1932. Tuesday, the 29th Day op Novbmbeb, 1932. The Committee met pursuant to notice at 10.30 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Dickie, Right Hon. Mr. Forbes, Mr. Hargest, Mr. W. Nash, Hon. Sir Apirana Ngata, Mr. Savage, and Mr. Veitch. The minutes of the previous meeting were read and confirmed. Discussion ensued arising out of the motion moved by Mr. Savage at the previous meeting, " That the questioning of witnesses be confined to members of the Committee." Resolved, on motion of the Right Hon. Mr. Forbes, That the Committee adjourn until 11.15 a.m. in order that Mr. Speaker's ruling be obtained. The Committee resumed at 11.15 a.m., and the Chairman reported Mr. Speaker's ruling to the Committee. Resolved, on motion of the Hon. Sir Apirana Ngata, That the Public Service Commissioner and Government Actuary be permitted to put questions to witnesses. Resolved, on motion of Mr. Savage, That a nominated representative of the Public Service organizations and superannuitants be permitted to put questions to witnesses. ° The following were then admitted to the committee-room : Mr. Verschaflelt, Public Service Commissioner ; Mr. Gostelow, Government Actuary ; accredited representatives of the press ; representatives of Government organizations and superannuitants. The following gave evidence, and were questioned by members of the Committee, Public Service Commissioner, and Government Actuary : Ward George Wohlmann, Commissioner of Police, representing the Police Force ; Rupert Samuel Wogan, Acting Secretary, Public Service Superannuation Board. The Committee continued to sit until 1.5 p.m., and it was resolved, on the motion of Mr. J. A. Nash, That the Committee ask leave of the House to sit in the afternoon. The Committee resumed at 3 p.m., when an order of reference granting leave to sit was read. James McDermott, Senior Vice-President, Post and Telegraph Officers' Guild, gave evidence, and was questioned by members of the Committee, the Public Service Commissioner, the Government Actuary, and Mr. Millar for the Public Service organizations. Resolved, on motion of Mr. J. A. Nash, That the Committee ask leave of the House to sit on Friday morning. The Committee continued to sit until 5 p.m., and then adjourned until Friday, 2nd December, 1932, if leave of the House obtained. Tuesday, the 6th Day of December, 1932. The Committee met pursuant to notice at 10.30 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Bodkin, Mr. Dickie, Mr. Hargest, Mr. McCombs, Mr. W. Nash, and Mr. Savage. The minutes of the previous meeting were read and confirmed. The following were admitted to the committee-room : Mr. Verschaflelt, Public Service Commissioner ; Mr. Gostelow, Government Actuary; accredited representatives of the press; representatives of Government organizations and superannuitants. The following gave evidence, and were questioned by members of the Committee, Public Service Commissioner, Government Actuary, and Mr. Millar: Robert Browne Ryder, Delegate from Superannuitants, Palmerston North ; Martin Joseph Lee, Delegate from Superannuitants, Palmerston North; William Marcus Wright, President, Superannuated Public Servants' Association of New Zealand ; John Caughley, on behalf of the Association of Superannuated Public Servants. The' Committee continued to sit until 1 p.m., and, on the motion of Mr. J. A. Nash, it was resolved, That the Committee ask leave of the House to sit in the afternoon. The Committee resumed at 3.30 p.m., when an order of reference granting leave to sit was read. The Committee continued to hear further evidence from Mr. Caughley. Mr. A. M. Samuel, M.P., was present during the afternoon. The Committee continued to sit until 5.30 p.m., and then adjourned until 9.30 a.m. on Wednesday, 7th December, 1932. Wednesday, the 7th Day of December, 1932. The Committee met pursuant to notice at 9.30 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Bodkin, Mr. Dickie, Mr. McCombs, Mr. W. Nash, Hon. Sir Apirana Ngata, and Mr. Savage. The minutes of the previous meeting were read and confirmed. The following were admitted to the committee-room : Mr. Verschaflelt, Public Service Commissioner ; Mr. Gostelow, Government Actuary ; Mr. Millar, representing organizations ; accredited representatives of the press ; representatives of Government organizations and superannuitants.

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The following gave evidence, and were questioned by members of the Committee, the Public Service Commissioner, Government Actuary, and Mr. Millar : Charles Philip Ryan, Representative of the Superannuitants of the Railway Service ; William Marcus Wright, President, Superannuated Public Servant's Association of New Zealand (recalled) ; John Gunn Poison, representing the teachers of all branches of the Service in Christchurch ; Oscar Ambrose Banner, 011 behalf of the Men Teachers' Guild, Auckland ; Dr. Michael Herbert Watt, Director-General of Health, on behalf of Nurses employed in the service of the Government. The Committee continued to sit until 1.5 p.m. and, on the motion of Mr. J. A. Nash, it was resolved, That the Committee ask leave of the House to sit ih the afternoon. The Committee resumed at 3 p.m., when an order of reference granting leave to sit was read. The following gave evidence, and were questioned by members of the Committee, the Public Service Commissioner, Government Actuary, and Mr. Millar: Sidney John Harrison, General Secretary, New Zealand Returned Soldiers' Association, Incorporated ; Thomas Leonard James, Vice President, New Zealand Technical School Teachers' Association (Registered); Major-General SinclairBurgess, Commanding New Zealand Military Forces. All strangers withdrew, and discussion ensued on the work of the members of the Committee during the adjournment of the House. Resolved, on the motion of Mr. W. Nash, That all statements be printed and circulated to members of the Committee during the adjournment. Resolved, on the motion of Mr. Hargest, That all returns asked for be circulated during the adjournment. The Clerk was instructed to print evidence in page form after waiting a reasonable time for corrected proofs from members, and ask all persons desiring to give evidence to send in statements that should be circulated. The Clerk was directed to ask the Government Actuary and Public Service Commissioner to prepare evidence in reply. The Committee continued to sit until 5.30 p.m., and then adjourned until the reassembly of the House in January. Thursday, the 9th Day of February, 1933. The Committee met pursuant to notice at 10.30 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Bodkin, Mr. McCombs, Mr. W. Nash, and Mr. Veitch. The minutes of the previous meeting were read and confirmed. The following were admitted to the committee-room : Mr. Gostelow, Government Actuary ; accredited representatives of the press ; representatives of Civil Service organizations and supeiannuitants. A request was made by Mr. Millar that his organization and others be provided with a copy of the evidence given by the Government Actuary. After discussion, it was decided that the Chairman obtain Mr. Speaker's ruling whether the evidence could be supplied or not, and when this was obtained the Clerk was instructed to act accordingly. The Chairman explained to members the evidence to come forward, and it was decided to go into deliberation on confidential statements before the Committee. All strangers then withdrew. The Committee continued to sit until 12 noon, and then adjourned until Wednesdav the 15th February, 1933. J ' Wednesday, the 15th Day op February, 1933. The Committee met pursuant to notice at 11 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Ansell, Mr. Dickie, Mr. Hargest, Mr. W. Nash, Hon. Sir Apirana Ngata, Mr. Savage, and Mr. Veitch. The minutes of the previous meeting were read and confirmed. Resolved, 011 motion of Mr. J. A. Nash, That letters received be included in the minutes of evidence, and be printed. The following were admitted to the committee-room : Mr. Verschaflelt, Public Service Commissioner ; Mr. Gostelow, Government Actuary ; representatives of the press ; and representatives of Government organizations and superannuitants. Colonel T. W. McDonald gave evidence, and was questioned by members, the Public Service Commissioner, and Mr. Gostelow. The Committee decided to deliberate on confidential statements, and all strangers withdrew. Resolved, on motion of Mr. W. Nash, That the Public Trustee be requested to attend next meeting to discuss his confidential report. Resolved, 011 the motion of Mr. J. A. Nash, That Mr. Parsonson and Mr. Lundius be called to give evidence next sitting-day. The Committee continued to sit until 12.45 p.m., and then adjourned. Thursday, the 23rd Day op February, 1933. The Committee met pursuant to notice at 11 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Dickie, Mr. Hargest, Mr. W. Nash, Mr. Savage and Mr. Veitch. The minutes of the previous meeting were read and confirmed. Mr. C. Gostelow, Government Actuary, was admitted to the committee-room to hear a confidential statement of Mr. J. W. Macdonald, Public Trustee. Resolved, on motion of Mr. J. A. Nash, That the first portion of the Public Trustee's evidence remain confidential to the Committee, and the second portion be printed and circulated. Mr. Walter Edward Parsonson, of Lower Hutt, and Mr. Harry Lundius, of Wellington, retired Civil servants, gave evidence, and were questioned by members of the Committee. The Committee continued to sit until 12.45 p.m.', and then adjourned.

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Thursday, the 2nd Day of March, 1933. The Committee met pursuant to notice at 11 a.m. Present: Mr. J. A. Nash (Chairman), Mr. Hargest, Mr. McCombe, Mr. W. Nash, and Mr. Savage. The minutes of the previous meeting were read and confirmed. Confidential evidence from the Public Trustee was read to the Committee by the Clerk. The Chairman explained a statement received from Miss V. M. Greig and four others, and the reply received from the Teachers' Superannuation Board. The following were admitted to the committee-room: Mr. Verschaflelt, Public Service Commissioner , Mr. Gostelow, Government Actuary ; accredited representatives of the press ; representatives of Civil Service organizations and superannuitants. The Public Service Commissioner and Government Actuary were questioned by members of the Committee and Mr. It. Sinel (for Mr. Millar). Mr. W. M. Wright made a short statement. Resolved, on motion of Mr. J. A. Nash, That the special Committee to which was referred the Government Superannuation Funds Bill has the honour to report that, after hearing voluminous evidence and receiving numerous written statements, it regrets that the time at its disposal has been insufficient to enable the Committee to make a complete investigation into the proposals contained in the Bill and to consider the many alternatives placed before it ; and recommends that the Bill be not allowed to proceed this session. Resolved, on motion of Mr. J. A. Nash, That the Chairman move in the House to have the report, minutes of proceedings, and minutes of evidence printed. Resolved, on motion of Mr. W. Nash, That the Committee desires to place on record its appreciation of the very excellent service rendered by the Committee Clerk, Mr. E. A. Dobbie, and that this resolution be recorded in the minutes of the Committee and be reported to the House. Resolved, on motion of Mr. Savage, That the Chairman present the report to the House and have power to read and confirm the minutes of the final meeting. The Committee, having continued to sit until 12.45 p.m., adjourned.

VIII

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MINUTES OF EVIDENCE.

The Chairman : At the last meeting of this Committee it was decided that Mr. Verschaflelt and Mr. Gostelow should be asked to come here to-day, and that meantime they should make up a general statement in regard to the proposals before Parliament, also expressing their own views upon the matter, and that they should also be invited to attend and be present with this Committee during its sittings. Further, that this morning opportunity would be taken by the Committee to go into details with the officers I have referred to. I presume everybody has read the reports : I think we should express our thanks for the very lengthy report that has been prepared by both these gentlemen. I feel sure they will be of very great assistance to the Committee. Paul Desibe Nestor Vekschaffelt, Public Service Commissioner. (No. 1.) In response to your request that I furnish a report in regard to the Superannuation Amendment Bill, I attach hereto a copy of my report to the National Expenditure Commission. This gives— (1) The reasons why a pension scheme is necessary ; (2) A brief review of the superannuation schemes in operation in New Zealand ; (3) The main causes leading up to existing deficiencies in the various funds ; and (4) A summary of the proposals which, if given effect to, I considered would considerably strengthen the various State Superannuation Funds. The proposals referred to were discussed with the Commission, and finally adopted by them as the basis of their recommendations. Before making any further comments on the Bill, I desire to lay stress on the importance of giving the fullest consideration to the reports of the Actuary on the state of the funds, and the suggestions made by him as to the remedial measures necessary to improve their financial position. Many superannuation schemes have failed because those responsible have not perceived that fixed mathematical principles must underlie any sound superannuation scheme, and that if any system proves inequitable and unsatisfactory it is because it violates such principles. I propose briefly to refer to two important pension schemes in illustration of the foregoing. Great Britain. Though civil pensions, particularly to those officers of the Crown who had held high and important positions, had been granted from early times, it was not until 1810 that the first general Act dealing with the subject of superannuation in all offices of the Government was passed. Under this Act funds were appropriated by the Government and paid into the Exchequer, and a general system obtained of granting superannuation allowances to the Civil Service out of the revenues of the country without the existence of any superannuation fund. It was found that the expenditure for pensions increased very rapidly, and in 1822 an Act was passed providing that deductions should be made from the salaries of those employees drawing more than £100 per annum. This Act was, however, repealed in 1824. From 1824 to 1829 pensions were granted without deduction from salaries. In 1829 it was decided by Treasury minute to make deductions from salaries at the rate of 2J per cent. from, salaries not exceeding £100, and 5 per cent, from salaries exceeding that amount, irrespective of age. The Superannuation Act of 1834 gave parliamentary sanction to these deductions, but no provision was made for the setting-up of a separate fund. As no account was kept of the amount collected, it was not known whether the contributions were adequate or inadequate. An impression prevailed that they were more than sufficient, and that the Government was making a profit out .of its employees. In 1856 a Select Committee of the House of Commons was appointed to consider the superannuation question. This Select Committee, besides taking evidence from members of the staff and others, engaged the services of two actuaries to investigate the question of the sufficiency of the deductions from salaries. To the surprise of many —since an impression to the contrary had prevailed—the actuaries reported that the contributions of the officers were not adequate to meet the liabilities. In other words, had the deductions from salaries been funded from the first, the fund woidd by that time have been hopelessly insolvent. The report of the actuaries was delayed owing to the necessity of obtaining data from which to make their calculations. Before the actuaries' report had been submitted, however, the Civil Service Superannuation Commission, which succeeded the Select Committee, had recommended the abolition of the contributory system, and the provision for deduction from salary was repealed in 1857. It is not suggested that the Commission made their recommendation because of the financial unsoundness of the scheme in operation, but had they waited for the report of the actuaries they would have been in a much better position to judge the matter, and instead of the present costly non-contributory system a financially sound contributory system satisfactory to the members of the Service could have been evolved. The members of the Civil Service were not opposed to a contributory scheme. The inherent weaknesses of the scheme as it existed were — (1) The provision for flat-rate assessments (irrespective of age). (2) The lack of provision for taking care of the accrued liabilities.

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New South Wales. A study of the superannuation scheme tried in New South Wales and the reasons for its failure throws much light on the fundamental principles which must underlie any sound and equitable superannuation measure. The Civil Service Superannuation Account was formed in 1885, and Civil servants were required to contribute 4 per cent, of their salaries to this fund, irrespective of age. There was a State subsidy to the fund. The pension benefits were based on the average salary for the three years preceding retirement, and the maximum pension was forty-sixtieths of the average salary. Retirement was permitted to any employee who had served for at least fifteen years and had reached the age of 60. Provision was made for actuarial investigation every three years. The weakness of the scheme and the unsafety of the fund were revealed as early as 1889, at the first triennial valuation, which indicated an estimated deficiency of £1,325,706. The actuary s report was, however, read with scepticism and indifference, and his recommendations were not acted upon. The comments of the actuary, Mr. Teece, as to the causes of the deficiency are of interest and very illuminating. They may be summarized as under : — (1) The flat rate of contribution was quite inadequate. (This does not apply to the New Zealand scheme, which profited by the experience of New South Wales.) (2) The absence of sufficient provision for accrued liabilities due to back service. (This large dormant liability was to some extent met by a Government subsidy, which, however, was totally inadequate.) (3) The unexpected liability in respect of pensions to officers who, though not incapacitated, were retired before reaching age 60. This was due to a retrenchment policy followed by the Government. (4) The method of computing pensions on the average salary for the three years preceding retirement. His suggestions for improving the position were— (i) The rate of contribution might be increased : (ii) The rates of pension might be reduced by basing the pension on the average salary for the whole period of service : (iii) The Government might rescue the fund from its unsatisfactory condition, and provide for its future stability. The actuary's warning and recommendations were not heeded, and doubt was cast on the correctness of his conclusions. The second triennial investigation was made in 1890 by Mr. Trivett. He reported that the insolvent state reported by Mr. Teece was most distinct and intensified. This was partly due to the fact that the Government subsidy had practically ceased. Mr. Trivett found that the actuarial deficiency had increased to £1,592,568. He agreed with the conclusions of Mr. Teece. On this occasion the Civil Service Board recommended — (1) That there be a limitation as to the age of persons allowed to enter as contributors to the fund ; (2) That no retirements or pensions be allowed under sixty years of age, except under very rigid regulations ; (3) That a sufficient annual subsidy be granted to assist the fund ; (4) That reorganization and retrenchment retiring-allowances should not be a charge on the fund. Thev, however, pointed out that in their opinion the fund was not in quite the hopeless condition as envisaged by the actuary. The third triennial valuation was made in 1893 by Mr. Coghlan. He found that the deficiency had increased to £2,905,199. The following extract from his report is of interest, and very applicable to the position as it exists in New Zealand to-day : — " The reports of the actuaries received far less attention at the hands of those interested than they deserved, as apart from any question of State policy it must have been apparent to contributors that it would be a serious thing if they were compelled to continue paying into a fund which had on the best authority been declared to be fast lapsing into insolvency, and from which the younger of their number could not reasonably hope for benefit, while pensioners could hardly have looked with composure on the more serious and immediate loss which would befall them in the event of the fund collapsing or their pensions being largely reduced. The apparent apathy in regard to the condition of the fund was due to a lurking belief in the minds of many otherwise well-informed persons that actuarial methods, though very well in theory, do not usually stand the test of everyday experience. It would be idle on my part to argue in support of actuarial methods, which are nothing if not the embodiment and application of everyday experience, and I mention the matter of the distrust exhibited in some quarters as to the correctness, from a business point of view, of the actuarial conclusions, only in order to point out that not only is there no cause for such distrust, but that if the actuaries erred at all it was by presenting the condition of the fund in too favourable a light."

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His suggestions as to the remedies which would place the fund on a proper basis were on somewhat similar lines to those made by Mr. Teece. The Government was not willing to take the steps necessary for the reconstruction of the fund. In 1903 the disaster predicted by the actuaries came to pass. The Superannuation Account became exhausted. Those who had been paying into the fund the longest and who had paid the most found themselves in the position of having had their money all absorbed by those who had contributed the least. Under the Public Service (Superannuation) Act, 1903, provision was made that all amounts payable to and out of the Superannuation Fund should in future be paid to and out of the Consolidated Revenue Fund. In other words, to meet the position the fund was wound up, and Government was forced to assume the responsibility of paying future pensions. It was anticipated that it would be necessary to continue payments from the Consolidated Fund for forty-four years —i.e., until the death of all officers who were in the Service prior to 1895. New Zealand. As will be seen from the various triennial valuations and actuarial reports which have been made in respect of the three New Zealand Superannuation Funds, each Actuary in turn has drawn pointed attention to the serious deficiency in each of these funds, and various suggestions have been made as to the methods to be adopted to secure improvement. Hitherto, however, except for the provision in the 1909 Act limiting pensions to future entrants to a maximum of £300, no attempt has been made to remedy matters, and if one sees " the writing on the wall " it is obvious that drastic alterations must be made in the existing provisions of the various schemes. Taking the report of the National Expenditure Commission, with which I entirely agree —except, perhaps, in regard to the limitation of the reduction in existing pensions to 20 per cent. —I would offer the following additional comments on the points referred to : — Paragraph 1445. Right of Members to Retire. —Males (a) After age 65 : The most common age fixed in superannuation systems is sixty-five years, Belgium, Czechoslovakia, Germany, Italy, Netherlands, and Norway (females) fixing this age. Austria, France, and Great Britain set the age at 60, and Sweden at 67. Denmark and Switzerland have as high as 70 for all employees, and Norway that age for males. There is no age requirement in Italy after forty years' service, and in Switzerland after fifty years' service for males and thirty-five for females. In Canada the optional age is 60, and compulsory 70. In the United States of America the age is 70, but letter-carriers, Post Office clerks, labourers, and mechanics, age 65. Railway postal clerks and employees in specially hazardous or physically strenuous occupations, &c., age 62. I am further of the opinion that provision should be made making 65 the compulsory age for retirement, with provision to extend by, say, five years in special cases. (b) After age 60 if combined with forty years' service : At present an officer can retire on completion of forty years' service, irrespective of age. This privilege imposes a very great strain on the fund. In quite a number of cases full pension is drawn by officers who retired at the early age of 52. In such cases the fund loses the benefit of contributions, and has to pay the pension over a much longer period than it should reasonably be expected to do. If an officer wished to retire before attaining age 60 he should only be granted an actuarial pension, which would be the maximum amount which could be granted without imposing any undue strain on the funds. Paragraph 1446. Eliminate all Options to Retire with the Minister's Consent, <&c. —I am not aware of any liberal concessions of this nature in any other schemes, and, apart from the question of free back "service, these early retirements, more than any other factor, undoubtedly impose the greatest strain on the funds. That this was recognized when the Act was framed is apparent, as the statute provides that such retirements may be subject to such conditions as the Minister may impose. In actual practice little use has been made of this very wise and necessary provision under which modified pensions could have been granted, thus conserving the funds ; in other words, almost invariably the wishes of the officer concerned have been considered before the interests of the fund. Paragraph 1447. Alter the Basis of Calculation of " Final Salary."—The present provision under which the pension is based on the average salary over the last three years imposes a great strain on the funds. The pension granted should bear some relation to the amount contributed by the employee during his whole period of service, and doubtless it would be more scientific and equitable to make the average salary for the whole period of service the basis for the pension. For many reasons I would prefer to see the basis of calculation of pensions altered to a " whole service " basis. This, however, would involve too drastic a change. Under such a scheme it would be possible to make better provision for an officer's widow, by giving him the option to allocate, say, one-half of his allowance to his widow in the event of his death. This is done in Canada, France, Germany, Belgium, &c. Paragraph 1449. Government Subsidy: Proposed £1 for £1,-—ln many Government schemes and in most private schemes the contribution by the employer is on the basis of £1 for £1. In New Zealand an adequate Government subsidy regularly paid is an absolute necessity, owing to the fact that Government made itself responsible for the liability due to back service. It is a fundamental principle that the responsibilities for back service (if such is to be allowed to count for pension purposes) should be assumed by the employer. In actual practice in New Zealand, due to the failure of Government to pay each year the amount certified by the Actuary as necessary in this respect, the funds were forced to assume this responsibility, and thus the pensions of many who have retired after contributing very little to the funds have had to be met from the contributions of those still in the Service. 1*

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The effect has been to deplete the funds at a time when they should be steadily building up to provide for their liabilities to existing contributors. The loss of interest due to the depletion of the funds under these circumstances is very real, and has a marked effect on the funds. It is in my opinion very necessary that the obligation of Government regularly to pay the subsidy due should be fully recognized, and every endeavour should be made to ensure this being done. The Commission suggests "an automatic £1 for £1 subsidy." For this reason I think the Bill should make provision for the necessary amount to be paid to the funds " without further appropriation than this Act," instead of, as provided in the Bill, " out of moneys appropriated from the Consolidated Fund for the purpose." Paragraph 1461. Review of Existing Annuities. —I agree entirely with the recommendation of the National Expenditure Commission that existing pensions be reviewed and brought into line with the proposals for future pensions. I would not go so far, however, as to recommend that the reductions be not greater than 20 per cent. It should not be overlooked that existing pensions are to a large extent practically non-contributory. By this I mean that the employee made no contribution in respect of service prior to the year 1908, and when it is realized that the present condition of the funds is largely due to the failure of Government to meet its liabilities in this connection it is only reasonable that those reaping the benefit of the scheme without fully paying for those benefits should bear their share in the reconstruction proposals which have been forced on the funds. It is often contended that, when a man has actually retired and is in receipt of a pension, the contract is more or less complete ; but to differentiate between the man who retired yesterday and the man who may retire to-morrow under the new proposals would be to create very real anomalies, which can be avoided only by treating all alike.

Office of the Public Service Commissioner, Wellington, N.Z., 18th March, 1932. Memorandum for The Chairman, National Expenditure Commission. As requested, I have made a brief review of the retirement pension schemes relating to the various branches of the Public Service. For the sake of clarity I shall divide the subject-matter under the following main heads : — (a) Objective and history of scheme ; (b) Alternative methods ; (c) State Superannuation Funds in operation in New Zealand ; ('d) History of various schemes in New Zealand ; and (e) In conclusion, certain suggestions which may be helpful to the Commission. (rt) Objective and History of Scheme. —It is, I think, fully appreciated by everybody that some form of pension scheme is necessary in any State service, even if it be only for the purpose of promoting the efficiency of the Service by facilitating the removal from office of those who, as the result of age or medical unfitness, have outlived their usefulness. The generally recognized obligation of the State to contribute to a retirement pension scheme is based on the principle or recognition of the fact that, if the State has the services of an employee throughout his years of usefulness, there is a duty to provide for his old age. This principle has long been recognized in nearly all civilized countries, and in England as early as in 1810, to place this matter on a more systematic basis, a Superannuation Act was passed providing for pensions to retired State employees. The monetary reward for public servants are as a rule on. a lower plane than in other callings, hence the State's contribution to a retirement scheme has always been regarded as in the nature of deferred pay. (b) Alternative Methods.—Various systems are in operation in different countries, but in effect there are only two particulars in which retirement schemes differ fundamentally — (i) In the source of the funds by which they are maintained ; and (ii) In the method by which provision is made for meeting the liabilities incurred. In regard to (i), the scheme may be contributory or non-contributory. As regards (ii), they may be managed upon either the cash disbursements or the actuarial reserve plan. Under the joint contributory system each employee contributes regularly, usually by a percentage deduction from his salary, while the employing authority either makes a fixed regular contribution or undertakes to appropriate sufficient funds as needed to keep the scheme in operation. Under the non-contributory system the whole cost is borne by the employer. The latter system is in operation in Great Britain, Belgium, and Germany, but in most countries the former system is in vogue. Under the cash-disbursement system benefits are paid from whatever funds are in hand, without much reference to the future. During the early years of the operation of such system the employees' contributions are often more than sufficient to meet all needs, but gradually the growing pension roll

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demands increasingly heavy annual payments, and the contributions of the employees are progressively inadequate to the situation and the employing authority is called upon for expending annual contributions. Under this method the generation which establishes the scheme escapes its fair proportion of financial responsibility, whilst succeeding generations must bear a continually increasing burden. Under the actuarial reserve plan, on the other hand, the taxpayers who receive the services of the employees for the time being pay their share of the obligations incurred in respect of that service. Under this method a fund is established and the employer, like the employee, pays (or should pay) into this fund regular contributions. The rate of contribution is so calculated for both sides that the fund should receive annually an amount which, invested at compound interest, will be sufficient to meet all demands on the fund. On the initiation of the scheme it is the usual practice for the employing authority to assume responsibility for back service, and to make regular contributions to liquidate this accrued liability. Ordinarily, as the name implies, the actuarial reserve system provides for periodic actuarial reviews. (c) State Superannuation Funds in Operation in New Zealand.—ln New Zealand, in addition to the Local Authorities' Superannuation Funds and the National Provident Fund superannuation scheme, which is mainly availed of by local authorities, there are three separate State Superannuation Funds— viz., Railways, established in 1903 ; Teachers, established in 1906 ; and the Public Service, established in 1908. Each of these schemes is contributory, and is based on the actuarial reserve system, although under the Railways scheme there is no statutory provision either for periodic actuarial review, as in the case of the other funds, or for regular subsidies ; but this fund is State-guaranteed, and regular subsidies are now paid from the Railways Account. Due to the failure of the Government to contribute its quota the funds have drifted more or less into a hybrid arrangement, which possesses the weaknesses of the cash disbursement system and which loses the stability derivable from regular subsidies and interest from investments that would have been obtained had the actuarial reserve plan been adhered to. It should be noted that contributions are in effect savings against the day of a contributor's retirement —they are trust funds, but notwithstanding this, due primarily to the failure of the Government in the past to meet its obligations in respect of subsidy, and also due in part to the actuarial unsoundness of the basis of retirement in many cases, the contributions from employees in the Service are being utilized to pay the pensions of employees who have retired ; so that not only are the contributions of employees not being credited with interest, but the principal itself is being dissipated, to the grave risk of insolvency of the funds. By reason of the fact that, with the help of compound interest at the rate of 4 per cent, per annum, the sum of a given contribution per annum will double itself in the course of a service of thirty-one years, it follows that the total contributions of an employee who serves forty years need be less than half the amount required by direct appropriation to give the same pension. It is or should be recognized that there must be a sharp differentiation between accrued liabilities and future liabilities. The contributions made by present employees should be held in reserve to pay future pensions, and not consumed in paying pensions for past services. The accrued liabilities must be paid by the State, or the contributed fund will become insolvent. As indicated in the preceding paragraph, to use the current contributions for the payment of pensions on back service is doubly destructive to any scheme, because it not only takes the contributions that wore paid in to meet future obligations, but it cuts off the accumulation of interest. (d) History of Various Schemes. —Many retirement schemes from time to time have been tried in New Zealand, the first being under the Pension Act of 1858. Pension Act, 1858 : This provided for retirement on annuity "in case of incapacity by age, illhealth, or other infirmity after ten years of faithful and diligent service." If the term of service had been ten to seventeen years, the annual allowance was one-quarter of the employee's average salary for the last three years. From seventeen to forty-five years the pension was one-third of such salary, plus one eighty-fourth of such salary for each year of service above seventeen. For forty-five years or more of service the allowance was two-thirds of the said salary. In the discretion of the Governor in Council, relief up to one year's salary could be granted the widow or family of an employee dying in the employ of the Government. Pension Act, 1866 : Under the Act of 1866 changes were made in the provisions for grant of pensions. The allowance on retirement reflected the influence of the British Superannuation Act of 1859. It was fixed at one-sixtieth of the average salary of the three preceding years for each year of service up to forty-sixtieths after forty years' or more service. Civil Service Act, 1871 : The 1871 Act repealed the provisions of the 1858 and the 1866 Acts as applied to persons entering the Service after that date. The reason for the repeal was that Government saw that the amount paid in pensions, though small, was rapidly increasing proportionately. In eleven years it went up from £160 to about £7,400, and there was fear that it might double itself in a very few years, with increasing embarrassment to the Government. Civil Service Act, 1886 : The year 1886 was a year of profound business depression, in which the Government Service suffered with the rest of the colony. The gratuities and compensation granted to Civil employees were felt to be too great a burden on the taxpayer at the time, and a contributory scheme was suggested. When therefore a Civil Service Reform Bill was drawn up in 1886 a clause was inserted providing that State employees should be required to set aside 5 per cent, of their salaries, which should be returned to them with interest on retirement from office. This compulsory savings' scheme was devised mainly in the interests of the taxpayer, to lessen the burden for com--1 pensation. It was to be supposed, of course, that the employee who received his savings in a, lump sum on leaving the Service would be less disposed to ask for a gratuity or compensation than the one who found himself entirely without funds on retirement from office.

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This scheme was unsatisfactory, because it afforded no adequate provision for employees who might live many years after retiring from the Service. Civil Service Insurance Act, 1893 : The compulsory savings' arrangement having proved inadequate as a retirement measure, the Civil Service Insurance Act, a combined assurance and annuity scheme for the benefit of Civil servants, was passed in 1893, and made compulsory on all new entrants into the Service under forty years of age. This Act, however, did not prove sufficient as a substitute for a retirement plan. The price of an endowment assurance is so high as to make it of little use to an employee of small salary as a means of furnishing him with an adequate retirement allowance. The inadequacy of the endowment assurance as an old-age allowance made it necessary for the Government to supplement this provision in a great many cases with gratuities and compensation. Such payments were specially appropriated, but the law of 1893 provided distinctly for granting an employee who became permanently incapacitated through no fault of his own a sum equal to one month's salary for each year of service. This allowance on account of invalidity was entirely separate from the annuity for which he paid. Under these terms the employee who became incapacitated through ill-health was in a much better position than one who kept his health. A complete summary of the compensation and pension grants was made by Mr. Morris Fox when the Public Service Superannuation Act of 1907 was under consideration. The payments for the year 1906-7 for pensions, gratuities, and compensation totalled £42,157. Public Service Superannuation Act, 1907 : The Civil Service Insurance Act proving inadequate from the first as a superannuation measure, different classes of Civil servants made successful efforts from time to time to secure more satisfactory legislation. In 1899 the Police Provident Fund was passed ; in 1902 the employees of the Railways and in 1905 the teachers did likewise. In 1906 a Civil Service Superannuation Bill was prepared and referred to the Public Accounts Committee. This Committee recommended that the matter be referred to an Actuary for examination and investigation. Mr. Morris Fox thereupon took up the work, and submitted a very full report, following which the Public Service Superannuation Act, 1907, was passed. Mr. Fox made it clear that the whole of the liability for back service should be borne by the Government, and this point was not questioned by the Government. Mr. Fox insisted on the importance of reserving and accumulating the contributions to meet the contributor's portion of liability, and not using them in earlier years to pay other claims which have not been provided for by the contributors —namely, pensions to persons already in the Service at the time of the establishment of the plan. He maintained that such claims should certainly be met from other sources as they fall in, and not discharged by using accumulations formed for the purpose of meeting altogether different liabilities. The Act provided for the counting of back service, and Mr. Fox said, " If it be deliberately resolved to offer these pensions, it should also be recognized that they constitute a present liability, and they should be met out of the present resources of the State." The sums contributed by the employees should be used only for the purpose of meeting the portions of the current and future liabilities for which they were intended. That part intended to meet a portion of the future liability should be accumulated at interest, and not used for any other purpose. The remainder of the current and future liabilities not so provided for by the contributor should be discharged year by year as they accrue by the Government of the day, and no portion whatever of the contributed fund should be used for that purpose. It was pointed out by Mr. Fox that there were several ways in which the liability assumed by the Government might be met: — I. The capital sum, £1,816,719, might be paid in immediately, but this would not be practicable ; 11. A yearly payment of £72,669 interest on the capital sum at 4 per cent, might be made ; or, as proposed by him ; 111. The liability to be met by the Government year by year as it accrues. To meet the case, provision was made in the Act for the payment into the fund each year " without further appropriation than this Act " of a certain fixed sum, together with such further amount, if any, as is deemed by the Governor-General in Council in accordance with the report of the Actuary to be necessary to meet the charges on the fund during the ensuing year. The New Zealand scheme was apparently regarded as being satisfactory to the public as well as to the employees. Press comments took the form of congratulation rather than of any criticism of any extra charge laid on the country. It will be seen from the foregoing that, after many years of experimentation with various schemes, including compulsory assurance, the present contributory system was adopted. It was regarded as a definite advance on previous schemes, and one that would be equitable both from the point of view of the State as well as the employee. The outstanding features of the scheme itself were (a) A percentage contribution by employees based on age of joining the fund ; (b) A definite recognition by Government of its obligation to contribute to a retirement scheme ; (c) Government's acceptance of a liability for all annuities on service rendered up to the time of the adoption of the scheme ; and (d) Government's assumption of a liability to make up any deficit on account of benefits to invalids, widows, and orphans ; but probably a more outstanding feature of the operation of the scheme has been the fact that the Government's obligations in respect of these undertakings have been " more honoured in the breach than in the observance."

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In his memorandum to you dated 24th February, 1932, the Government Actuary has fully set out the existing deficiencies in the various superannuation funds, and has clearly shown that these deficiencies are due in the main to the following causes : (a) The failure of the Government (mainly since 1919) to pay into the funds each year the amount of subsidy reported by the Actuary in terms of the Superannuation Acts to be necessary to meet the State's share of the pensions falling due during the ensuing year (mainly in respect of back service) : _ . . (ib) The accumulation of the loss of interest on the subsidies (referred to m (a)) not paid into the fund by the Government: (c) The large number of retirements of comparatively young officers with long service. In addition, there is the effect of the post-war rise in salaries. Those officers who have retired on pension since the year 1921 have received a material pension benefit while they themselves have made very little contribution to that increase. This is, however, a temporary phase, the general effect of which on the fund will be diminished as a result of reduction in the scale of salaries and by the effluxion of time. , Due to the fact that pensions are calculated on the average salary for the last years >. service, fluctuations in salary scales and accelerated promotion near the close of an officer s official career result in the granting of pensions quite disproportionate to the amount contributed by the individual. The pension should be based on the average salary over a period of at least seven to ten years if no over the whole period of service. This is, however, only one of several and anomalies which exist in the various funds, and which are to be considered by a special committee set up tor that purpose. The matter of adjustment is not a simple one, and, as I have already indicated, any decrease or limitation in existing pensions would create anomalies and hardship difficult to overcome. (e) Conclusion.—After consultation with the Government Actuary, I submit the following summary of proposals, which, if given effect to, would considerably strengthen the various Government Superannuation Funds: — •. x xi (1) Modify the present right of members to retire by length of service by limiting it to those who have attained a specified age-e.g., age 60 in the case of males, and age 55 in the case of females ; with a further increase by five years in the age or length of service at which a female contributor has the right to retire. Males. Present Rights. Proposed Rights. (a) After age 65. ( a ) After age 65. , (b) After forty years' service. (b) After age 60 if combined with forty years service. (c) At any age if medically unfit. (c) At any age if medically unlit. Females. (а) After age 55. ( a ) After age 60. ) (б) After thirty years' service. (b) After age 55 if combined with thirty-five years service. (c) At any age if medically unfit, (c) At any age if medically unfit, (2) Eliminate all options to retire (with the Minister's consent, &c.) earlier than above ; but, m order to avoid hardship in the case of those compulsorily retired through no fault of their own, make provision for an actuarially reduced pension that will place the Superannuation Fund m the same financial position as if the contributor had been retained m the Service to the earliest date at which he could have retired as of right—i.e., on similar lines to section 14 of the Finance Act, 1931 (JNo. 1). Present Options. , Proposed Options. (a) After age 60 (females, age 50). Actuarially reduced pensions only if com(b) After age 55 if combined with length of pulsorily retired through no fault of their own service of thirty years. after twenty-five years' service, or attainment (c) After thirty-five years' service. of age 50. (3) (i) 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 . (ii) Disregard for pension (and contribution) purposes any salary increases after a specified age, say age 55. Of these two alternatives, the former has the merit of correlating to some extent the retiringallowance and the average salary received in the years preceding retirement, while from the viewpoint of the fund the latter alternative has the advantage of being as effectual as the former m minimizing violent fluctuations in the pension liabilities due to salary increases immediately preceding retirement, and at the same time does not penalize those retiring medically unfit to the same extent as the former basis wold e Govemment tQ guarantee a Ee t effective interest yield of 5 per cent, on the funds. This would enable valuation of the funds to be made at 5 per cent.,_ and in effect be equivalent to a deferment of subsidy as the funds should for many years earn considerably more than 5 per cent. (5) Alter the method of paying the Government subsidy, which at the present time bears no relation to the actual deficiency in the fund, but is merely an average annual proportion of the ac.ual pensions falling due during the next triennium which the fund is unable to provide from its own

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resources. Although not sufficient to secure immediate solvency, an automatic pound-for-pound subsidy is suggested as being in keeping with the basis adopted in large superannuation schemes of other Governments and of commercial institutions ; it would also secure a much more adequate contribution than is at present payable by the commercial Government Departments in respect of their employees. It should be recognized as a cardinal principle of the scheme that contributions by present employees should be reserved for future pensions. (6) In the event of the foregoing being adopted, the existing limitation of pension to £300 per annum should be abolished. The limitation operates very harshly, particularly in respect of the professional and other higher paid officers who have no option but to contribute on a salary which ordinarily would provide a considerably higher pension. The number of such officers —i.e., those who would ordinarily enjoy a pension in excess of £300—is so small that the abolition of this provision would have very little effect on the funds. According to the Government Actuary s figures, the deficiencies in all the Government superannuation funds in 1927 (the latest published valuations) were £18,117,772. If the foregoing proposals (Nos. 1 to 4 inclusive) were adopted, it is reasonable to assume that the deficiency referred to would be reduced by 50 per cent. ; and if proposal No. 5 were adopted also, the funds would become solvent. In. regard to proposal No. 5, it is recognized that under existing conditions it is scarcely practicable to expect the Consolidated Fund to bear its share of increased subsidy, but there is no valid reason why a pound-for-pound subsidy of contribution should not be borne by the trading and other Departments separate from the Consolidated Fund, and the necessary provision made in the estimates for the respective Departments. In regard to the suggestion that superannuation allowances should be reduced on a percentage basis, the amount payable from the various funds is as under :—

A 10-per-cent. reduction in pensions would therefore be equivalent to an additional annual subsidy to the funds, as under (the present annual subsidy is shown in parentheses) :— Public Service .. ~ £42,000 (£86,000) Teachers .. .. .. £25,000 (£68,000) Railways .. .. .. £41,000 (£170,000) £108,000 (£324,000)

In considering this matter, however, it should not be overlooked that when the schemes were established Government servants were invited to contribute to the funds initially (it was not compulsory to join), and they agreed to enter on condition that the benefits then promised were given to them. They are in effect part proprietors of the funds, and the Government are only proprietors to the extent of their contributions to the funds. This relationship is illustrated by the following, which clearly shows that the amount contributed by Government servants is more than double that contributed by the State :—

The position of Government servants in regard to the superannuation funds is analogous to the position of persons who contract with an insurance company to contribute to its funds in consideration of obtaining certain annuities. Any proposal to reduce the amount of an annuity contracted for would

Annual Pensions i to jjji] Widows and Total. Orphans. ! £ £ £ Public Service (to date) .. .. .. 423,945 35.759 459,704 Teachers (to end January) .. .. ... 250,303 259J68 Railways (to end February) .. .. .. 412,008 38,857 450,865 1,086,256 84,081 1,170,337

1 Total Contributions. Total Subsidy. | £ • £ Public Service . . .. .. 3,919,723 1,648,500 Teachers .. .. .. 1,823,772 807,417 Railways .. .. .. 2,081,394 1,120,000 7,824,889 3,575,917 Note.—The above figures are from the last valuations.

I. —15.

undoubtedly be characterized as repudiation ; but there is also a moral obligation on the Government to sustain the solvency of the funds, and there appear to be only two alternatives for the Government to accomplish this end — (a) To pay up arrears of subsidy and interest—a course in its entirety at present quite impossible ; and (b) To reduce pensions and other benefits (both existing and future). Whilst I am loath to recommend the latter course, both on general principles and also because I recognize the serious effect it will be likely to have on the morale of the Service, it must be admitted that the majority of pensioners who have retired since 1921 have done so on an inflated pension, in most cases out of all relation, on an actuarial basis, to the average salary upon which their contributions to the fund have been made. If the reductions advocated in salaries, interest, rent, and in other directions betoken a general lowering of income standards, then a reduction of pensions would bring this class into line with other sections of the community. With regard to pensioners who retired prior to the war-inflated period, it should be noted that, except for pensions of less than £100 per annum, no adjustment by way of increased pension was made to compensate for the higher standard of values prevailing. On the other hand, these early pensioners have enjoyed pensions calculated over a long period of back service for which no contribution to the funds has been made by them. Any percentage reduction of pensions made because of depressed conditions would involve an obligation to readjust by granting a percentage increase in the event of general trade conditions reviving. Such an innovation would have objectionable features, as, from an actuarial point of view, uniformity and certainty are factors of paramount importance. Recommendations. —After fully reviewing the various alternative methods of improving the financial stability of the funds, and avoiding as far as possible any anomalies, I recommend I. That proposals Nos. 1 to 6 inclusive, set out on pages 7 and 8 hereof, be adopted. 11. That as far as possible the proposals referred to be made retrospective, and all existing pensions be reviewed on the following basis : — (a) The calculation of pensions on basis of average salary of last ten years of service, instead of last three as at present: Provided, however, that such average salary shall in no case be deemed to be less than the average salary for the three years ending the 31st March, 1921 ; nor shall any alteration be made in any pension granted before the 31st March, 1921 (vide proposal 3). (b) The calculation on an actuarial basis of pensions payable to those who retired, for reasons other than medical unfitness, prior to attaining age 65 (females 60) or after completing forty years' service (females 35) (vide proposal 2). 111. That in reviewing existing pensions no retiring-allowance be reduced below £150 per annum. If it be decided to vary the method of computing future retiring-allowances it will be imperative to review existing allowances in order to avoid anomalies, and for this reason recommendations I and II above should be considered together. P. Vekschaffelt, Public Service Commissioner.

Cecil Gostelow, Government Actuary. (No. 2.) With reference to the request of the Select Committee appointed to examine the Government Superannuation Funds Bill, 1932, that I should outline the reasons for the drift of the Government Superannuation Funds to their present parlous position and to comment on the recommendations for reconstruction contained in the National Expenditure Commission's report, I have to advise as follows : — The causes of the present large deficiency in the combined funds may briefly be summarized in their order of importance as follows : — (1) The accumulation at interest of the unredeemed amount of the initial deficiency caused by the gift of free pensions in respect of service prior to the inception of the fund. Pensions for each year of such " back service " were allowed at the same rate as for future contributory service. (2) The burden thrown on. the funds as the result of the practice followed, particularly from 1922 onwards, in compulsorily retiring men with forty years' service irrespective of their attained ages or their own wishes, and the extensive use of the extended provisions in the Act for retirement after thirty-five years. In the Public Service Superannuation Fund this power of extending the provisions of the Act to any officer rests with the Minister in Charge of that officer's Department, and in the Teachers' and Railways' Funds with the Superannuation Board, with the approval of the Minister of Education and the Minister of Railways respectively. (3) The great increase in pension liability due to the effect of the war on salary levels and to the inclusion of house allowance as salary for the purpose of computing pensions. At the most a contributor would only contribute on his increased salary for his future service, whereas he would obtain the same pension benefit as if he had been in receipt of such a salary for the whole period of his service. (4) Additional options granted to contributors from time to time. For example, the options to contribute on salaries prior to the cuts of 1921-1922, 1931, and 1932, or to accept refunds of contributions on excess payments.

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(5) Inadequate contribution scales, particularly in the Railways' Fund. I give hereunder a brief survey of the Public Service Fund. There is very little difference in the constitution of the three funds, but any special points of interest in connection with the Teachers' Fund and the Railways Fund will be briefly referred to later. Public Service Superannuation Fund. This Fund was established on the Ist January, 1908, and while the scheme was compulsory in respect of all public servants joining after that date, all persons employed in the Service at the date of the Act were given the option to join or to remain outside the scheme. In this latter connection it is important to note that the older officers joining the scheme and subsequently drawing a retiringallowance forfeited certain compensation rights under previous Acts, and that the effect of this reduction in the State's liability on the retirement of such officers has a very important bearing on the aspect of Government subsidies to the superannuation scheme. In commencing any staff pension scheme the greatest difficulty is to deal with the older employees. It is clear that with their few remaining years of service they would find it impossible to. pay for their own pensions, quite apart from any subsidiary benefits. As an example, I might state that even if back service were not allowed to count for pension purposes, the contribution for a pension of one-sixtieth of salary for each year of future service would range from about 12 per cent, at age 55 to 15 per cent, at age 64, and if provision were made for subsidiary benefits equal to those of our Government superannuation schemes in respect of widows' and children's allowances, refund of contributions on withdrawal or death as a bachelor, the total contributions of an old employee would range from, say, 17 per cent, to about 50 per cent, as the age approached the standard retiring-age of 65. If, in addition, the cost of back service had to be met by the contributor, the contribution chargeable would be prohibitive. Under the circumstances, this problem of cost, which constitutes the chief stumbling-block in the way of establishing a staff pension fund, usually results either in the older members being denied admission to the scheme or in the employer having to make a substantial capital payment to cover the cost of benefits granted in excess of what is provided by the employees' contributions. Frequently a middle course is chosen —namely, to allow the older employees only quarter or half benefits in respect of back service, with a consequent diminution in the employer's subsidy. The New Zealand Government in establishing its schemes decided to allow officers a full rate of pension in respect of each year of back service prior to the inception of the Fund —a very generous provision—even allowing for the fact that a large proportion of such officers had to surrender in effect the bulk of their compensation and other rights under previous Acts. This gift meant that many officers were almost immediately in a position to retire on the full forty-sixtieths of their average salary for the last three years after contributing only for a few months. As such back service ranged from a few days to over forty years, it may be said as a rough approximation that an average period of twenty years' service was allowed to count for superannuation purposes, and the original contributors as a whole only contributed for one-half of their pensions and received the other half as a gift. In addition to this the employees' contributions, ranging from 5 per cent, to 10 per cent, according to age, were insufficient to pay even for future, service, and were framed so that portion of the cost of widows' and children's allowances and the provision for return of contributions upon death or withdrawal was to be met by Government subsidy. Mr. Morris Fox, in giving estimates as to the cost of the proposed scheme, stated that the initial deficiency due to the two causes above mentioned was £1,816,220. It has to be pointed out, however, that this estimate was based on data supplied giving the number of persons eligible to join the proposed Superannuation Fund, whereas it was found subsequently that many of those eligible did not elect to join the Fund, while on the other hand a large number of Civil servants were afterwards brought within the scope of the Bill. There can be no doubt, however, that the initial deficiency was not less than one and a half million sterling. As the State definitely incurred this liability in making a gift of that portion of the pension based on service prior to the establishment of the Fund, and was aware of the cost involved, the soundest plan would have been to have paid the full capital sum into the Fund, or, alternatively, to have provided for its redemption within a specified period, say twenty or thirty years, and to have made a small additional annual subsidy to assist the contributions of new entrants. Instead of this, the subsidy method adopted was based on the principle of deferring meeting any portion of the liability till the pensions had actually emerged, and then the pensions were in effect divided into two parts : —■ (а) That portion of the pensions provided by the contributors ; and (б) The balance which was to be met by the State. It will be seen, therefore, that the principle underlying the Act was that members were to contribute upon the basis of paying their share of the liabilities immediately, while the State deferred payment of its share to the last possible moment. It will be obvious that the longer a financial liability is deferred the greater the amount of money that will ultimately have to be provided by reason of the operation of interest. It has also to be remembered that the annual subsidies themselves would increase rapidly by reason of the number of new pensioners coming on the Fund. The provision for making the Government subsidy is specifically set out in sections 49 and 50 of the Public Service Superannuation Act, 1927, the relative portions of which read as follows :— " 49. (2) The Actuary shall set forth the result of such examination in a report, which shall be so prepared as to show . . . the possible annual sums required by the Fund to provide the retiring and other allowances falling due within the ensuing three years without affecting or having recourse to the actuarial reserve appertaining to the contributors' contributions. " 50 (1) In the month of January in every year the Minister of Finance shall pay into the Fund and out of the Consolidated Fund, without further appropriation than this Act, the sum of ... , together with such further amount (if any) as is deemed by the GovernorGeneral in Council, in accordance with the aforesaid report of the actuary, to be required to meet the charges on the Fund during the ensuing year."

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The first actuarial valuation of the Fund was made by Mr. Morris Fox as at the 31st December, 1910, and disclosed a deficiency of £1,732,108. It must be emphasized that this deficiency was an actual shortage in the Fund to be eventually made good by the State, and that it was equivalent at 4 per cent, interest to an annual interest income in perpetuity of £69,284. In other words, a State subsidy of £69,284 per annum would have been necessary to prevent this deficiency from increasing, and that if such deficiency were to be eventually redeemed some annual sum in excess of this figure would have been necessary. For example, an annual subsidy of about £73,000 would have redeemed the deficiency within seventy-five years. The Act, however, as pointed out above, did not provide that the subsidy was to bear any relation to the deficiency, but was to be the mere amount of the State s share in the liability for pensions arising out of service before joining the Fund or for such part of the pensions arising out of subsequent service as was not covered by the contributor s contributions. The Actuary computed the subsidy on the above basis to be £43,060 for 1911, £47,525 for 1912, and £51,761 for 1913, and recommended an average annual subsidy of £48,000 for the three years following the triennium as against the £23,000 then being paid. This was given effect to for the year 1913, but no attempt was made to meet the annual shortage of £25,000 for the years 1911 and 1912. The second actuarial valuation was made by Mr. Percy Muter, F.1.A., as at the 31st December, 1913, and disclosed a deficiency of £2,381,466, and the Actuary, commenting on the increase of £649,358 in the deficiency, stated, ' This is chiefly accounted for by increases in the number of contributors and in the salaries on which future pensions are to be based." He reported that the average annual subsidy required for the years 1914, 1915, and 1916 in terms of the Act was £66,000. No action was taken to give effect to his recommendations, and for the succeeding triennium the State paid in £54,000 less than what was prescribed under the basis provided in the Act. The third actuarial valuation, as at the 31st December, 1916, was also made by Mr. Muter, and disclosed a deficiency of £3,007,081. The Actuary commented, " The increase on the present occasion is £625,615, which is made up to the extent of £147,500 by interest accumulation on the unprovided part of' the liability, the balance of the increase being mainly due to the normal expension in the number of contributors and salary charge." The Actuary reported that in accordance with the Act an average annual subsidy of £86,000 was required for the years 1917, 1918, and 1919. This was given effect to for the year 1919, but the State payments for 1917 and 1918 were on the old basis of £48,000, so that the triennium showed a shortage of £76,000. The fourth actuarial valuation, also made by Mr. Muter, was for the period ended 31st December, 1919, and disclosed a deficiency of £4,142,989. The Actuary commenting on the increased deficiency said, " The increase is due partly to accumulation at interest of that part of the State s liability that is unprovided for, partly to the normal expansion of the Service, and partly to the increased salaries." In reporting on the annual subsidy required in accordance with the basis laid down by the Act, he stated that an average annual amount of £110,000 was necessary to meet the State s share of the pensions falling due in each of the three years 1920, 1921, and 1922, and that an additional average annual amount of £15,000 was necessary to compensate for the failure of the State to comply with the requirements of the Act in the past, and for extraordinary retirements due to retrenchments in the year 1922. No action, however, was taken to give effect to his recommendations in terms of the Act, and accordingly the Fund received during the next three years £117,000 less than what was prescribed in terms of the Act. The fifth actuarial valuation was made by Mr. A. T. Traversi, F.1.A., as at the 31st March, 1924, and disclosed a deficiency of £5,534,173. The Actuary commented on the increase of £1,391,184 in the deficiency as follows : " This increase is due partly to the accumulation at interest of that part of the State's liability which is unprovided for, partly to normal expansion of the Service, and partly to the enforced retirement of officers with long service. The item is casting a considerable liability upon the Fund, and it is understood that the statutory subsidy of £86,000 has been increased to £136,000 on this account." Mr. Traversi recommended that, in accordance with the basis laid down by the Act, an average annual subsidy of £193,000 was required for each of the years 1924-25, 1925-26, 1926-27, and that in addition an average annual amount of £47,000 was necessary to include provision for the State redeeming arrears in past payments (£27,000), together with provision in respect of unexpected forced retirements (£12,000), and the annual appropriation for staff salaries and other office expenditure (£8,000). No action was taken to give effect to the Actuary's recommendation in terms of the Act. The Chairman : Was that £47,000 in addition to the £193,000 ? Mr. Gostelow : Yes ; he suggested, in effect, £240,000. I had the honour of making the sixth actuarial investigation, as at the 31st March, "1927, and reported a deficiency of £6,659,770 ; but in comparing this with previous figures it is necessary to bear in mind that a more lenient interest basis was adopted namely, per cent. In commenting on the growth of the deficiency I stated, " This increase, which would have been still greater had the valuation been made at 4 per cent., is due partly to normal expansion of the Service and to the inclusion of house allowance as salary for pension purposes, partly to the accumulation at interest of that part of the State s liability which is unprovided for, and partly to the heavy retirements of young officers with long service." In paragraphs 17 to 21 of my report (1928, H.-26a) I dealt fully with reasons for subsidy and the ascertainment thereof, and recommended that in accordance with the basis prescribed bv the Act the average annual subsidy for the three years 1927-28, 1928-29, and 1929-1930 should be £285,000. No effect was given to this recommendation, and as a result the subsidies paid in during the triennium exhibited a shortage of £497,000 apart from any question of interest. The seventh actuarial investigation, recently presented to Parliament, was made as at the 31st March, 1930, and disclosed a deficiency of £7,871,439. In commenting on the growth of the

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deficiency 1 stated, " This increase is mainly due to the accumulation at interest of that part of the State's liability which is unprovided for and to the number of retirements of comparatively young officers with long service being in excess of the valuation assumptions." Summing up it will be seen that up to 1919 the requirements of the Act as to Government subsidy were more or less complied with, the Act being duly altered to give effect to the recommendations, although payment of the increased subsidy was on the average two years late and no extra payment was made during the war period. From 191.9 onwards, however, no action has been taken to give effect to any of the actuarial reports submitted, and for all practical purposes section 50 of the Public Service Superannuation Act is a dead-letter. Reference to Table X of the Appendix of my latest report (1932, H.-26a) shows a shortage at the 31st March, 1930, of £1,301,000 in the subsidies actually paid by the State as compared with those prescribed by the Act. I have pomtd out previously that the method of arriving at the annual subsidy suffered from the practical defect that it meant for many years a rapidly increasing subsidy, and this has been borne out by the experience of the Fund. Another weakness in the method is that each actuarial investigation appears to require legislative enactment to give effect to the recommendations. Under the circumstances, there can be no question that an automatic subsidy would be preferable. As far back as 1915 Mr. Muter (vide paragraphs 1.2 and 13 of his actuarial examination for the triennium ended the 31st December, 1913) drew attention to the delay involved in connection with new legislation and the desirability of a more automatic method of obtaining the necessary subsidy, and stated that an automatic subsidy of 4 per cent, of the pay-roll would provide for the deficiency in the contributions for future service and gradually liquidate the liability for the pensions for back service. In his next report, for the period ended 31st December, 1916 (vide paragraph 14), Mr. Muter again suggested that the subsidy should take the form of a fixed percentage of the annual salaries, or, alternatively, that the subsidy be made a percentage of the contributions actually paid by the public servants. He stated, " A subsidy of 67 per cent, on the contributions of males and 78 per cent, on the contributions of females would extinguish the deficiency in approximately seventy-five years, assuming the expansion of the Dominion to continue at the same rate as hitherto. After that the subsidy would drop to a very much smaller figure." In his next report, for the triennium ended the 31st December, 1919, Mr. Muter stated, " A change is urgently needed which will place the subsidies upon a basis at once more automatic and more in accordance with the actual liabilities. At the very least it should be possible to say that the accumulations of the younger and greater portion of the members are rigorously set aside and maintained intact to assist in meeting the liabilities appertaining to those members." In the next report for the period ended 31st March, 1924, the Actuary, Mr. Traversi, stated (vide paragraph 12) that in his opinion the subsidies should be placed upon an automatic basis, and be recommended as a commencement 110 per cent, of members' contributions, amounting to about 6| per cent, of the salaries. Mr. Traversi went on to say, " I might say that a subsidy of 110 per cent, of the contributions of members would not immediately enable the budget to be balanced, but, though the State's payment would be increased somewhat from the outset, there would be a considerable gain in steadiness in regard to the amount of the subsidy as well as in point of ease of working. Provided the liabilities were not unduly inflated by the granting of additional benefits, this subsidy would no doubt suffice in time to right the fund." In my actuarial examination of the Fund, as at the 31st March, 1927 (vide paragraphs 22 and 23), I called attention to the practical defect in the method of arriving at the subsidy and suggested a subsidy of 8 per cent, of the pay-roll. In my last report on the Fund, as at the 31st March, 1930, pagagraph 22 reads as follows : " In my last actuarial report I drew attention to the method laid down by the Act of arriving at the State's subsidy, and suggested in lieu thereof an automatic basis which, although requiring increased payments at the outset, would minimize the rate of increase in future subsidies. "It is not necessary to add anything further to the remarks made in that report, beyond pointing out that the suggested subsidy of 8 per cent, of the salary roll would now need to be increased by reason of the short-payment in subsidies during the intervening three years." It will be seen that in each of the last six actuarial reports made by three different actuaries the existing subsidy method has been adversely commented on and an automatic subsidy recommended to take its place. It will also be noted that the amount of such automatic subsidy necessary to cover the State's share of the liability has risen from 4 per cent, in 1915 to over 8 per cent, at the present time. While to some extent the increase is due to increased pension liabilities following on salary increases due to the war and to the practice of retiring offiers with long service irrespective of age, it must not be overlooked that no small portion of the increase in the subsidy percentage necessary to cover the State's share of the liability is due to the delay in taking steps to put such a recommendation into effect. It is scarcely necessary to point out that every £1 payable now is equivalent at 4 per cent, compound interest to £2 payable seventeen years hence. In this connection I cannot do better than call attention to figures supplied by Mr. G. F. Hardy, F.1.A., President of the Institute of Actuaries, in giving evidence before the Committee appointed by the Board of Trade to inquire into the position of superannuation funds of railway companies in Great Britain. He produced a table showing that if an employer, instead of contributing 5-06 per cent, of salaries to a fund from commencement, adopted the attitude of withholding contribution until it was actually required by current expenditure over and above the 2f per cent, of salaries contributed by his employees, such employer would have no payments to make for the first forty years, but afterwards the percentage would increase rapidly to 18 per cent, of salaries by the end of the seventieth year.

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Teachers' Superannuation Fund. The Teachers' Superannuation Fund, which was originally constituted under the Teachers' Superannuation Act, 1905, provides benefits on similar lines to the other funds, and apart from the fact that about 60 per cent, of the contributors are women, who constitute a very small proportion of the membership in the other Government Superannuation Funds, it does not differ materially from the Public Service Superannuation Fund. It commenced operations with an initial deficiency (estimated at approximately £800,000), and instead of the sounder practice of putting up the necessary capital sum or liquidating it over a definite period of years, the Act provided that the basis previously described in connection with the Public Service Superannuation Fund was to be followed —namely, to postpone liability till the pensions actually emerged. The subsidy method is fully described in the first actuarial report, and the subsequent six actuarial reports disclose a state of affairs so closely approximating to that outlined above in connection with the Public Service Superannuation Fund that it is probably unnecessary to do more than submit the following summaries showing the growth of the deficiency (representing the present value of the State's share of the liability) and of the annual subsidies required. The deficiencies disclosed at the successive statutory valuations are as follow : —

In making deductions from the above table, it is important to bear in mind that the last two valuations were made at 4r| per cent, interest (as compared with 4 per cent, previously employed), and accordingly the last two deficiencies require to be suitably increased before any real comparison of the growth of the deficiency can be made. The annual subsidies required after providing for arrears due to the failure of the State to comply with the basis laid down by sections 11 1 and 112 of the Public Service Superannuation Act, 1927, are given in the successive actuarial reports, but will be more quickly visualized from the following table *:

As in the Public Service Superannuation Fund, there has been a failure on the part of the State to comply with the subsidy basis prescribed in the Act. The latest actuarial recommendation to be given effect to was that for the triennium ended 31st December, 1916. It is true that an additional annual grant of £25,000 (to bring the annual subsidy up to the recommendations contained in the actuarial report for the triennium ended 31st December, 1919) was paid from 1922-23 to the end of 1930-31, but it was discontinued last year. The total shortages in Government subsidy to the 31st January, 1930, amounted to £735,251 (vide Table IX of the Appendix to my last actuarial report (1932, E.-8a). Government Railways Superannuation Fund. The Government Railways Superannuation Fund differs from the other Government Superannuation Funds in that there is no provision for a statutory subsidy by the State as employer. The original Act contained a guarantee to the effect that " in the event of the Fund at any time being unable to meet the charges upon it " the deficiency would be met by the Consolidated Fund. The contributions in respect of males under age 50 were fixed without seeking any actuarial advice, at rates 2 per cent, less than were subsequently adopted when the other two funds were established. Members joining prior to the Ist January, 1908, have, however, never been called on to make good the shortage in their contributions, and have therefore enjoyed a distinct advantage as compared with their fellow officers in other branches of the Government service, or with railway servants joining the Fund on or after the Ist January, 1908. The obvious deficiency created by the free gift of that portion of the pension

Date of Valuation. Actuary. Deficiency. £ 31st December, 1910 .. Mr. Morris Fox .. .. .. i 983,818 1913.. Mr. P. Muter, P.I.A. .. .. .. 1,443,597 1916 .. „ .. .. .. 1,801,816 1919 .. „ .. .. .. 2,813,176 31st March, 1924 .. Mr. C. Gostelow, P.I.A. .. .. 4,074,548 1927 .. „ .. .. 4,647,798 1930 .. „ .. .. 5,559,202

- Average Annual Subsidy required for Triennium succeeding Valuation Date. Valuation Date. Actual. Normal. (Allowing for Past (For Pensions only.) Shortages in the State Subsidy.) £ £ 31st December, 1910 .. .. 17,000 17,000 1913 .. .. 33,000 33,000 1916 .. .. 43,000 43,000 1919 .. .. 60,000 68,000 31st January, 1924 .. .. 120,000 137,000 1927 .. .. 141,000 173,000 1930 .. .. 166,000 214,000

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allowed for each year of service prior to the establishment of the Fund, together with the assessment of the contributions of the original members at rates inadequate to provide even for future service, was left entirely to the future, and the Fund proceeded to pay the pensions of the older members from the accumulations of the younger men, instead of following the sound practice of keeping intact these accumulations, together with the interest earned thereon, to meet as they matured the pensions they were designed to furnish. In 1911 —after the scheme had been in operation for seven years —an annual subsidy of £25,000 was commenced. The first actuarial examination of the Fund was made by Mr. Morris Fox as at the 31st.March, 1912, and disclosed a deficiency of £1,776,851. Mr. Fox pointed out that an annual subsidy of £50,000 was necessary in respect merely of pensions and allowances in possession or accruing within the ensuing three years. No effect was given to the recommendation made, although the increased subsidy was paid for one year —1915. As the result of the second actuarial investigation, made by Mr. P. Muter, F.1.A., as at the 31st March, 1919, a definiency of £3,959,455 was disclosed. Mr. Muter, not being bound by any statutory provisions regarding subsidy, decided, very properly, in my opinion, that the subsidy should bear a direct relation to the deficiency, and recommended that the future annual subsidy be increased to £170,000, so as to extinguish the deficiency in about seventy-five years. He went on to state, " The amount should, of course, be subject to occasional adjustment to meet changes in the factors. As already stated, the total pay-roll of the employees included in the Fund is £2,256,369 per annum, and it may be pointed out that the subsidy recommended represents approximately 7i per cent, thereon. It is usually considered by the highest actuarial authorities that a subsidy of 5 per cent, or 6 per cent, on the pay-roll is quite a reasonable amount for an employer to pay for the undoubted benefits he gets from a pension fund. In this case the figure is somewhat higher by reason of the fact that the State (as employer) failed to make the proper contributions to the Fund from the very inception, and has now to provide not only the short payments of the past, but interest thereon." I had the honour of making the third actuarial investigation as at the 31st March, 1927, and found that, as the result mainly of the effect of the World War on salary levels and the policy of early retirements, the deficiency had increased from £3,959,455 at 1919 to £6,810,204 at 1927. The reasons for this abnormal increase of nearly three millions are set out fully in paragraphs 19 to 21 of my report which was recently laid on the table of the House of Representatives by leave (parliamentary paper 1932, D.-sa). I pointed out (vide par. 23) that this deficiency, which was guaranteed by the State as employer, was equivalent to an annual interest income (at 4| per cent.) of £306,459, and as this amount constituted an annual payment in perpetuity, and did not include any subsidy to new entrants, I recommended a future annual subsidy equal to 10 per cent, of the salary roll, commencing at about £340,000 per annum. I further pointed out (vide par. 29) that, if it were desired to go further so as to more rapidly redeem the deficiency, a higher subsidy than 10 per cent, could be fixed, or, alternatively, the Fund could be strengthened by suitable amendments to the Government Railways Act. The most important amendment suggested was that the employees' right to retire after forty years' service be abolished. So far as lam aware, none of my recommendations have been given effect to. Instead, some hundreds of retirements of officers with thirty-five years' service have been effected, irrespective of age. In this connection I cannot do better than point out that the new annual pensions and allowances, which had exceeded £28,000 on only two previous occasions, rose to £40,574 in 1930-31, and to no less than £143,808 in 1931-32. All Funds. In order to present a picture of the deficiency in the combined funds it is necessary to choose between taking the results as at the 1927 valuations, which are now out of date on account of the serious financial retrogression that has since taken place, or amalgamating the 1930 valuation results of the Public Service and Teachers' Funds with the 1927 valuation results of the Railways Fund. Although the latter method suffers from the serious defect of not bringing the values to a common date, and, moreover, makes no allowance for the drift in the Railways Fund since 1927, I have adopted it for illustrative purposes to show that the estimated present deficiency of £23,000,000 stated by the National Expenditure Commission is not far from the mark. Amalgamated Valuation Results of Funds. (Public Service Superannuation and Teachers at 1930 ; Railways at 1927.) £ £ £ Present value of existing pensions and allowances.. .. .. .. 7,926,187 Present value of prospective benefits .. .. .. .. 24,918,613 Less present value of members' contributions .. .. 6, 582,369 And less value of State subsidy for widows and children 954,543 7,536,912 17,381,701 Total net liabilities .. .. .. .. .. . • • • .. 25,307,888 Funds in hand .. .. .. .. .. •. ■ • .. 5,067,043 Present value of total liability of State .. .. .. .. •. .. 20,240,845 Less present value of subsidy £324,000* (if treated as a perpetuity) .. .. 7,200,000 Value of future subsidies to be provided by the State over~and*above*the*present, subsidy £13,040,845 of £324,000 per annum ======

* Note.—This amount has since been reduced to £299,000 by the reduction of the subsidy of the Teacher's Fund from a minimum of £68,000, at which it has stood since 1922-1923, to £43,000.

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It will be seen from the above that the capitalized value of pensions and allowances actually in possession at the valuation dates amounted to £7,926,187, and that the excess of the prospective liabilities in respect of existing contributors over the capitalized value of their future contributions was £17,381,701, showing a total net liability of £25,307,888. Against this the total funds in hand only amounted to £5,067,043. It will be seen from the above that the existing funds were not only insufficient to provide for pensions and allowances then existing, but also that the deficiency of £20,240,845 represents the present value of the liability to be met by the State or liquidated with instalments of capital and interest in the future. In order to bring all results up to date, I have made an approximation to the probable amount of the deficiency at the 31st March, 1933, on the assumption that nothing is done to reconstruct the funds. On a conservative estimate the deficiency at that date will amount to 25J millions sterling, made up as follows : Railways Fund, 10 millions ; Public Service Fund, 9 millions ; and Teachers' Fund, 6J millions. Such a deficiency is equivalent to an annual interest payment in perpetuity of over one million sterling. If we look ten years ahead—say, to the 31st March, 1942 —the deficiency will have increased to approximately 38 millions, which is equivalent to an annual interest income of nearly two millions sterling. It is not my function to express any opinion as to whether the State can or cannot afford to find from now on a million a year for the Superannuation Funds of its employees, or whether it should attempt to carry on with the present subsidy of approximately £300,000 with the prospect of taking up an annual payment of two millions some ten years hence, or a larger figure if the matter is postponed longer. My sole concern at the moment is that the National Expenditure Commission came to the opinion that the burden was beyond the capacity of the State and suggested a reconstruction, and accordingly my subsequent remarks must be interpreted in the light of the Commission's opinion that the State cannot find the money and that the problem is to find the fairest composition between the State as debtor and the pensioners and contributors of the Superannuation Funds as creditors. The conclusions and recommendations of the Commission may briefly be summarized as follows : — (1) The deficiency in the Superannuation Funds is £23,000,000, and unless action is taken to reconstruct the funds this liability must eventually be met by the State. (2) The interest on this deficiency amounts to over £1,000,000 per annum, and the Commission is of the opinion that this annual sum is beyond the present capacity of the country to meet. It suggests, in effect, that the burden be approximately halved between the State and its employees. (3) The sacrifice to be made by the employees consists of a reduction of benefits, and it is proposed to extinguish roughly one-half of the deficiency by reducing the liabilities of the funds as follows (a) Modify contributors' rights to retire and. generally tighten up early retirement provisions. (b) Base the pensions of existing contributors on the average salary of the last seven or ten years instead of three years as at present. (c) Review the annuities paid to present pensioners (excluding those who retired prior to the 31st March, 1921) so as to bring them them into line with what is recommended in (a) and (b) above for present contributors. (d) Strengthen the Railways Fund by increasing by 2 per cent, the future contributions of certain officers in order to bring them into line with the remainder of the Railways service and with contributors to the other funds. (e) Make the proposed future pound-for-pound subsidy retrospective in respect of the trading Departments. (4) The report also recommends the removal of the arbitrary pension limitation of £300 to officers joining the Service after the 24th December, 1909, thus bringing them into line with officers joining before that date. (5) The suggested contribution to be made by the State in liquidation of the balance (roughly one-half) of the deficiency is— (a) A pound-for-pound subsidy of the employees' contributions ; and (5) A guarantee of any interest earned below 5 per cent. In the latter connection the Commission did not anticipate that any immediate subsidy would be required from the Government, as the funds are at present showing an interest yield in excess of that rate. I now propose to deal with the Commission's recommendations seriatim, and the Government Superannuation Funds Bill, 1932, will hereafter be referred to as " the Bill." Paragraph 1445 (Sections 6, 18, and SO of the Bill). The suggestion is to modify the present right of members to retire by length of service irrespective of age attained, and to provide that no male contributor shall retire before age 60 and no female contributor before age 55. lam strongly in agreement with this proposal, and have frequently drawn attention to its necessity in statutory triennial reports on the Fund. Reference might be made to paragraphs 35 and 36 of my statutory report on the Teachers' Superannuation Fund as at the 31st January, 1927, and to paragraphs 21 and 22 of my actuarial report on the Railways Fund as at the 31st March, 1927 (parliamentary papers E.-8a of 1929 and D.-5a of 1932). The tables therein submitted show conclusively the difference between the number of contributors who would voluntary elect to retire after forty years' service and the number of such pensioners thrown on the funds as the result of the policy of compulsorily retiring officers as soon as they

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have completed forty years' service irrespective of their age. Many officers join the Service at ages round about 15 (some as low as 12 in the Post Office), and it must be obvious that it is very costly to cause or even allow them to retire on the maximum rate of pension at ages from, say, 52 onwards when in many cases their ability and experience are of most value to the State. There is no particular virtue in assuming that an officer has completed his period of usefulness after forty years' service, as the only tests of ability to render efficient service are age and physical fitness. In the large pension schemes of other countries the general practice appears to be to regard age 65 as the standard age of retirement, and in a number of schemes, both public and private, the rules empower the employer to require the employee to remain on till he is 70. As regards the extension by five years of the age at which female contributors may retire, it is interesting to note that 55 per cent, of female teachers enter on their pensions before age 55. I have showed conclusively in the 1927 statutory actuarial report on the Teachers' Superannuation Fund (v'de paragraph 12) that the female teacher is a greater liability on the Superannuation Fund than the male, in spite of the fact that the male teachers receive higher salaries (on which pensions are based), and, in addition, are covered for widows' and children's benefits, and tha,t such greater liability is due to the early ages at which they can and do retire and the superior vitality of female pensioners generally. Paragraph 1446 (Sections 7, 19, and Si of the Bill). The suggestion is to eliminate all options of early retirement with the consent of the Minister or of the Superannuation Boards on pensions at the rate of one-sixtieth of salary for each year of service, and to substitute actuarially equivalent pensions if compulsorily retired for reasons other than misconduct at any time after twenty-five years' service or attainment of age 50. To my mind this is the most vital suggestion in the Commission's report, as such early retirements are second only to the initial deficiency created by the gift of free pensions for back service in causing the present parlous financial position of the funds. The serious aspect of those early retirements has been stressed ad nauseam in successive actuarial reports, and it must surely be self-evident that officers retiring at ages from 50 to 55 cast a heavy burden on the Fund not only from the greater number of years during which pensions have to be paid, but also from the loss of contribution income until age 65. As an illustration I may point out that a deferred pension of £100 at age 65, subject to contributions in the meantime equal to per cent, of pension (that is, 5 per cent, of salary), is equivalent to an immediate pension of approximately £35f at age 55, or, to put it another way, an immediate pension of £100 to an officer at age 55, allowing for the saving in contributions to a hypothetical fund at a rate of 5 per cent, of salary (that is, 7| per cent, of pension), is equivalent to a deferred pension of approximately £281 at age 65. It will be seen, therefore, that if the officers' contributions to the fund are taken into account the granting of pensions at a fixed age 55 instead of a fixed age 65 would necessitate reducing each unit of pension by 64 J per cent, if the Fund were not to be prejudicially affected ; or, to put it another way, if the amount of pension were to remain unaltered at the maximum, such payment of pension at age 55 instead of age 65 would increase the funds' pension liabilities by 181 per cent. These figures should dispel any impression that in the case of officers retiring after thirty years' service the Government Superannuation Funds are fully compensated by the fact that the pensions are based on thirty-sixtieths of salary instead of the maximum of forty-sixtieths. If any further proof were needed it is to be found in the fact that the Superannuation Act specifically provides that in the case of the Public Service Fund the Minister in charge of the Department to which the officer belongs, and in the Teachers' Fund the Superannuation Board, with the approval of the Minister of Education, has the power, when extending the provisions of the Act to provide for early retirements, to impose upon the retiring contributor such terms and conditions as to payments into the Fund or otherwise as the Minister or the Superannuation Board respectively thinks fit. Unfortunately, this right has been seldom, if ever, exercised in the Public Service Fund, and, moreover, no such provision exists in the Railways Fund. In order to give some idea of the extent to which the extended provisions of the Public Service Superannuation Act have been availed of, I may state that one in every four of those now drawing pensions from the Public Service Superannuation Fund were retired under the extended provisions of section 26 of the Act, and I think it would be safe to say that in the Railways Fund the proportion is even higher, possibly as high as one in every two. Paragraph 1447 (Sections 8, 20, and 32 of the Bill). The suggestion is to reduce the liabilities of the funds by basing pensions on the average salary of the last seven or ten years instead of three years as at present. I approve of this proposal, and had previously recommended it in statutory triennial reports (vide paragraph 23 of the statutory report on the Public Service Superannuation Fund as at the 31st March, 1930, and paragraph 26 of the statutory report on the Teachers' Superannuation Fund as at the 31st January, 1930). In this connection it might not be out of place to make a few general remarks regarding pension funds. The ideal fund is one based on terminal salaries, as it enables each officer to receive a pension directly commensurate with his income and standard of living at the time of retirement. It is admitted, however, that from a practical point of view officers receiving substantial promotion comparatively late in life receive a disproportionate share of the subsidy provided by the employer, and although it is generally held that the employer has an absolute right to say how his own subsidy shall be employed, it is apt to cause discontent, particularly in a Government Service. A greater defect, to my mind, is the amount of fluctuation in the actuarial estimates of liability and the consequent financial safety of the fund. Pension-fund finance demands an equation between pension benefits and contribution income

1.-—l5.

(including subsidy), and it is extremely difficult to forecast salary conditions thirty or forty years hence. The late war furnishes an outstanding instance of the eflect of the terminal salary method on pensions. Salary levels of Government servants at 1927 were approximately £100 higher than in 1913, and,_ accordingly, in prospective pension rights each employee stood to receive for his whole period of service the full benefit of such increase, whereas the effect of the increased salary scale on contribution income to the Fund is limited only to his future service. It follows that the stability of a pension fund, if not assisted by an adequate employer's subsidy, increases as the base on which pensions are granted is lengthened. lam convinced, having regard to all the factors, that the pensions in a Government superannuation scheme should have a direct correlation to the contributions paid, and accordingly be based over the whole period of service. This would not necessarily mean reducing the average pensions of officers, as the present rate of one-sixtieth for each year of service would, in an average salary pension scheme, be increased, say, to one-fiftieth or even to one-fortieth. As, however, the Commission did not consider the substitution of a new scheme, but rather the modification of the present scheme, I am in agreement with their proposal to lengthen the base from three years to seven or ten years. The Bill provides for ten years, and as this will give greater financial stability than a sevenyear period, I support it. Paragra/pli 1448 (Sections 16, 26, and 38 of the Bill). Ihe suggestion is for the Government to guarantee a net effective interest yield of 5 per cent, per annum on the funds. As indicated by the Commission, the recommendation is suggested primarily to allow future actuarial valuations to be made at 5 per cent, in order to bring the subsidy into closer relation to the actual facts than now exist. At the present time the valuation is made at 4f- per cent., and it follows that if the subsidy is based on the results brought out from such a valuation basis, and interest in excess of 4J per cent, is earned in the future, the subsidy paid will be higher than is required, all other things being equal. By valuing at 5 per cent., the estimated liabilities are reduced and a smaller immediate subsidy is determined, and only if and when interest falls below 5 per cent, will an additional subsidy require to be paid. An analysis of the annual interest rates earned by the funds from the year 1924-25 to the latest valuation date shows that in the Public Service Superannuation Fund the range was from £5 14s. 2d. per cent, to £5 18s. 6d. per cent. ; in the Teachers' Superannuation Fund, from £5 19s. 4d. per cent, to £6 2s. Id. per cent. ; and in the Railways Fund, from £5 7s. lid. per cent, to £5 12s. lOd. per cent. It is therefore not expected that the adoption of this recommendation will throw any immediate liability on the Government, and I recommend its adoption. Paragraph 1449 (Sections 14, 25, and 36 of the Bill). The suggestion is for the Government to pay a pound-for-pound subsidy of employees' contributions. The basis of an equal division of cost between employer and employee is very common in the superannuation schemes of other Governments, and is a favourite in schemes of private employers. This matter was fully dealt with in my statutory examination of the Teachers' Superannuation Fund as at the 31st January, 1927 (vide paragraph 31), in which the Government Superannuation Funds of South Africa and Australia and the Local Government Superannuation Fund of the Imperial Government were instanced. I may add that, with the exception of Mr. Morris Fox, every Actuary who has valued the New Zealand Government Superannuation schemes has advocated an automatic subsidy based either on the salary roll or on members' contributions, and reference to the various actuarial reports will show that had such a scheme been instituted at the beginning a subsidy of considerably less than £1 for £1 would have been sufficient to have kept the funds stable, even including the gift of free pensions for back service prior to the inception of the funds. It will be seen, therefore, that the present suggestion of a pound-for-pound subsidy does not mean that new contributors will onlv be asked to pay for one-half of their benefits, since the suggested subsidy is not a true subsidy, but the bulk of it is merely the equivalent of such sum in perpetuity as is necessary to redeem the deficiency caused by the failure of the State to carry out its contractual subsidy obligations in the past. In order to enable members of the Select Committee to visualize what is involved in a pound-for-pound subsidy, the following table is submitted in connection with the Public Service and Teachers' Funds. The Railways Fund already receives £28,000 per annum more than a pound-for-pound subsidy. Pound-for-pound . „ , ~ Fund. Subsidy. Present Subs %- £ £ Public Service.. .. .. ..242,000 86,000 Teachers' .. .. ~ ..129,000 43,000 £371,000 £129,000 It will be seen from the above that the additional amount to be provided by the State as employer would be £242,000 per annum. It is important to bear in mind, however, that this would not all fall on the Consolidated Fund, as it is estimated that the Post Office and the trading Departments of the Public Service Superannuation Fund would, in respect of their employees, provide about £110,000 per annum, leaving the Consolidated Fund to find £132,000 in addition to what is at present being paid. It is not my function to express any opinion as to the ability of the Consolidated Fund to find this additional amount this year, but as it only represents 1 per cent, of the salary bill it is not anticipated that it will present an insuperable difficulty. 2—l. 15.

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Although I have refrained from dealing with the actual wording of the Bill, I think it important, in this particular case, to stress the fact that the Committee's recommendation was for an automatic subsidy. The Bill as drafted makes the subsidy dependent on annual appropriations by Parliament, which appears to me to defeat the main object of an automatic subsidy. I think at the very least the subsidy should be paid without further appropriation than the Act, so that only an amendment of the Act by Parliament could interfere with the amount being paid regularly. Paragraph 1450 (Section 29 of the Bill). The suggestion is to strengthen the Railways Fund by increasing by 2 per cent, the future contributions of officers joining the Service before the Ist January, 1908, at ages under 50, in order to bring them into line with similar officers in other branches of the Government Service. This suggestion had previously been made to the Government Railways Department in my actuarial report into the position of the Railways Fund as at the 31st March, 1927, and its equity is apparent. If the suggestion errs at all it errs on the side of leniency, as there are good grounds for suggesting that the proposal be made retrospective, or, alternatively, that the pensions of such officers should be proportionately reduced. Paragraphs 1454-1458 (Section 15 of the Bill). The suggestion is to make the proposed pound-for-pound subsidy retrospective in respect of trading Departments. As this is purely a policy question, I express no opinion on the merits of the proposal. Paragraphs 1461-1463 (Sections 12, 23, and 34 of the Bill). The suggestion is to review existing annuities so as to bring them into line with what is recommended for future pensioners (present contributors). In considering this proposal it will be an advantage to divide existing pensioners into two distinct classes —namely, — (a) Those who have retired under extended provisions of the Act—that is, before they were entitled to retire as of right; and (b) Those who completed forty years' service (females thirty-five years) or attained age 65 (females or Railway contributors, age 60). As the Public Service Superannuation Act makes specific provision for special terms and conditions to be imposed when officers are retired earlier than of right, it is clear that where such conditions were not imposed they have obtained a benefit that the original scheme never contemplated, and accordingly I strongly support the Commission's recommendation that their pensions be adjusted on the same lines as prescribed in the Bill for future pensioners. As regards the second class, the justice of the proposal is not so obvious, since such officers have carried out in its entirety the bargain made with the State when the superannuation schemes were adopted, and possibly the only grounds for interfering with their pensions are that the original benefits were too liberal, and that if it is decided to base pensions on the average salary of the last ten years instead of three years for future pensioners, it is only equitable that existing pensioners should receive no better treatment. Indeed, from the viewpoint that they have for possibly a number of years enjoyed higher pensions than future officers of a similar status will draw on retirement, and from the further fact that they will necessarily have had a bigger proportion of free pensions—that is, such portion of their pensions as is based on each year of service prior to the inception of the fund —the Commission's recommendation appears reasonable. It is doubtless unnecessary to point out that it will certainly lead to serious anomalies if an officer retiring a few weeks prior to any Act reconstructing the Superannuation Funds were to receive preferential treatment to a contributor of similar rank who was not in a position to retire until a few weeks after the date of such an Act. Paragraph 1464 (Sections 12 (4), 23 (4), and 34 (4) ). The Commission recommends that no existing pension be reduced more than 20 per cent. I am strongly against any such arbitrary limitation, as it cuts right across the principle of uniformity as between present and prospective pensioners. The proposed arbitrary maximum deduction of 20 per cent, would be less objectionable if it were limited to pensions to be adjusted solely as the result of computations being made on the basis of the average salary of the last seven or ten years instead of three years as at present, since it must be conceded that in all these cases the contributor fulfilled his part of the contract. In fact, it may be said that the main justification for any interference with such " normal retirement " pensions is that the original benefits of the scheme were too liberal, and cannot now be carried out with the financial resources available. I see no justification, however, for the proposed limitation of deduction to 20 per cent, in the case of pensions granted in respect of early retirements (other than for medical unfitness) at comparatively young ages and with service between thirty-five and forty years. In these cases the pensioner is receiving a benefit far in excess of what was originally contemplated by statute, since it is reasonable to assume that the Minister's power to grant a reduced pension or make such other conditions as he deems fit implies that such " early retirement " pensions were, in general, to be on an actuarial basis so as not to throw a greater strain on the Superannuation Fund than would have been occasioned had the officer completed his full service.

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I should, perhaps, point out that in the last two years scores of officers with service between thirty-five and thirty years have been retired on " actuarial" pensions residting in deductions of from 30 per cent, to 45 per cent, of the pensions that would have been allowed if determined solely on the basis of length of service, and as the law now stands future retirements for similar service will be treated similarly. Moreover, if the Commission's scheme is adopted in respect of future pensioners, officers with service of thirty-five years and upwards will receive actuarial pensions equivalent to deductions ranging to more than 20 per cent. Under the circumstances it seems desirable to bridge the gap between existing pensioners retired respectively after 34-95 and 35-05 years' service in a scientific manner, instead of fixing an arbitrary maximum deduction of 20 per cent., which will apply only in respect of existing " early retirement " pensioners. It may be said that as far as " actuarial " pensions proper are concerned the proposed maximum deduction of 20 per cent, will, in general, operate only to benefit those officers who have already retired with service between thirty-five and thirty-seven years ; and it will certainly create a very striking anomaly as between officers who were retired a few weeks before completing thirty-five years' service and those with service a few weeks more than thirty-five years. I desire to stress the fact that, in the Railway Superannuation Fund alone, hundreds of officers, after completing thirty-five years' service, have been retired without any regard to actuarial requirements, and if any reconstruction of the scheme fails to secure a proper adjustment of such pensions it will be to a large extent ineffective, since it is this class of retirement which has been a prime factor in the growth of the Fund's deficiencies. Paragraphs 1470-1474 (Sections 9, 21, and 33 of the Bill). The suggestion is to remove the arbitrary pension limitation of £300 per annum to officers joining the service after the 24th December, 1909, thus bringing them into line with officers joining before that date. The injustice of compelling officers to contribute to a fund and at the same time limiting them to a pension of £300 irrespective of the value of their contributions is obvious. It is in no way different in principle to compelling a body of men to place a specific portion of their salary in a savings-bank on the undertaking that in no case shall they receive back more than some arbitrary amount determined by the directors of the savings-bank. Surely if a University professor or a doctor appointed to the Service at a salary remaining practically stationary through his whole service pays twice, three times, or even four times as much as any other officer whose ratio of salary increase is in the same proportion, elementary justice demands that his pension should be respectively twice, three times, or four times as much as that granted to the latter officer. In this connection, it may not be out of place to point out that the arbitrary pension limitation of £300 was never taken into account in the original estimates of cost furnished before the schemes were established, nor was it included as part of the original Act being introduced some two years later, for reasons I have never been able to discover. If the matter were not so serious in its broader aspects one might be tempted to enlarge on the Gilbertian touch of an employer commencing a superannuation scheme for his employees and giving away, inversely to their future value to him, an increasing proportion of pension benefit {e.g., 97|- per cent., 75 per cent,., 50 per cent., or 25 per cent, of pension benefit to employees with respectively one, ten, twenty, or thirty years of remaining service) without imposing any restrictions as to the maximum amount of pension granted, while at the same time asking new employees to devote themselves to his service and to contribute for the whole period of their employment to a fund offering them an arbitrary maximum pension—that is, equivalent to a pension at a rate for each year of service decreasing in proportion as the length of service increases. It would more readily have been understood that if any limitation were to be applied at all in a State scheme it would be in respect of those members who had long years of back service during which they made no contribution to the Fund. As the National Expenditure Commission has pointed out, each Actuary who has had to report on the funds has adversely commented on the arbitrary pension limitation. My own carefully considered views are given in paragraphs 30 and 31 of the actuarial investigation of the Government Railways Superannuation Fund as at the 31st March, 1927, and it is of interest to point out that they are backed by the opinion of Mr. George King, F.1.A., F.F.A., probably the greatest living authority on pension funds. General. In conclusion, I should perhaps point out that this report has been furnished at somewhat short notice, and consequently some of the points touched on may require further elaboration. I have made no.attempt to deal with the individual clauses of the Bill, but have confined myself to the National Expenditure Commission's recommendations on which the Bill was based. The Chairman : Would any of you gentlemen like to ask Mr. Verschaffelt or Mr. Gostelow any questions ? Mr. McCombs : There will be other witnesses appearing before us. Will they be cognizant of what takes place here after to-day ? Would it not be possible for the witnesses that will appear in the future to know what has already been submitted to the Committee, and what may be in the minds of the Committee as a result ? 2*

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The Chairman : Ido not know. I think these reports are confidential to this Committee. Ido not think other witnesses are entitled to know what they contain. Mr. McCombs: That is a matter that can be discussed later. In regard to the alleged amount of the deficiency, £23,000,000 or £25,000,000, can we bring that down to an annual deficiency of £1,000,000 ? Mr. Gostelow : Yes, an annual payment in perpetuity. Mr. McCombs : An annual payment of £1,000,000 ? Mr. Gostelow : Yes, forever. Mr. McCombs : £25,000,000 is the capitalization of that £1,000,000 ? Mr. Gostelow : That is so : it is just like £25,000,000 stock. Mr. McCombs : It is really a deficiency of £1,000,000 a year ? Mr. Gostelow : Yes. Mr. McCombs : And if we choose to capitalize it and put the money out at 4 per cent., that amounts to the same thing. What percentage reduction in the benefits that would be received by the whole of the pensioners would be brought about by computation on the seven-year basis instead of three as previouslv computed ? Mr. Gostelow : You cannot very well express it as a percentage reduction, because some oiiicers will not get any reduction at all. . ... . Mr. Combs : Computation on the basis of the last seven years of service will mean a certain saving to the Fund annually as compared with three years, have you computed that ? Mr. Gostelow : We have not taken out an estimate of that. It would take a long time to get that information. There are some five thousand pensioners alone. Mr. McCombs : Before you could recommend that seven years was better than three years you must have made some calculation or some estimate to know how it would be better ? Mr. Gostelow : As a matter of fact I do not think it is necessay to make any computation at all. To mv mind, the pension should be based- over the whole period of service. Mr. McCombs : I know that. Mr. Gostelow : Obviously that would mean altering the whole scheme. All that the Commission suggests is to broaden the base. Instead of taking it over the whole period of service, take it over the last seven or ten years. - . , Mr. McCombs : Then we want to know what eflect that would have on the finances ol the scheme Mr. Gostelow : I could give you an estimate of that, but it would only be an approximate one. We have taken out an estimate from a body of data that I was working on, and it would effect a saving of 6| per cent. Mr. McCombs :On the ten-year period or the seven year ? _ Mr. Gostelow : On the seven-year period. The ten-year period would affect a saving of 10 per cent., but that is an average over the whole. Mr. McCombs : I want the average, because some officers will not be affected ; but it tiie average is going to be 61 per cent, on seven years and 10 per cent, on ten years and some officers will not be effected, and other percentages will be different altogether from 6| per cent, and 10 per cent., it is possible that some may suffer a reduction, of 20, 30, or 40 per cent. ? Mr. Verschaffelt: Quite easily. , . ~ ~ Mr. Gostelow : They might suffer a reduction of 30 or even 40 per cent., but after all they are supposed to pay their share towards the pension. If a man's salary has gone up so rapidly m the last three years of his service that there is a 40-per-cent. difference in the average for seven years, he surely cannot complain if the pensioii is altered. . Mr. McCombs : I notice that you say that the contributors have carried out their part ot the contract and so on. ,i -l • x ±±- Mr. Verschaffelt: There are really two cuts suggested, and one is that the basis ot computation should be altered from three to seven or ten years. ~ , , Mr McCombs: With regard to the deficiency, there was some recommendation that the interest on the deficiency amounted to one million pounds, and a suggestion that the position might be met by paying half that amount. . . Mr. Gostelow: That is what we suggest here. A pound-for-pound subsidy would bring m about £500,000 (half a million). _ .• 9 Mr. McCombs : Would the seven or ten year basis fit m with that half-million suggestion ( _ Mr. Gostelow : No. That half-million suggestion means cutting out 50 per pent, oi the deficiency The alteration to seven or ten years would only cut down 6| per cent, of the liabilities. That would not go very far in that direction. Mr. Bodkin : It would be helped by extending the retiring-age ? Mr. Gostelow : Yes, that would help. Mr. BodMn: Have you computed what that would be? Mr. Gostelow : It would take some six or eight months to do that. There are forty-odd thousand contributors to these funds. Mr. Bodkin: Could you fix it approximately ? Mr. Gostelow : I cannot give you any definite approximation. These recommendations which have been made have been very carefully considered in the light of years and years of experience, and represent, to my mind, the most equitable method of apportioning the deficiency. 11 the btate cannot pay or will not pay the subsidy, then we have to find the fairest way of spreading the sacrifice over every one, and that is what this scheme represents—the fairest possible scheme we have been able to evolve.

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Mr. Wilkinson: I think it was mentioned that where the pensions had been based upon three years as against seven to ten years service the difference would be up to, say, 35 per cent. Mr. Gostelow: That is only in isolated cases. Mr. Wilkinson : Could we not get some examples of those cases ? Mr. Verschqffelt: I can give you one right away. Mr. Newton, who was in the Internal Affairs Department. He was only three years on his last salary. His pension at the present time is about £540, whereas if it was based over ten years it would drop down to about £410. Mr. Wilkinson: Would that be about the average ? Mr. Verschaffelt: No ; his is probably an exceptional case. Mr. Wilkinson: In dealing with a case like that we should have a general idea in regard to the magnitude of the amount involved in connection with this particular class of pension. Mr. Verschaffelt: The only way to do that is to take particular cases ; you could not take the whole lot because it would mean an enormous amount of work. You could take particular cases of any one you know of. Mr. Wilkinson : Perhaps information regarding that might be made available to members of the Committee later. The Chairman : Perhaps you can supply that information ? Mr. Gostelow : We can give you some instances right now. To my mind, these represent the extreme cases. The bulk of the pensioners will have very small reductions. Take Mr. McVilly's case. He retired at age 64 on a pension of £2,000. If Ms pension had been based on ten years instead of three years it would have come down to about £1,360, a reduction of 32 per cent. Then Mr. Jones, of the Railway Department. His pension would have been reduced 35 per cent. Mr. Wilkinson : What is his present pension ? Mr. Gosteloiv: £1,123. Mr. Wilkinson : On a ten-year basis ? Mr. Gostelow : On a three-year basis. Mr. Wilkinson : On a ten-year basis it would be reduced 35 per cent. ? Mr. Gostelow: Yes. Mr. Verschaffelt: His is a special case. Perhaps we had better not take his case as an illustration. Mr. McCombs : Could the smaller pensions suffer an equal percentage ? Mr. Gostelow : It is hardly likely that the smaller salaries would go up to the same extent as those of the higher executives. Mr. Verschaffelt: Certain classes of employees will not be affected at all. Postmen, for instance, and men who have been in the Railway in subordinate positions practically all their life will not be affected. Mr. Wilkinson: It only affects those cases where rises in salary have been given near the end of their service. Mr. Verschaffelt: Yes. Mr. W. Nash : Would it be possible for a seven-years average to be greater than a three-years average ? Mr. Verschaffelt: Ido not think so. Mr. W. Nash: What about the 10-per-cent. and the 12f-per-cent. outs ? Mr. Verschaffelt: If a man has not contributed on the salary he received prior to the cuts it is his own fault; he had the option. Mr. W. Nash : Is it possible for the average salary for seven years to be greater than the average salary for three years. For instance, say a man was getting £600 a year and his salary was reduced by 10 per cent., bringing it down to £54-6, and then again reduced by 10 per cent., bringing it down to £486. The average over the three years might be £545, but taking it on four years at £600 and three years on the smaller amount he might get £576. Mr. Gostelow : He would in that case elect to contribute on the higher salary. Mr. W. Nash : Suppose he has not elected to do so : if you take the salary over the last seven years it will give a greater average than over the last three. Mr. Gostelow: I might point out that there is a provision in the Bill that pensions shall not be increased. Mr. W. Nash : Does that mean that in cases of that type the pension remains the same ? Mr. Gosteloio : That is in the Bill. Mr. W. Nash : Then would it not be better to compute the pension on the three-year basis if the seven-year basis is going to cost more ? Mr. Verschaffelt: I cannot imagine a case where that actually occurs. Mr. W. Nash : Take a man getting £600 a year. His salary is reduced by 10 per cent., bringing it down to £540, then it is again reduced by 10 per cent, to £486. The average over the last seven years will be greater than over the last three years. Mr. Gostelow: I think you will find very few of those cases. Mr. Verschaffelt: That is a hypothetical case. Ido not think you will find a case like that. Mr. W. Nash : lam assuming there are cases of that description. Have you not got a man in the Service who was getting £600 a year for the five years prior to 1930 ? Mr. Verschaffelt: Yes. Mr. W. Nash: Then since 1930 he has suffered two cuts, bringing his salary down to £486. Is not the average over the last three years smaller than over the last seven years ? Mr. Verschaffelt: Yes ; but is there a case like that ? I cannot imagine a man not electing to contribute on the higher rate. He would have contributed on the higher rate because it would be in his interest to do so. I cannot imagine that there is a case of that kind.

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Mr. W. Nash : I am just asking if the average is smaller over the three years than over the seven in that case. The three years would be a smaller sum than the seven years unless the man elected to contribute at the higher rate ? Mr. Verschaffelt: Yes. Mr. W. Nash: Then the Bill will cost the State more money. Mr. Gostelow : No. There is provision in the Bill that no existing pension shall be increased. Mr. W. Nash : There is another matter I wish to bring up, and that is in regard to the £25,000,000 and the £1,000,000 annual liability. What will be the difference between capitalizing the deficiency, and getting £1,000,000 a year out of the capitalization, and finding the £1,000,000 each year out of the revenue of the country ? Perhaps you can tell us that later on ? Mr. Gostelow: There is no difference in principle. If you issue a loan of £25,000,000 at 4 per cent, you have to pay out £1,000,000 a year. It would have to come out of revenue from taxation in the same way as you would have to find it to pay interest on the loan. The two things are exactly equivalent. Mr. W. Nash: Then why try to find the £25,000,000 ? Mr. Gostelow: No one wants to find the £25,000,000, because £25,000,000 would not be put up. You would only issue scrip or give an undertaking to pay. That is all it is. Mr. W. Nash : Is it not one of the suggestions that the Fund shall be put on a sound basis, and to do that an amount of £25,000,000 will require to be paid into the Fund ? Mr. Gostelow : No ; so long as there is an undertaking to pay the £1,000,000. Mr. W. Nash : You report and recommend that the Fund should be put on a sound financial basis. I admit that it is not possible, taking the existing circumstances of the country into account, to do that; but assuming that it was possible to get the £25,000,000 and put it aside for this Fund, it would then be on a sound actuarial basis 1 Mr. Gostelow : Yes. And as far as now can be seen, no further payments would be required of the Government in respect of present contributors. Mr. W. Nash : The Fund needs £1,000,000 annually, which it will use to pay out pensions. What is the difference between that proposal and the State paying £1,000,000 every year without worrying about the £25,000,000 ? Mr. Gostelow : There is no difference whatever so long as the State honours the promise to pay the £1,000,000. Mr. W. Nash: I would like Mr. Verschaffelt and Mr. Gostelow to tell us the difference between where the £1,000,000 comes from if you get the £25,000,000 of capital invested, and where the £1,000,000 comes from to pay the pensions each year if you do not get the £25,000,000 invested ? Mr. Gostelow: From the same place. One is a guarantee and the other is a promise. Mr. W. Nash : In one case it comes from interest on the loan and the other from taxation. Mr. Gostelow : It comes from taxation in either case. You cannot get it otherwise unless you could hand over £25,000,000 in, say, discharged soldiers' settlement bonds. If you cannot get it from surpluses it is equivalent to raising an internal loan. Mr. W. Nash: You raise an internal loan and pay the interest on the loan. Why worry about the £25,000,000 if it has to come from the same source ? Mr. Gostelow : No one is worrying about the £25,000,000. What is wanted is £1,000,000 a year. Mr. W. Nash : Then why all this fuss about the £25,000,000 ? The position of the funds when you have made them actuarially sound is exactly the same as if they were actuarially unsound. The point is this : that you would have to, in the one case, raise £1,000,000 to pay the interest on the £25,000,000, and, in the other case, you would have to raise £1,000,000 to pay the pensions—both amounts of £1,000,000. Mr. Gostelow : That is right. Mr. W. Nash: Then why worry about the £25,000,000 if the £1,000,000 has to come from the same source ? Mr. Gostelow : No one expects to see the £25,000,000 in golden sovereigns. The capital would be in script. That is the point. There is no real difference whatever between the £25,000,000 and the annual sum of £1,000,000. Mr. W. Nash : The point is this: to make the Fund actuarially sound you borrow £25,000,000, and then you raise £1,000,000 each year to pay the interest thereon. The other way you raise £1,000,000 for the purpose of paying the pensions. I cannot see any difference at all. Mr. Gostelow : There is no difference whatever, except that one is a guarantee. If you have stock of 25 millions, you can sell it—that is, it is a negotiable security. The other promise to pay of a million a year is not worth a snap of the fingers if it is not paid. Mr. W. Nash : I should say the one difference worth while from the Civil servants' point of view is that 25 millions is raised and paid into a Superannuation Fund, and they in turn every year pay their contributions to the Fund. It would be a better case, from their point of view, to say, " This is our Fund," whereas now they have to depend on the Government levying taxation to pay it. There is a further point: that the recommendation of the Commission was for an amount of £150, but the Bill provides for £100 minimum before the cuts start to take effect. Then I want Mr. Gostelow, if he would, to give us an estimate of the amount of money that was actually paid out of the funds on account of back service that is not actually provided, for. You take into account a certain deficiency, and show it here. A portion of the deficiency is due to the fact that large sums of money were paid out on account of back service. Mr. Verschaffelt: The contributions of present members of the Fund are paying the pensions of past members.

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Mr. W. Nash: That is so. Could you give us the figure actually paid out on account of back service, and what liability the State at present has on account of back service ? Mr. Fox mentioned in his first report that £1,800,000 would be required at that time. Mr. Gostelow : I do not think the data is in a form that you could readily get these figures. Mr. W. Nash : Take a man on £500 in 1908. In 1911 he retires on his forty-sixtieths. The chances are that he has paid into the Fund, even on a 5-per-cent. basis, on £75. Mr. Verschaffelt: It would be on a 10-per-cent. basis. Mr. W. Nash : Very well, £150 for three years ; and he is now to receive, roughly, £334 a year. Would it not be possible to tell the Committee just what the cost to the Fund was of the difference between that £150 and the £334 ? Did not Mr. Fox give a figure ? I think he did, of £1,800,000. That is a cumulative figure. You have not given any further figures based on that. Could you get us that ? Mr. Gostelow: They are not to be got. Mr. Verschaffelt: The real point is that the shortage of payments to the three funds which the Government should have paid in amounts to at least 3J millions ; and there is the further point that interest has been lost on this and on the present contributors' contributions. Mr. Bodkin : The Bill proposes to abolish the limit of £300. Could you give us any examples which would serve to illustrate whether it would be a better proposition for the State, in lieu of the £300 limit, to grant a pension on an actuarial basis over the whole period, computed on the actual amount paid in, as against the ten-years salary average ? Mr. Verschaffelt: We could give an actual case of that. Mr. Bodkin : For instance, it would be no great hardship to a pensioner if he could choose between the £300 limit or the pension that he had actually paid in cash for. Mr. Gostelow : That would mean you would have to wait until the officer had actually retired. Mr. Bodkin : Exactly ; and if the £300 limit were a hardship, it would be no hardship to give him a pension calculated on the amount he had paid in. It would be no hardship to the class of Civil servant that you mention—professors —or any man if he simply gets what he pays for. Mr. Verschaffelt: Most of them —the University professors —pay on a uniform rate right through. Mr. Bodkin : But not in the case of professional men. Mr. Verschaffelt: No, like Engineers in the Public Works Department, or Inspectors of Machinery, or Inspectors in the Department of Agriculture, or professional men in the Department of Scientific and Industrial Research. Mr. Bodkin: Or a man in the Public Trust Office. The Chairman : We have three Superannuation Boards, have we not ? Mr. Gostelow: Yes. The Chairman : And we have a Pensions Board. Would it be possible for one Board to control the lot, instead of having four ? Mr. Gostelow : Of course the Pensions Board deals with a different aspect altogether. The three Superannuation Funds—that might be possible. The Chairman : What I am looking at is the cost. Mr. Gostelow : There is practically no cost involved. The Chairman : But what about the administrative cost ? Mr. Gostelow : That is very little, because the staff is there to deal with it. Take the Railways ; their own staff do the extra work in connection with the Fund —the tabulation of increases, and contributions, and things like that. The Chairman: And that costs £1 6s. Id. per pay. Mr. Gostelow : I have not any figures. The Chairman: I have not the figures up to date ; but even with the Public Service it is £2 19s. 2d. —as I say, I have not up-to-date figures —and that seems to be a terrific charge on the Fund. The Bank of New Zealand control their work with their Superannuation Fund at 5s. 1 It is interesting, and it wants a little consideration, too. Mr. Veitch : Could you give us the source of that information ? The Chairman: Yes, I will supply it. Mr. Hargest: We know that any reduction in benefits will impose a hardship upon annuitants, both those now and in the future. What would be the effect of an increase in the contributions of, say, 1 per cent. ? How would it affect the Fund 1 Mr. Gostelow: That would not be any good ; that would not affect the men already out. Mr. Hargest: But it would affect the future. Would the Public Service resent having to pay 1 per cent, extra ? Mr. Gostelow : They would, and I think quite rightly so. A good superannuation scheme proceeds on the assumption that no man should be asked to pay more than the benefits he gets out of it. At the present time the contribution rates of many of the men are adequate to pay for their own benefits, and you cannot ask those men to pay for the benefits of anybody else. That is not a fair deal. That is the reason for the subsidy. Mr. Hargest: Excepting that, would they prefer to pay an extra percentage now rather than continue for the additional five years ? Mr. Gostelow : I should have qualified that as regards the females ; the females would probably pay an extra 2 per cent. But that could only apply to future service—you could never make that retrospective. Mr. Hargest: Of course the new retiring-age only applies to those in the Service to-day.

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Mr. Gostelow : That is so ; but you do not get over the difficulty that the present pensioners have caused the liability. Mr. Hargest: But the burden is going to be imposed on the future pensioners as well. Mr. Gostelow: Future pensioners won't worry so much ; I think you will get most of the objections from the existing pensioners. The present annuitants are responsible for the trouble, because they were given free pensions for back service. The man who went out, and who had had only one year, had 97 J per cent, of his pension given him ; and that was covered by a Government promise to pay, and the State as employer has in effect dishonoured that promise. If there is any question of reconstruction to be taken into account, those are the people that are most concerned. Mr. Hargest: But the people who are very vitally concerned to-day are the number of women who are contributing to the Fund to-day and who find themselves faced with the possibility of an extra five years of service. If they had the choice of paying 2 per cent, more as an alternative to those extra years of service, would they not jump at it ? Mr. Gostelow : Two per cent, would not cover it. Mr. Hargest: Some percentage would help to cover it. Mr. Gostelow : It would be quite beyond the bounds of possibility for the older members —those with three years or four years to go. Mr. Hargest: I realize that, but would it not be advisable to consider the point ? Mr. Gostelow : I do not think it would be practicable. Mr. Ansell: You state there is an actual shortage in the payments by the Government of 3f millions—a total of £2,790,000-odd for Public Service and Teachers, leaving a deficiency in the Railway Fund of £700,576. Have I misunderstood the position, that you did not know what the deficiency was, and is your 3§ millions guess, or do you actually know the deficiency in the Railway Fund ? Mr. Verschaffelt: The 3|- millions includes the three funds. Mr. Ansell: I understood that you did not know the deficiency in the Railway Fund. Mr. Verschaffelt: Oh yes. Mr. Ansell: The deficiency in the Railway Fund would be £700,576 —is that correct ? Mr. Verschaffelt: If that is what those figures total up to. Mr. Ansell: Yes. Mr. Verschaffelt: Then that is what it would be. Mr. W. Nash : At the last meeting I asked for the deficiency in the Government payments as far as the Railway Superannuation Fund is concerned. We have the figures in the Actuary's report with regard to the Teachers' and the Public Service —as stated by Mr. Ansell, they total £2,790,000-odd. I was told it was not possible to get the deficiency in the Railway Superannuation Fund. In the Actuary's report there are only two reports —e.g., on the Public Service Fund and on the Teachers' Fund. In both those reports there are tables showing the estimated deficiency in the Government payments. If taken at 4 J per cent, they total £2,799,493. Mr. Gostelow : Yes ; that is including interest. Mr. W. Nash : Can we have the same figure for the Railway Fund ? Mr. Gostelow : A table could be compiled, but I doubt very much the value of a table like that, because the method as regards the Teachers' and the Public Service Funds is based on something specifically laid down in the Act. The Act says the State shall pay a subsidy in accordance with a certain basis. With the Railway Fund there is no question of a subsidy at all. Mr. Ansell: There is the guarantee of a shortage. Mr. Gostelow : That is so. Mr. Ansell: What does that shortage amount to ? Because, after all, that is a Government liability. Mr. W. Nash : Presume that in 1924 certain payments were being made out of the Railway Superannuation Fund to pensioners, and the Government at that time were expected to pay so much in. Can you tell us what they did not pay in that they ought to have paid in ? Mr. Gostelow : I doubt if we could do that. Take the first seven years of the Fund—Government paid in no subsidy. There was no statutory obligation to pay a subsidy. Mr. W. Nash : Then what is the shortage ? Mr. Gostelow : No one knows. Mr. W. Nash : You would know what they should have paid in. Mr. Gostelow : No, I would not even know that. They started their Fund on their own assurance that it would be quite solvent at 3 per cent., and it was some seven or eight years after that when the first valuation was made. How could we say what the shortage was in the meantime ? Mr. Ansell: How does Mr. Verschaffelt arrive at the figure of 3J millions ? Mr. Gostelow says there is no means of ascertaining the shortage. Mr. Verschaffelt: Nothing definite. We are working on the basis of the two other funds —you have the actual figures of those. The Railways, since 1927, have become much worse. They are paying in now more than pound-for-pound subsidy —about £28,000 a year more. Chairman: Quite a large number of letters have come in from different institutions. The secretary is replying, stating that their cases will receive consideration, and that the writers will be advised later on. Meantime they are being asked to prepare written statements. We have further communications from Mr. Gostelow, Government Actuary. I think we had better have them read— thev will then be under the consideration of the Committee.

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Government Actuary's Office, Wellington, 4th November, 1932. Memorandum for the Chairman, Select Committee, Superannuation Funds' Bill, House oe Representatives. Further to my memorandum of the 2nd instant, the enclosed copy of a memorandum submitted to the National Expenditure Commission on the 22nd March, 1932, will doubtless be of value, and will enable members to visualize the parlous financial position of the funds. C. Gostelow, Government Actuary. Government Actuary's Office, Wellington, 22nd March, 1932. Memorandum eor the Chairman, National Expenditure Commission, Wellington. Government Superannuation Funds. In accordance w r ith your request for figures showing the position of the Superannuation Funds if, for hypothetical purposes, they were to be regarded as adjudged bankrupt at the last valuation date and liquidated solely in relation to their accumulated funds, 1 submit the following comparative statement of the accumulated funds, the contributions of existing contributors, and the liabilities in respect of existing pensioners, widows, and children

I. On the hypothetical assumptions that the funds were put into liquidation, and that the existing pensioners were treated as " preference shareholders," with the prior right of having their claims satisfied before existing contributors shared in the assets, the position would be as follows : —

It will be seen from the above table that on such a hypothetical basis of liquidation of the combined Government Superannuation Funds existing pensioners would sacrifice 36-07 per cent. (7s. 3d. in the pound) of their pensions or allowances, and the contributors still in Service would forfeit all the contributions they have paid into the funds. 11. If on the other hand existing contributors were allowed to withdraw their contributions (without interest) before the hypothetical liquidation of the funds, the position would be as follows : —■

It will be seen from the above table that, if all contributors still in Service were given their money back, the balance of the accumulated funds would be sufficient to pay only 3-26 per cent. (Bd. in the pound) of the pensions of those already on the funds. I should perhaps make it clear that in the above tables no account has been taken of future Government subsidies, and that the main objects in presenting them in this form are for illustrative purposes, to substantiate the contention previously put forward that, in order to place the funds on a satisfactory footing, one of two courses should be followed, namely — (1) That the Government should meet its contractual subsidy obligations; or, alternatively, (2) That if any alteration in the subsidies is considered necessary, any consequent reconstruction of the scheme should apply to pensioners and contributors alike. C. Gostelow, Government Actuary.

, , f I Capital Value Amount of r id ! of Pensions and Name of Fund. Accumulated contributors I Allowances still in the Service, actually entered upon. £ £ £ Public Service (1930) .. 2,882,504 2,443,225 3,375,540 Teachers'(1930) .. .. 1,198,711 1,103,814 2,293,201 Railways (1927) .. ..J 985,828 1,261,560 2,257,446 All funds .. .. .. | 5,067,043 4,808,599 7,926,187

Proportion of t, !.• *-m Contributions available Name o£ Fund Proportion of Existing Pensions tliat the f f d to c M . JN ame ot a una. Funds could meet . gtffl Service. Public Service (1930) .. 85-39 per cent, or 17s. Id. in the pound Nil. Teachers' (1930).. .. 52-27 per cent, or 10s. 5d. in the pound Nil. Railways (1927) .. 43-67 per cent, or 8s. 9d. in the pound Nil. All funds .. .. 63-93 per cent, or 12s. 9d. in the pound Nil.

: I Proportion of Existing Pensions that could be i Proportion of Name of Fund. met from Balance of Funds after refunding Contributions that the Contributions of Existing Contributors. Funds could meet. __ _ - Public Service (1930) .. 13-01 per cent, or 2s. 7d. in the pound Full. Teachers' (1930).. .. 4-14 per cent, or lOd. in the pound .. Full. Railways (1927) .. Nil 78-14 per cent, or 15s.8d. in the pound. All funds .. .. 3-26 per cent, or 8d. in the pound .. Pull.

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Government Actuary's Office, Wellington, Bth November, 1932. Memorandum foe the Chairman, Superannuation Bills Committee, House of Representatives. With reference to questions raised regarding subsidy " shortages " in the Government Railways Superannuation Fund, the following table may be of interest: —

I should, however, like to amplify what I stated in evidence before the Committee—i.e., that the difference between the annual subsidies recommended in actuarial reports on the Railways Fund and those actually paid into the fund are not " arrears " in the same sense as in the Public Service and the Teachers' Funds. In the Public Service and the Teachers' Funds the subsidy recommended by the Actuary is in accordance with the provisions of the statute (sections 49 and 111 of the Act), and is merely the amount necessary to cover the liability of the State year by year in respect of current pensions. It has no connection with the actual deficiency in the funds. In the Railways Fund there is no similar provision for a statutory subsidy, nor does the Act require an actuarial valuation. As set out in my memorandum of the 2nd instant (page 13) the first actuarial examination of the Railways Fund, as at 31st March, 1912, disclosed a deficiency of £1,776,851, and the Actuary stated that an annual subsidy of £50,000 was necessary in respect merely of pensions and allowances in possession or accruing within the ensuing three years. This was on the lines of the subsidy method prescribed for the Public Service and the Teachers' Funds. No subsidy was paid to the Railways Fund for the years 1903-10, inclusive, and with the exception of one year, 1915, when £50,000 was paid, an annual subsidy of only £25,000 from 1911 to 1919 was paid. Accordingly, for the seven years ended 31st March, 1919 —the period covered by the second actuarial investigation—the fund received £150,000 less than was recommended, and also lost the benefit of interest accretions on that amount. It is clear that, had this amount been paid, the deficiency disclosed at the second valuation would have been less by £150,000 (and interest thereon) than the amount of £3,959,455 shown in the actuarial report. As the Actuary was dealing only with the actual facts, and not with the position as it might have been, and as he was not limited by any statutory provision as in the case of the other funds, the recommendation that the future annual subsidy be £170,000 (made up of £158,378 to cover interest at 4 per cent, on the deficiency and £11,622 to provide for the ultimate redemption of the deficiency over a long period of years) had the effect of blotting out the past and starting with a clean sheet from 1920. Similarly, the difference of £490,000 between the subsidy recommended of £1,360,000 (that is, eight times the annual rate of £170,000) and the amount of £870,000 actually received for the period 1919-27 was reflected to the extent of that amount and interest thereon in the deficiency of £6,810,204 disclosed at" the third valuation as at the 31st March, 1927. The Actuary's recommendation that the future annual subsidy be equal to 10 per cent, of the pay - roll (equivalent to £306,459, being interest at 4J per cent, on the deficiency and an amount, commencing at about £33,541, to gradually redeem the deficiency and make some provision for new entrants) would, under present conditions, if given effect to, provide for all time and would automatically counteract the shortcomings of the past. In the five years that have elapsed since the last valuation the fund has received £850,000 less than the amount recommended, and unless the Working Railways Account makes a substantial increase before the next valuation the deficiency then disclosed will show a corresponding increase, and a still higher subsidy will be required in the future. ' Summing up, it will be seen that the Actuary reporting on the Government Railways Fund is given a free hand in making recommendations, and by basing his computation of future subsidies on the deficiency shown by valuation he is able to make adjustments for previous years. This aspect is very important when comparing the subsidies to the Railways Fund with those to the Public Service and the Teachers' Funds. In each of the latter funds the subsidy bears no relation to the actual deficiency disclosed by valuation (vide pages 8 to 10 of my memorandum of the 2nd instant), but is the amount merely to cover the State's current liability year by year in respect of the pension outgo of the three years succeeding the valuation date. It will also be seen that, while the subsidy recommended for the Railways Fund will, if given effect to, definitely check and ultimately extinguish the deficiency, the statutory method at present prescribed in connection with the Public Service and the Teachers' Funds will, for many years to come, be powerless to prevent the deficiency from increasing, and that any failure to keep up with the weak standard provided in the Act will only accelerate the growth of the deficiency. I trust the above explanation will eliminate any possibility of confusion between the " actual deficiency" in the Superannuation Funds and the " subsidy arrears " of the State to these funds, and will make it clear that the terms are not synonymous, as would appear to be the impression in some quarters.

iss» ™g dby s * b «vt m re TS dby Subsi^r uaiiy £ £ £ £ 1903 .... * Nil 1904 .... * Nil 1920 .. .. 170,000 75,000 1905 .... * Nil 1921 .. .. 170,000 75,000 1906 .... * Nil 1922 .. .. 170,000 75,000 1907 .... * Nil 1923 .. .. 170,000 75,000 1908 .... * Nil 1924 .. .. 170,000 125,000 1909 .... * Nil 1925 .. .. 170,000 105,000 1910 .... * Nil 1926 .. .. 170,000 170,000 1911 .. .. * 25,000 1927 .. .. 170,000 170,000 1912 .. .. * 25,000 1913 .. .. 50,000 25,000 1928 .. .. 340.000 170,000 1914 .. .. 50,000 25,000 1929 .. .. 340,000 170,000 1915 .. .. 50,000 50,000 1930.. .. 340.000 170,000 1916 .. .. 50,000 25,000 1931 .. .. 340,000 170,000 1917 .. .. 50,000 25,000 1932 .. .. 340,000 170,000 1918 .. .. 50,000 25,000 1919 .. .. 50,000 25,000 * Wo actuarial valuation was made prior to 1912.

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The subsidy arrears (excluding interest) amount to £1,301,000 in the Public Service Superannuation Fund, and £735,251 in the Teachers' Superannuation Fund, a total of £2,036,251 for both funds (exclusive of interest) (vide Tables X and IX of the appendices to the statutory reports on the Public Service and Teachers' Superannuation Funds—parliamentary papers H.-26a and E.-8a of 1932). As already explained, no data is available as to the subsidy arrears (as the term is understood in relation to the Public Service and the Teachers' Funds) in the Railways Superannuation Fund. The actual deficiency represents the additional assets the funds should have in hand before they can be said to be in a position fully to meet their liabilities, present and prospective—i.e., before they can be regarded as being solvent. It is immaterial whether such assets are in liquid securities or in the form of a guaranteed regular income of adequate amount. At the last valuation dates the actual deficiency of the combined funds amounted to £20,240,845 (vide page 16 of my memorandum of the 2nd instant), and at the 31st March, 1933, it is estimated that it will be in the neighbourhood of 25£ millions sterling. The recommendations made by the National Expenditure Commission, which are embodied in the Bill now under discussion, are in the direction of providing a pound-for-pound subsidy, which, if regularly paid, will, with the guarantee of a 5-per-cent. interest provide for about one-half of the annual income required to cover the deficiency. The reductions in benefits are estimated to provide for the remaining half. This would have the effect of wiping off all arrears, and the future annual liability of the State would be approximately 5-£ per cent, of the salary bill. C. Gostelow, Government Actuary. Mr. Ansell: For 1911 to 1912 110 subsidy was recommended, yet £25,000 was paid in in each case. Can you give an explanation of that ? Mr. Gostelow : The Railways Fund was started in 1903 without any actuarial certificate as to the contributions. There was no provision for a subsidy. The Government undertook to guarantee any shortage in the Fund. Nothing was paid till 1910, and then it was seen that the contributions of the existing members were being eaten up too quickly, and the Government accordingly put into the Fund £25,000 from the Working Railways Account. Mr. W. Nash : You say that the deficiency disclosed at the second valuation would have been less by £150,000 (and interest thereon) than the amount of £3,959,455 shown in the actuarial report. Mr. Gostelow: That was the deficiency disclosed. Mr. W. Nash : It would have been £3,809,000-odd had that amount of £150,000 been paid ? Mr. Gostelow: Yes, round about that. Mr. W. Nash : On page 3 of the report you mention the interest rate as 4 per cent., and as 4| per cent, in this letter. Mr. Gostelow: The last valuations have been made at 4f per cent. Ernest John Dash, President, Amalgamated Society of Railway Servants of New Zealand. (No. 3.) Mr. Chairman and Gentlemen, it gives us very great pleasure to meet you this morning on behalf of the Amalgamated Society of Railway Servants, representing over eight thousand members of the Second Division, who are very much concerned at the moment about the proposed alteration in the Superannuation Act. We consider that we have entered into a contract with the Department in regard to superannuation, and we on our part have kept that contract. What we ask is that the Government do their part and keep to the contract —namely, a State guarantee. We have prepared a very lengthy statement showing reasons why the Act should not be amended, and I will now ask Mr. Mcllvride to read it to you ; he will also explain any points or answer any questions you may desire to ask. Lewis Mcllvkide, Secretary, Amalgamated Society of Railway Servants of New Zealand. (No. 4.) The Amalgamated Society of Railway Servants of New Zealand, an organization of men who have been either induced, by definite promises of the management, or compelled, as a condition of their employment., to contribute to the Railways Superannuation Fund, is seriously perturbed over certain proposals of the National Expenditure Commission, and the Bill based upon that Commission's Report in relation thereto. Whilst admitting that the duties entrusted to the Commission necessitated investigation into questions complex and varied —questions covering an exceptionally wide range and of the greatest magnitude and national importance —and whilst recognizing the appearance of thoroughness with which they have accomplished their difficult task, we cannot agree with their recommendations so far as the Railways Superannuation Fund is concerned, and submit that such recommendations should not have been made before the representatives of the contributors had been given an opportunity of stating their case, as viewed in the light of the history of the Fund. In fact, we are at a loss to understand why the Superannuation Fund came within the ambit of their investigations at all, as it was in no way responsible either for the depression or for the adverse budgetary position which prompted the Government to set up the Commission. On the contrary, the economic position of the country has been vastly improved as a result of the Fund relieving the Government from payment of compensations for " back service," and old age and widows' pensions on account of ex-employees— obligations which otherwise would have been a direct liability on the State. The financial position and prestige of the country have likewise been at least temporarily improved by the utilization, in the interest of the country generally, of moneys which the Government, as an employer, should have paid into the Superannuation Fund as an ordinary business precaution to strengthen the Fund. If the recommendations as set out by the Commission are now given effect to, they will defeat the

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underlying principle of the superannuation-fund scheme, sow the seeds of dissension and revolt throughout the Civil Service, and also, so far as the lower-paid men particularly are concerned, destroy the reasonable expectation of their lives. The underlying principle of the Railways Superannuation Fund scheme was to make adequate provision for old age —strictly on the terms embodied in the original statute —at a time in the life of every contributor calculated to allow a reasonable number of years for well-earned, happy retirement; and nothing should be introduced now to break the contract by altering the anticipated annuity or the time at which it was to be granted. In other words, as stated when the original Bill of 1902 was introduced, " the principle underlying the scheme is that the men of the Railway service of the country, the most difficult and onerous of all the public services, are to be rewarded after their life's work in a manner worthy of the State." Any interference with or alteration of the original contract will be an indelible blot on the legislative escutcheon of New Zealand. It will destroy absolutely the confidence of the people in the sacredness of British governmental contracts, create grievous antagonisms and strife, reduce the incentive that an adequate superannuation benefit is to the wage-earner to make provision against impecunious old age, and possibly undermine the whole Fund by wholesale demands for a return of their money by present contributors. The Commission's theoretical actuarial deficit is also grossly misleading. It falsifies the true position, for in our opinion the Fund, taking into account the fact that it was not founded on an actuarial basis, is in a no more perilous position in this respect than most of the businesses, banks, and other institutions in the country, or, for that matter, the Dominion itself ; but such an allegation, made in an atmosphere of panic, unfortunately creates an entirely wrong psychology regarding the Fund and its contributors. When the Fund was established in 1902 it was not intended to be on an actuarial basis. Sir Joseph Ward, when moving the second reading of the Bill, said, " Now, if you are going to ask for a superannuation scheme to be established in this country, or in any country, upon what may be termed, from an actuarial point of view, a sound basis, you would never get a scheme at all." It will thus be seen that at the inception of the Fund it was never contended that the income of the Fund as laid down in the original statute was an adequate income from an " actuarial " point of view to provide for the benefits set out in the original Act. The basis of our Fund was similar to that of most superannuation funds —i.e., a contribution from the employer and the employee. A 2|-per-cent. contribution from the wages of the employees, and a 2|--per-cent. contribution from the employer, was the example quoted by Sir Joseph Ward of one of the leading British railways (the North-western) Superannuation Funds, which, founded on that basis and after forty-seven years' experience, and after meeting every conceivable claim, had £1,114,000 of accumulated assets to its credit. As a practical proposition this British railway scheme was eminently successful, but, as pointed out by Sir Joseph Ward, from an " actuarial" point of view, it was unsound. To ensure success with his scheme, Sir Joseph Ward, in the first instance, provided for a 3-per-cent. contribution from the wages of railwaymen, and a 3-per-cent. contribution from the Government as the employer. This basis, however, was subsequently altered, and the Government guaranteed the Fund, instead of paying a cash contribution year by year. The then leader of the Legislative Council said, " The State, instead of paying" a direct contribution annually, calculated on a percentage scale, came in as guarantor of any possible deficiency." Speaking on the same question, Sir Joseph Ward said, " In the case of the North-western Company, the fact of the company itself giving its contribution of 2J per cent, was a large guarantee on the side of the company, which would ensure that provision of capital which is looked to as the basis upon which to rest the structure, and when the State is behind such a scheme as this I do not think there are any honourable members who will assert that the fact would not to some extent take the place of what is looked upon as being necessary to make the scheme actuarially sound." And again, "If the system were found to be unsound, it could only be because the State refused to make up the deficiency." It is clear that the Government, by substituting a guarantee as its contribution instead of an actual money contribution from the inauguration of the Fund, was committing itself to a'definite liability towards contributors, which the present Bill proposes to repudiate. Had a cash payment been made annually by the Government, as originally intended, there can be no doubt that the state of the Fund would have been even " actuarially" sound to-day, and the present psychology regarding it would never have developed. But to endeavour to introduce at this late date an " actuarial" soundness to a fund which has been carrying on under Government guarantee for the past thirty years is to place too heavy a load upon present taxpayers and present contributors, and it can be shown that there is no need for such a change. The State guaranteed the Fund, and the 1902 Act promised that no future legislation would interfere with the rights of contributors as laid down therein, and the State should honour its pledge, and, if it is honest, must honour its pledge. This pledge was that " all benefits under this Act shall be conferred upon any person who has actually contributed, and shall remain in force, and shall not be prejudicially affected by the amendment or repeal of this Act." The spirit and intention of this clause has been faithfully observed by all subsequent Governments, and it will ill become the present Administration, for the sake of complying with a sudden demand for actuarial soundness, to ignore the validity of the contract entered into by the State with the contributors at the inception of the Fund. Such action destroys at one fell stroke the sanctity of contracts which the Empire went to war to preserve. The State guaranteed the Fund, and there is no present or future justification for failing to maintain that guarantee. The guarantee is that, without altering in any way the rights of contributors at the time they joined the Fund, the State will pay annually to annuitants the amounts agreed upon from the specified time of retirement.

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Regarding the stability of the Fund, all that is required is that the Government's contribution year by year should be sufficient to balance income and expenditure. This would give an assured actual stability to the Fund, although not an " actuarial " stability. No Government can afford to destroy its own and the Nation's credit by dishonouring its pledges, and no Government should be allowed to accept the recommendations of any Commission advocating the breaking of contracts solemnly entered into —subversive recommendations which, if given effect to, will destroy all faith in Government pledges, but which are passed over lightly by the Commission with the words : " Be that as it way " ! If we examine the reason for these recommendations we find it is ostensibly to save the Fund from progressive actuarial insolvency, but it is really to exempt the Government from the necessity of paying its just debt to its employees. If carried out, the recommendations will constitute a definite financial advantage to the Government and to the Government alone. There will be no advantage to the vast, majority of the men ; on the contrary, the contributors will be defeated in what must be recognized as the reasonable expectation of tlieir lives —that is, that they would work out their period, and receive superannuation benefits as determined by the original Superannuation Fund Act of 1902, for which they have paid either in service (for the Government contribution is only a deferred payment made for service) or in cash. If the Government accepts and places these recommendations on the statutebook, the men will be deceived, and will be neither more or less than the victims of a gigantic confidence trick perpetrated by the Government. The men have put up their money under agreements at least as binding as those of Ottawa, and demand that the Government's agreement shall be honoured. Any failure on the part of the Government to do so will be, to use a racecourse phrase, pure " welshing." It may be argued that, if the reasonable expectation of contributors is defeated, the present Government will not be responsible, as they could not foresee or provide for the change in conditions. Our reply to that is that the State, in years of prosperity, made no attempt to place the Fund on an actuarial basis, and, even if the conditions which have brought about the present unsatisfactory position were beyond the control of the Government of the day, it is manifestly unfair that the burden of the prejudicial effect of these conditions should now be imposed upon the men —unfair in any circumststnces, but dishonestly unfair in view of the fact that it is the bounded duty, under definite contract, of the State to guarantee the Fund against insolvency. If it is contended that it is impossible for the Government to find the required sum to make the Fund actuarially sound, then surely, in view of the State's pledged word as guarantor for the Fund and its failure in the past to pay sufficient contributions for this purpose, it is not too much to ask that the State's contribution to the Fund be now made at least sufficient (in view of the enormous cash saving made by reducing Civil servant's wages) to make income equal expenditure, and so implement the State's guarantee by providing a practical safeguard against insolvency until the peak-load period is over. The Railways Superannuation Fund has now been in existence for thirty years, and its cycle is forty years. That is to say, after forty years' operation the annual additional load resulting from new retirements would be counterbalanced by the number passing out from the Fund through death. The cycle, however, having been disturbed by placing officers on the Fund at thirty-five years, the Fund is now bearing its maximum stress. Should no further retirements for retrenchment purposes take place, there will be no further financial burden placed on the Fund. In fact, for the next five years, there will be, by the above action, even less than the ordinary number of retirements, and the Fund will be relieved by the death of those superannuated members who die during this period. All that is required, therefore, is that income shall be made to equal expenditure for the next five years, after which the Fund will be, from a practica operative point of view, self-supporting. When the scheme was launched every inducement was offered to the men to join the Fund by the Government and the Department. The General Manager of Railways, in November, 1902, sent a circular letter to every member of the Railway Service explaining the provisions of the Act, which was to come into operation, on the Ist January, 1903. In this letter he urged upon employees the advantages which would accrue to them if they joined the Fund. He even worked out for their information examples of the benefits which would be obtained after the completion of forty years' service of members in the various types of employment. For instance : " A platelayer at 7s. per day (equals annual pay £109 lis.), age 44, with twenty years' service, when joining the Fund Ist January, 1903, would pay a contribution at 6 per cent, of his pay = £6 lis. ss. per annum for sixteen years. Being then sixty years of age, he would be entitled to retire on a superannuation allowance of £65 14s. 7d. per annum for life, being equal to thirtysix sixtieths of his annual rate of pay." That may not be a very good example. Let me put the other side : A surfaceman pays 5 per cent, of his wages for forty years. That 5 per cent compounded means that he has paid in over the forty years £962. If you take the Government subsidy of £1 for £1, also compounded, there is another £962, which gives that man £1,924 against his name at date of retirement. If he were twenty-five years of age when he joined the Fund, taking the Government Statistician's mortality table of 68f years for the expectation of life, then he can expect 3| years on retirement. His pension would be approximately £3 a week. In 3| years he would draw about £546. Interest would be accruing on the amount left in the Fund" in the meantime. So that if that man died at the end of 3|- years the Fund would be about £1,600 better off as the result of his having contributed. The other point is that if this Bill goes through, after forty years contributing this man will get very little more out of the Superannuation Fund than the State would give him and his wife as of right by way of the oldage pension.

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The General Manager's circular proceeded to make this definite promise : " All the benefits of the Act are secured after the first contribution." The appeal to join the Fund proceeded as follows : "It is quite optional for members of the staff to join the Fund or otherwise as they think fit, and for those who do join to name any date not later than the 30th June, 1903, as the date from which their contributions shall begin. Intending contributors should, however, keep steadily in view the fact that all the benefits of the Act are secured after the payment of the first contribution, and that each day they put of! joining the Fund after the Act comes into operation they are taking serious risks which, as prudent men, it is inadvisable for them to run." Among the principal advantages mentioned by the General Manager of Railways at the time were that " the Fund combines all the advantages of insurance, savings-bank, and pension fund, and provides all the machinery for automatic collection of contributions, thus relieving contributors of the anxieties and loss of time incidental to the payment of premiums or savings-bank deposits, while absolutely insuring that a contributor saves a certain amount of money each fourweekly period, and makes at the same time provision for old age, wife, and family." Officers were also sent throughout the country to explain the benefits of the Fund, and to assure members that they had the pledged word of the State, backed by legislation, that the benefits provided in the Act of 1902 would never be repudiated. On these grounds—that they had the best of all possible security, the State's guarantee —the great majority of the men embraced the scheme, and their existing insurance policies and other provident engagements were sacrificed in favour of the Fund. Now, after thirty years of faithful observance of its agreement with the men, the Government, in the name of expediency, proposes to defraud the men of their rights, break its plighted word, play havoc with the honour of the State, and for what ? To enable larger superannuation funds to be built up to satisfy an actuary —funds which any similar Government in the future would not hesitate to raid in the name of this same immoral expediency. Mr. Lloyd George once said, " National honour is a reality, and the nation which dishonours its obligations is doomed." It is the national honour of New Zealand which is at stake in the present Bill. A Brief Record of the Fund. —The Government Railways Superannuation Fund Act, 1902, became operative on the Ist January, 1903. Permanent members of the staff had the option of joining the Fund between Ist January, 1903, and 30th June, 1903. 6,504 members were eligible to join on the Ist January, 1903. Of these, 6,438 members joined, and 66 declined to join. It was made compulsory for all members appointed to the permament staff on and after the Ist January, 1903, to contribute to the Superannuation Fund. Members' Contributions. —From the inception of the Fund in 1903 to the 31st March, 1932, members have contributed to the Fund £2,855,794 19s. sd. Government Contributions. —During the first seven years of the scheme the Government paid nothing to the Railways Superannuation Fund. Since 1910, the Government has contributed £1,970,000 to the Fund. It will thus be seen that the Railway employees have so far contributed £885,795 more to the Fund than the Government. In most superannuation funds the employer contributes equally with and at the same time as the employee. Instead of this the " Government guarantee " was used as security for the benefits provided under the Act. Examination of Commission's Report. More Time essential for Examination of the Bill. —A critical examination of the National Economy Commission's ten-thousand-word report upon the Superannuation Funds reveals many serious discrepancies which can only be explained by the enormous scope of work the Commission attempted to review in an extremely short period. And so many points of a controversial nature regarding superannuation have been raised by the Commission, all requiring most careful checking and analysis, there is an unanswerable case for delay in deciding to proceed with the Bill. Such delay is essential if this investigation of the Report and of the Bill to which it has given rise is to be carried out with sufficient care to justify confidence in its conclusions. Employees Principal Contributors. —Particularly is this so when the position, as revealed by the Commission, is that employees of all the State Departments have contributed to the Fund £8,940,000, as compared with the State's contribution of £4,683,000. This surely gives the contributors a right, in equity, first to sufficient time to thoroughly examine the report and Bill, and then to a predominating influence in deciding what course should be pursued with the accumulated funds. Commission wrongly accuses the State. —The National Expenditure Commissioners stated, inter alia (paragraph 1387), that " unless the State is able to make good its obligations to the Fund " certain radical alterations would be required. It should here be noted that the Commission means " actuarial " obligations based on certain figures presented to it. This vital error in statement overlooks the fact that the Funds were never intended to be on an actuarial basis. There is ample evidence on record to prove this statement. Thus an attempt has been made by the Commission to bring about a complete change in the basis of the funds, by introducing actuarial considerations instead of actual ones, at a time when the' country is in a worse condition to stand such a change than it has ever been. Nothing wrong with the Present System. —At no point does the Commission show why a change of this kind is necessary or should be introduced now. Its only reference to the present system is the recommendation (paragraph 1449) to alter the method by which the amount of annual Government subsidy to the funds is now decided. This subsidy is described as " merely an average annual proportion of the actual annuities falling due during the next triennium which, the funds are unable to provide from their own resources." There is nothing in the report to show why this system, which is working

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well in practice, should be abandoned and replaced by a pciund-for-pound subsidy system. The Commission errs gravely when it states in the same paragraph that " the Government subsidy bears no relation to the actual deficiencies in the funds." There are no actual deficiencies in the funds. On the contrary, each of the funds has actually a genuine credit balance in hand amounting to very big figures. For instance, the Railways Superannuation Fund was able to carry forward, at the 31st March, 1932, a credit balance of £1,454,173. Commission's Inconsistency. —In paragraph 1392 of the report the Commission records that the Civil Service Amendment Act of 1871 preserved the existing rights of those entitled to pensions, yet with this sound knowledge of constitutional practice in British communities in regard to matter of the kind the Commission recommends that the existing rights under the present funds should now be sacrificed ; while in paragraph 1.479 it gravely expresses the opinion that- " a second failure of the State to meet its obligations would shatter all faith in Government superannuation schemes." This extraordinary inconsistency would be very difficult to parallel in the whole history of Commission reports. The National Economy Commission desires to set a precedent in breaking State obligations, while pathetically expressing the hope that no future Commission will make similar recommendations. It creates a precedent, but warns future generations not to follow its lead. A One-sided Statement.—At paragraph 1411 the Commission reports that " the potential liabilities on the funds had been added to from time to time without provision being made to meet these additional liabilities." It does not record the fact, however, that all of these alterations were come to by mutual agreement between the employees of the Department and the Government, nor does it point out that, in return for certain advantages to be gained by such alterations, the employees agreed to disadvantages to themselves in other directions. For instance, the original agreement was for forty years' service for a superannuation of two-thirds of the salary or wages at the time of retirement; but this was altered, in return for concessions in other directions, to two-thirds of salary or wages over an average of three years' remuneration prior to retirement—a very material difference. A Fanciful Deduction. —In paragraph 1388 the Commission draws special attention to what it calls " the huge potential liabilities on the State in regard to the funds." This statement is only supported by an obviously ridiculous declaration that " taking the three funds as a whole (paragraph 1475) the present annuitants could obtain a dividend of only 12s. 9d. in the pound of their annuities or allowances, whilst contributors still in the Service would forfeit all the contributions they have paid into the funds." The absurdity of this statement lies in the fact, firstly, that there is no prospect of such a fund requiring to be immediately liquidated, and, secondly, if such a liquidation were decided upon, the obvious course would be to eliminate all present annuitants from any share in the fund if the amount they had received from it were equal to, or more than, the amount they had paid into it. Again it is necessary to draw attention to the fact that the amending Bill's present proposals are in the direction of placing the funds upon an " actuarial " basis, ignoring the fact that they were never intended to be upon such a basis, and would never have been started if such a basis had been proposed. A Great British Precedent. —In paragraph 1389 the Commission admits that some form of superannuation is necessary in any State service, and draws attention to the fact that in England as early as 1810 a superannuation Act was passed providing for free pensions to retired State employees. It should be noted that not only were no contributions required from employees under the English Act, but that no funds were required to be built up to meet the requirements of the Act. Yet, after over one hundred years' operation, the English Act, with certain amendments, is still operative, and each amendment has preserved the rights of superannuitants as provided in the previous Acts. Further, despite the great demands for reduction in the cost of social services owing to the intensely severe economic pressure of the times in England, no party has even suggested interfering with the existing superannuation rights of those in the English Civil Service. It may be mentioned, further, that the English State Superannuation Act provides for benefits at least as good as those under the New Zealand Act. Recent evidence is to hand bearing upon this point. The Commission shows Bias. —In paragraph 1390 the Commission goes out of its way to remark that " more particularly as the emoluments of the senior public servants are, as a general rule, on a somewhat lower plane than those in other callings," Government contributions must be regarded as in the nature of deferred pay in any retirement scheme. The objectionable part of this statement is the clause " more particularly the emoluments of the senior public servants." Had the Commission understood its job, and possessed the desire to state the case fairly, it would have made no such class distinction. It is thoroughly well known to all those engaged in the great business of conciliation and arbitration awards that the rates of pay in almost all sections of the Civil Service, including Railways, are lower than they are outside the Service, and those who have had the business of conducting negotiations for the various State Departments in regard to wage scales know and have recognized throughout the period since superannuation funds were created that these funds are a definite factor in explaining this disparity as between rates of pay inside and outside the Services. The distinction made by the Commission is therefore held to reveal class bias. Commission recommends Breach of British Constitutional Practice.—The Commission (paragraph 1392) mentions that the New Zealand Civi 1 Service Amendment Act, 1871, preserved the existing rights of Civil servants. This was quite in conformity with British practice. The proposals of the present amending Bill, however, depart entirely from this constitutional practice of honourable fulfilment of contracts. In paragraph 1394 the Commission refers to the Superannuation Act of 1907, and in connection with this it states that " existing rights of all contributors to the Superannuation Fund were preserved." In view of the Commission's evident knowledge of past practice in dealing with such funds, the present proposals indicate a lack of appreciation of the moral seriousness of the issue— namely, to set a precedent which initiates the practice of ignoring existing rights in connection with the State's contracts with its employees.

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Commission's Incomplete Statement of State's Liability.—The Commission mentions (paragraph 1394) that the State's liability to the Public Service Superannuation Fund for accrued compensation incurred prior to the fund's initiation was £560,000, and (paragraph 1415) that its " actuarial " liability in regard to back service was £1,816,719. The Commission does not give similar figures for the Railways Fund. This is information which should have been contained in the report had it been as thoroughly prepared as the importance of the subject warranted. It is information which is essential to any true estimate of the position. Its absence supplies another reason for further time to examine the measures proposed. In regard to the Teachers' Fund, the Commission shows (paragraph 1419) that the fund commenced with an initial deficiency of £800,000, due to back service, or an actuarial deficiency at the present time of £2,595,313. It is obvious, of course, that had no fund been inaugurated these actuarial liabilities would never have been projected, as they are now, to make scare headings for newspapers, and to produce panic legislation that " out-Langs " Lang. The Railway Department's liability on account of back service, although omitted from the Commission's report, has been calculated at £600,000, or an actuarial liability of approximately £1,816,719. The Effect of Actuarial Distortion. —From this it will be seen that the total actuarial liability placed by the State on the three funds from the day they were brought into existence was £6,212,032. These facts are recapitulated here to show the absurdity of introducing questions of actuarial liabilities in regard to State superannuation or pensions funds. The total amount contributed to the three Superannuation Funds—Public Service, Teachers', and Railways —by the State for the year ended 31st March, 1932, was £411,000. The total of pensions paid on a non-contributory basis administered by the Pensions Department for the year ended 31st March, 1932, was £3,088,536. Supposing a fund were instituted to cover these noncontributory pensions, its immediate actuarial liability would be £68,634,133, for this is the capital sum at 4J per cent, (the Actuary's interest rate) which would be required to meet these noncontributory pensions yearly. These comparisons are made for the purpose of showing into what astonishingly fanciful figures of actuarial liability the country's annual liabilities can be made to mount, and to discount completely the demands made by the Commission for an actuarial basis to be applied to contributory State Superannuation Funds. Other Discrepancies revealed.—ln paragraph 1396 the Commission shows that whilst employees have contributed £8,940,000 to the various funds, the State has contributed only £4,683,000. The accuracy of these figures may have to be challenged, because in stating the amount contributed by the State to the Railways Superannuation Fund the Commission's figures differ by £50,000 from those supplied to this society by the Department. If the general reliability of the Commission's statements is open to question in this way, it is most important that the Government should have them checked, or it may be grossly misled in regard to the fund. It is worthy of note that at paragraph 1429 the Commission quotes series of figures indicating the alleged actuarial deficiencies of the various funds up to the date of the last published actuarial valuation. Surely it would have been reasonable to await the completion of an up-to-date actuarial investigation before rushing through a statement which was influenced obviously by figures at least five years out of date. Radical Difference between Railway and other Funds. —At paragraph 1397 the Commission states " there is no radical difference between the three funds." This is quite inaccurate. The Railways Superannuation Fund was started long before the others, and on a totally different basis. It has had thirty years of operation on a non-actuarial basis, and has proved its soundness, for practical purposes, throughout that period. Despite the enormous strain placed upon it last year by the retirements of a great number of employees up to ten years before they would normally have retired, the Chairman of the Government Railways Superannuation Fund Board states in D.-5, 1932, that the balance of income over expenditure for the year ended 31st March, 1932, amounted to £5,656 19s. Id. It is quite unfair to the Railway contributors and superannuitants that the report upon their fund by the Commission should have been so inadequate, and that facts in regard to it should have been misstated in order to bring it under the general conditions suggested for the Public Service Superannuation Funds. The £300 Limit: Commission's Inconsistency.—Paragraph 1414 of the Commission's report refers to the amendment of 1909 containing provision that no person joining after that year should be entitled to retire on an allowance exceeding £300 per annum. This also applied to the Railway Fund. This provision of the Act was clearly intended by the Legislature to safeguard the funds at the time when they would reach the period of maximum liability. Hence it is most astounding to find the Commission recommending that this safeguarding clause should now be deleted. Quite clearly it is an effort to introduce a type of class favouritism into the present proposed adjustment to the Act. The Commission states in the same paragraph, " The effect of this amendment is well understood, particularly by professional men who are appointed to the Public Service at relatively high salaries on which they contribute to the fund in full." Each of these officers knows the conditions under which he joined, and accepted those conditions. There is, therefore, no injustice done by the £300 limit, because if the conditions did not suit such officers they were under no obligation to accept the positions. The extraordinary attitude of the Commission is revealed in the fact that at a time when they claim the funds to be £23,000,000 short on an " actuarial " basis, they should advocate the removal of one of the main stabilizing and protective amendments to the Act. How glaring this inconsistency is can be understood from the Commission's complaint that the present £300 limit would act unfairly in the case of an officer who averaged £750 per annum over the whole

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period of Ms service. It occurs to the average contributor that an officer who, for forty years, averaged £750 per annum in pay from the State would not be at all badly treated if he then retired on a £300 maximum. It is flagrantly revealed that the Commission, whilst tenderly solicitous in regard to the very highly paid official, shows no compassion when dealing with the vast majority of members in the Service who receive comparatively low pay, who are the mainstay of the fund, and whom the Commission proposes practically to deprive of superannuation privileges altogether by an outrageous extension of the retiring-age limit. Injustice of Proposed Age-limit Alterations. —The average age at joining the Railway service is 22J years. The expectation of life at that age, as revealed by the Government mortality tables, is 68J years. This means that the average period which a railwayman might expect to be on the Fund as a superannuitant would be only years. For those joining before twenty years, the anticipated period of benefit from the Fund would be reduced, while they would be required to pay into the Fund for a longer period. The State's Liability. —In paragraph 1430 the Commission again draws attention to the failure of the State in its " duty to make suitable provision to meet the initial liability cast on the Fund." Here, once more, is revealed the Commission's obsession regarding the actuarial situation of the Fund. Once more is it necessary to state, therefore, that the Fund was never instituted on an actuarial basis, has never been put on an actuarial basis, and that any present-day attempt to do so would do an irreparable injustice to a body of the public, the Public Service, which properly treated is the best protection for the State in times of stress. In paragraph 1431 the Commission states " the continued failure to meet State obligations to the Fund has resulted in the rapid growth of the deficiencies disclosed." Yet again must it be stated that the Funds reveal no actual deficiencies. The Commission evidently means " actuarial" deficiencies, a very different thing, and one with which it is proposed to deal later. Fallacy of Actuary's Claims. —It has been stated by the Government Actuary that only himself and another in New Zealand are capable of making an actuarial investigation of the funds. This may be so ; if it is, it is surely a serious responsibility that the Government undertakes when it proposes to rob over forty-two thousand State employees and over seven thousand State superannuitants of rights to which they are entitled extending over the last thirty years upon the word of one man whose estimates could be checked, although they have not been, by only one other in the Dominion. In regard to actuarial calculations, however, it is known that a long period of calculation has to be taken. In normal times such a calculation into the future might come out with some degree of accuracy. But supposing a forty-year period were used as a basis, could any actuary in 1892 have predicted and made the exactly accurate provisions necessary to take account of all the changes in economic conditions occurring since then up to the present year, and have allowed for the extraordinary variations that have occurred in (1) the value of money, (2) the scales of pay, (3) the expectation of life, and (4) the growth or decline in the numbers of Government employees, with the corresponding effects upon the liability calculations of the fund of the kind ? The answer to this question must be a most emphatic " No." That being so, can any one at the present day predict with any more certainty what changes in the respects enumerated will take place in the next forty years ? If no one can do this, then certainly the only two actuaries in New Zealand cannot do so, and, as they cannot do so, any estimates they make will only be a " blind stabbing in the dark." This is admitted when the Actuary recommends more frequent actuarial investigation. It is considerations such as these which reveal the bogey nature of the panic estimate of a £23,000,000 actuarial deficiency in State Superannuation Funds, an estimate which has misled the Government into the belief that the drastic curtailment of rights and inflictions of penalties contained in the Amending Bill were necessary. Commission's Contradictory Recommendations. —In paragraph 1431 the Commission states that the shortage in annual subsidies by the Government to all the funds is £491,300. In this connection it is interesting to note that the Commission states the shortage in annual subsidies to the Railways Superannuation Fund as £136,459. Now, the Railways Board paid into the Superannuation Fund last year £170,000 (as was paid in the previous year). This sum added to stated annual shortage in the Railway subsidy makes a total of £306,459, which, in the Commission's opinion, is the amount by which the Railway Fund should have been subsidized for one year. But the Commission (paragraph 1454) said that there did not appear to be any valid reason why trading Departments should not pay a pound-for-pound subsidy to their superannuation funds. On this latter basis the Railway Department would have paid, as subsidy, last year only £142,239 to the Fund ; so that the same Commission which states that the Railway should subsidize their Fund by £306,459 states in the same report that the subsidy should be only £142,239. The difference in the Commission's own recommendations in regard to this one Fund (the difference between £142,239 and £306,459) shows the huge discrepancy of £164,220. This discrepancy is between the statement made in paragraph 1431 and the recommendation made in paragraph 1454. How reducing the contribution of the Railway Department from £170,000 to £142,000 —that is, by £28,000 —could strengthen the Fund, is beyond human comprehension. It is, in fact, just one more evidence of the general haste and carelessness with which the report was prepared when dealing with Superannuation Funds. But a discrepancy of £164,000, which would be enough to cause any Civil servant to lose his position, is a mere circumstance in a report by a Commission which, after finishing its report, collected its pay and now has no job to lose. Railways Fund in comparatively Strong Position. —Paragraph 1435 of the report states that the conditions of retirement have been liberalized from time to time with disastrous results. How untrue this is in regard to the Railways Superannuation Fund is shown by the fact that, despite the liberalizing 3— Ī. 15.

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to which reference is made, the Railways Fund which started behind scratch with a handicap of previous Government liabilities, was able at the 31st March, 1932, to show a balance carried forward of £1,454,173 ; and in that year, the worst in its history owing to forced retirements, actually increased the credit balance carried forward by over £5,000. Previous Actuary recommends " No Alterations." —A paragraph from an Actuary's report in 1910 quoted by the Commission concludes " let the Service clearly understand that the benefits will not be altered again for better or for worse." The Commission which quotes this, with approval, as part of a " prophetic warning " puts in its own report recommendations which will, if carried into effect, ignore the warning in two directions —that is, they will make the benefits better for some and worse for others. The above is quoted merely as another illustration of the remarkable inconsistency of the National Expenditure Commission's report. No Actuarial Basis intended. —In paragraph 1436 the Commission shows clearly that it knew the funds were never placed upon an actuarial basis. It therefore knows that its present action in recommending the introduction of the actuarial basis is a complete reversal of past policy, and is loading present contributors, superannuitants, and the Government with a present-day liability that they should never be asked to meet and that the circumstances of the Fund certainly do not warrant. Commission's Official Bias. —Reference is made in paragraph 1439 to the post-war rise in salaries. No concurrent reference is made to the decrease in the purchasing value of money. Nor does the paragraph refer at all to the rise in wages. This shows that the Commission has been more concerned with, the position of the salary-earner than the wage-earner, although in the case of the Railways Fund the wage-earner contributes the bulk of the money towards the Fund, and obtains, generally speaking, the lower proportion of benefits. Commission's Breach-of-contract Recommendations. —In paragraph 1440 the Commission advocates that annuities should be based on the average salary over a period of at least seven years or ten years. There is nothing to show that the Commission has actuarial authority for this recommendation, nor have any examples been supplied by which an estimate could be made of the effect this suggestion would have upon the Fund or the retiring-allowance of members. This information should be definitely given, even if, to quote the Government Actuary in regard to other figures, its preparation might be " very laborious." Without such information we would be " buying a pig in a poke." There is no question but that the proposal would make a great difference by reducing the benefits to employees and reducing the liability on the Fund. However, the proposal is for a direct breach of agreement with employees, and if carried into effect will be to the lasting discredit of those who recommended it and of the Government which legislated in that direction. It is noted that the Government proposes to make the penalty as severe as possible, choosing the ten-year period rather than the seven. Actuarial Absurdity exposed.■ —In paragraphs 1441, 1442, 1475, and 1434 the Commission refers to the alleged actuarial deficiency of £23,000,000 for the three funds. Of this, the Railways Fund is alleged to be £9,000,000 short. Supposing, as an alternative to adopting the Commission's recommendation, that the Government decided immediately to make the Fund " actuarially " sound. It would pay £9,000,000 into the Fund, which already has a credit balance of £1,454,173. This would give the Railways Fund a credit balance of £10,454,173. This capital would, at the present earning rate of the Fund, earn interest at the rate of 5-734 per cent. This would mean that from interest alone in the first year the Railways Superannuation Fund would gain £599,442. But last year's Railways liability to superannuitants was only £403,367, so that the interest from the Fund alone would have paid the whole of the year's liability and have left a credit balance for the year of £196,075 from interest alone. But the employees last year contributed £142,239, and the Working Railways contributed a total of £182,200, so that on this basis the Fund would have paid all its liabilities for the year and increased in one year its credit balance by the huge amount of £520,514. It does not require an actuary to see how fantastic these figures would grow, with interest compounding and pyramiding all the time, with accessions of over half a million annually to the Fund of ten and a half million pounds so created. It does not require a very profound knowledge of political human nature to realize, further, that such a fund, increasing vastly in the way indicated, would be an irresistible bait for the raiding instinct of some future Government. That this danger is very real has already been exemplified in England by the raiding last year of the Road Fund, and in New Zealand by the raids made upon accumulated surpluses and the pawning of soldier-settlement funds. Considerations such as these show the absurdity of the Commission's statement (paragraph 1442) that " if the present system is to continue without alteration, the only method whereby the funds can be saved from progressive insolvency is by the payment of the sum of £23,000,000 to the funds." As has already been pointed out, the Funds are not insolvent while they can pay, as they have been doing, their full annual requirements, and there is no reason, if Governments continue to carry out their obligations from year to year, why the funds should not continue to do so. It is- again clear that the Commission is wedded to the idea that the Fund must be made " actuarially " sound, and again it is necessary to repeat that this was never the intention of the Government which introduced the funds, or of the State employees who jointly agreed to their introduction. Annual Appropriations the Sound Principle.—ln view of the fact that in this country until the funds were established, and in other countries still, the State meets its liabilities directly in the matter of pensions without any superannuation funds at all, it might have occurred to the Commission that, so long as the annual payments to the Fund were sufficient to meet the annual demands upon the Fund, no other action would be necessary. Compared with other countries, the State would still have the definite advantage that members were contributing, on the average, 5 per cent, of their earnings annually in order that they might reap the benefit of a retiring-allowance of two-thirds of their annual earnings at the expiry of forty years' service. It might here be suggested that, even if the State found it necessary to reduce rather than

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increase its proportionate contribution annually to the Fund, this course could be pursued quite safely until there were no funds left, and the State would, even at that stage, be in a better position in regard to the superannuation of its employees than are other States where no employees' contributions are made. " Actuarial " Soundness not necessary. —The Commission has overlooked entirely the prime fact that members joining the Fund do not expect to have their money back except in the shape of superannuation, and that those—a limited number—who leave the Service before becoming entitled to superannuation receive back only the money which they have paid into the Fund, without interest. The Fund benefits by absorbing the compound interest on all such money whilst it remains in the Fund. Were there no accumulated superannuation funds at all, the average State employee would be quite unconcerned, and could continue as at present to contribute his present percentage of salary or wages, provided the benefits to be obtained as superannuation were assured. It was the reiterated assurance in the original Railways Superannuation Bill of 1902 that no future changes should take away the benefits secured by that Bill to employees that induced over 80 per cent, of the Railway staff employed at that time to agree to enter into the superannuation scheme. As all the recommendations of the Commission (see paragraph 1444) have been made from one standpoint—that is, the standpoint of making the funds actuarially sound—they must be discounted immediately it is admitted that the need for " actuarial " soundness does not exist. Commission's Confiscatory Proposals.—Regarding the recommendations themselves, the effect of the proposed changes is startling. A youth entering the Service as an apprentice at fifteen years would require to work forty-five years (instead of forty years) in order to retire at the age of sixty. A porter, surfaceman, lifter, striker, holder-up, machinist, or labourer entering at seventeen to twenty years would have to work from forty-three to forty years to retire at age 60. In paragraph 1446 the Commission recommended that when employees are compulsorily retired through no fault of their own the annuity should be reduced to keep the financial position the same as if the contributor had been retained in the Service to the earliest date at which he could have retired as a right. The effect of this is that, to take the case of an employee joining at fifteen years of age who is compulsorily retired after thirty-five years of service, whereas at present the employee compulsorily retired at the age of 50 would obtain thirty-five sixtieths of his salary based on the last three years of service, he would, under the proposal, retire on an actuarial calculation of his retiringallowance based on the last ten years of his salary or wages, and also with superannuation further reduced because he would be ten years short of the sixty years minimum retiring-age, instead of five years under the present system. This would be a double imposition which could hardly have been contemplated when the proposal was hastily thrown together, and one in regard to which no one at present knows the full effect. This information should be forthcoming and submitted for the consideration of all concerned before any further action is taken in regard to proceeding with the Bill. Folly of Commission's Proposal for Government Guarantee of Interest. —In paragraph 1448 the Commission recommends that the Government guarantee a net effective interest yield of 5 per cent, on the funds. As the funds have all been earning well over 5 per cent., and in some cases nearly 6 per cent., during the last ten years, and as there is no present indication in New Zealand as to the direction in which interest rates will move in the coming years, this provision would have no effect upon the Fund either immediately or during the life of the present Government. How a Commission which recommends the breaking of pledges made by a previous Government can expect its recommendations, even if given, effect to, to be honoured by future Governments, cannot be explained by any method of logic, and reveals a strange faith by the Commission for which its own actions give no justification. The point to be noted is that this recommendation would have no present or proximate effect upon the Fund. What it might do would be to open a loophole for the present Government by which it might secure, for current general revenue purposes, the favourable balance between the 5 per cent, which it would guarantee and the 5f per cent, which the funds are earning. In the same paragraph the Commission points out that the adoption of the recommendation would enable the Actuary to value the Fund on a 5-per-cent. basis, and " will virtually have the immediate effect of reducing the actuarial deficiencies in the three funds by a considerable amount." It is pertinent here to ask " Why has the Commission not stated the amount by which the actuarial deficiency would be actually reduced by such action ? " The fact that the Actuary has based his estimated actuarial deficiency on a 4-|-per-cent. rate, when it is known that the Fund in the past ten years has actually earned over 5J per cent., shows how far the Actuary is from realizing the practical state of affairs at the present time, and has shot up the estimate of actuarial liabilities to a quite unnecessary degree. What is the Cardinal Principle of the Scheme ? —ln paragraph 1449 the Commission states It should be recognized as a cardinal principle of the scheme that contributions by present employees should be reserved for future annuities." This was never a cardinal principle of the scheme, so it is difficult to understand why it should be recognized as such at the present time. The cardinal principle of the scheme —the principle upon which employees were induced to enter it at its initiation, and the principle which has been presented to new entrants to the Public Service since then is that employees either leave the Fund before reaching the superannuation stage, in which case the whole of their contributions are returned to them without interest, or, if they do become superannuitants and die before the value of their contributions have been exhausted, the remaining contributions are returned to their executors. That is the cardinal principle in regard to contributions of employees of the State. This paragraph alone condemns the Commission's report because of its failure to recognize and acknowledge the basis upon which these funds were set up and upon which they were intended to be carried on. 3*

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Commission's Report hazy. —A further inconsistency of the report is that, while recommending a pound-for-pound subsidy, it states (paragraph 1449) that the subsidy will not be required for all time. If that is so, why not recalculate the actuarial situation to find out what is the rate of subsidy which would be required " for all time " ? Surely this is not beyond the capacity of the Actuary who was able to supply figures upon which the present statement of actuarial liability was based. And why has the Commission, instead of obtaining such a figure, asked the present heavily overloaded Government and the present heavily underpaid staff to bear an unduly heavy load for relief of future generations " for all time " ? Commission recommends that another Contract be broken. —In paragraph 1450 the Commission recommends an increase, by 2 per cent, of remuneration, in respect to their future service, in the contribution of contributors to the Railways Fund who joined prior to the Ist January, 1908, at ages under fifty years. Does this mean that an employee who was forty-nine years of age on Ist January, 1908, is now to have his percentage of contributions increased by 2 per cent. ? If so, who is he, because a forty-nine-year-old man in 1908 is seventy-three years of age now ? As the present requirements of the Act demand that employees retire at not later than sixty-five years of age, it is obvious that there is no such person. By the same process of elimination the age stated by the Commission should be " under forty-one." Of course, the Commission may mean that those over fifty years of age at the present are not to suffer this imposition. If so, their recommendation is made very loosely ; if not, it is an absurdity. The Commission recommends that, as these men who joined prior to 1908 paid 2 per cent, less than those who joined after Ist January of that year, the former should now be called upon for increased contributions. The proper view to take of this matter is that such was the agreement entered into, and such is the agreement which should be carried through. Any other action taken now which would impose further charges upon original contributors is a breach of contract, and undermines the whole principle of the sanctity of contracts. The fact that different rates are paid by employees who joined at different times does not constitute an anomaly. It is merely an indication of changes made during the existence of the Fund in regard to the rates to be charged those joining the Fund. For instance, the Commission makes no suggestion that it is anomalous that in 1902 surfacemen were given 7s. per day upon joining the Service, while in 1920 they were given 15s. a day upon joining the Service. Had such a fact been considered by the Commission it would not have concluded that 3 per cent, for the 7s. man as against 5 per cent, from the 15s. man constituted a real anomaly. It would have known that 5 per cent, could not have been paid in 1902, and had such a percentage been asked for the Railways Superannuation Fund would not have come into existence. What the Commission proposes now is to do an injustice, by a gross breach of contract, to the original contributor now in the Service in an endeavour to equalize one factor, knowing all the time that there are many other factors which have not been taken into account and over which it has no control. Commission's Tender Care for Large-salaried Employees. —The same paragraph refers to the arbitrary annuity limitation of £300 per annum, on retirement, of all who joined after the 24th November, 1909. Again it is necessary to state that this arrangement was by agreement, for no one was compelled to join any of the Services, and all were given an opportunity to know the conditions applying to them in regard to the State Superannuation Fund. Surely the present is not the time to introduce a liberalizing policy which would benefit only those obtaining a salary which would average as high as £450 per annum during the last ten years of their service. With such a high average salary for so long a period before retirement, surely £300 per annum, the amount agreed upon, should meet requirements for their period of retirement. It is unreasonable to suggest increasing the liability of the Fund for the benefit of those without any legal claim to increased benefits, as it is equally unjust to impose further superannuation charges upon those already in the Fund for whom no additional benefits are suggested. This society stands, first and last, for the preservation of the sanctity of contracts entered into. Faulty Worh of Commission. —Paragraph 1451 should have stated how soon a reduction in the State subsidy below £1 for £1 would be possible. As it is not stated, the reasonable assumption is that it was not worked out —another clear indication of the faulty work put into the report. In paragraph 1452 the Commission again comes back to what it calls " a real liability of the State to the Fund." It is therefore again necessary to reiterate that the State has a liability to its employees, not to the funds. The funds merely represent a method of financing the liability of the State towards the employees, and no objection can possibly be raised to the way in which the State arranges its finances so long as it does not default in its definite liabilities to its employees and other creditors. Commission's Unsound Discrimination between Funds.—ln paragraph 1453 the Commission once more mentions £700,000 as the compensation which should have been paid from the Consolidated Fund to the Superannuation Funds in respect of officers who have drawn superannuation from the Public Service Fund. No mention is made of members of the Railway service similarly situated, although some reference was to have been expected had the Commission known this side of their subject. In paragraph 1454, in dealing with trading departments, the Commission again omits the Railways, although the Railways are the largest Government trading Department of all. If the Railway Department was included it would be interesting to know what amount " compounded at 4 per cent, interest, " (to use the Commission's phrase) would have been required from the Railways (as a trading Department). The Commission recommends that £184,000 or its equivalent over a period of years should be paid to the funds on account of Public Trust, Government Life, and State Fire Offices. On the

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pound-for-pound basis the amount which the Government should pay according to this principle is £886,000 (see paragraph 1396). Doubtless the Commission has not included the Railways in a similar recommendation because of the impossibility of such a figure appealing to the Government. But ordinary consistency, instead of erratic expediency, should have been expected from a Commission which was given a free hand in making its recommendations. Commission's Criticism of the Law. —In paragraph 1459 the Commission refers to " the too liberal provisions of the law "in regard to certain superannuitants. By what right does this Commission obtain authority for so sweeping a criticism of the law ? The law represents justice, and the carryingout of the law is the basis upon which the British Constitution is founded. Under the law of contractual rights alterations to the law should not be made retrospective. The Commission admits that the alterations of an existing annuity is an interference with a contractual right. It then suggests that this interference would be justified so that those at present contributing to the Fund should be able to reap the benefits provided by the Act. But there is no need, if the State continues to carry out its annual obligations to superannuitants, to make any such adjustment. This has been pointed out already, but is worth reiterating because of the basic unsoundness of the Commission's report. Commission's Grave Error in Facts relating to Wage Variations. —In paragraph 1460 the Commission chooses 1921 as the year after which annuities became what it calls " inflated," due to post-war rises in salaries.. But increases in pay, following increased prices, were granted in 1916, 1917, 1918, and 1920. On the Ist January, 1922, the first post-war reduction in wages of railwaymen became effective. A further reduction took place in July of the same year. In view of the foregoing, it is clear that the Commission either did not know the facts in regard to the rise and fall of wages, or, knowing the facts, it ignored them in order to protect any one who retired prior to 1921. Those who retired immediately before 1921 had the benefit of no less than four increases in rates of pay, yet the Commission states that it would be unfair to recommend a reduction in annuities for such superannuitants. There appears to be definite grounds here for the assumption that the choice of the year 1921 as the point at which a distinction must be made between superannuitants has been made for the benefit of certain individuals and not in the interests of justice. This vitiates the recommendation in paragraphs 1461 and 1462 regarding the saving clause for those granted annuities before 31st March, 1921. If any alteration were necessary, and this we deny and claim to be unfair, unconstitutional, and subversive of the first principles of contractual obligations, then the reductions should be made on a percentual basis, as has been done in the case of wage reductions and rent reductions in the Finance Acts of 1931 and 1932. Commission proposes to make " Fish of One and Flesh of Another." —In paragraph 1464 the Commission refers to " the drastic reductions which will in many cases follow the calculation of present annuities on an actuarial basis." In fairness to contributors, samples of the amounts of such drastic reductions should be given. This information is also necessary if the amending legislation proposed is to be considered with full knowledge of what it means. The proposal to limit any proposed reduction of present annuities to 20 per cent, is obviously unfair. If the benefits from the Fund under present arrangements are to be departed from by a system of " breach of contract " such as that proposed, then those in the Service and those on superannuation should be treated on an exactly similar basis. By no other means could an equitable adjustment be made. In paragraph 1465 the Commission states that it has considered " the possibility of recommending an arbitrary reduction of, say, 10 per cent, in existing annuities." The fact that the Commission in this clause can speak of a 10-per-cent. all-round reduction as an alternative for a proposal in regard to which protection of a maximum 20 per cent, is to be provided, is a clear indication of the very serious nature of the imposition now proposed in regard to present contributors to the Fund, and the extent of the special protection which it is proposed to give to those who retired prior to March, 1921. The whole of the proposal in paragraph 1464 is inequitable, and the grossness of its inequality is revealed in paragraphs 1465, 1466, 1469. In paragraph 1471 the Commission shows certain objections to the £300 limit in regard to the annuity of employees of State services who joined after the 24th December, 1909. It states, (1) that it leads (in some cases) "to officers paying more in contributions than their annuities are worth.' This objection is met by the fact that the difference between contributions made and annuities received, if in favour of contributions, is returned to the contributors. (2) The statement is made that the £300 limit helps to defeat an object of the Fund by diminishing the inducement to the best officers to remain in the Service. There is no evidence to show that there has been any drain upon " the best officers "in the Service up to the present time. The statement is therefore condemned by the evidence available. The third objection, that " it renders it more difficult to retire the higher officers " is absurd, and the example given of £1,000 salary " of a deserving officer of long service " certainly indicates no hardship if an annuity of £300 is provided. The fourth objection of the Commission, that " it will cause a great deal of embarrassment m the future " is no reason for putting a heavier load on the Fund at the present time. _ The fifth objection, " that it does not proportionately help the finances of the Fund " is obviously a case of special pleading. There is no question of proportion in the matter. The amount that the Fund would be loaded by the removal of the £300 limit should be stated. This has not been done. Until it is done the extent to which the finances of the Fund would be damaged by the proposal cannot be assessed, but there is no doubt that it would be a serious additional load. Further Commission inconsistency.—ln paragraph 1477 the Commission makes a point " that a,ny relief obtained by the Fund as a result of their proposals must not be taken as justifying a reduction

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in the subsidies payable by the Government to the three funds." Yet, as already pointed out, one of the Commission's proposals (the pound-for-pound subsidy in regard to trading Departments) would actually have relieved the Government of a subsidy last year amounting to £28,000. In paragraph 1478 the Commission refers in favourable terms to the arrangement made regarding the National Provident Fund. The vital point of difference here is that the National Provident Fund was arranged in the first place on an actuarial basis, but there was 110 intention at any time up to the present of treating the State Superannuation Funds on the same basis. The Commission also suggests the desirability of the Government affording the Superannuation Boards the opportunity of considering their proposals in full. The extraordinary position about the Commission's report is that it did not arrange to obtain these views before submitting its report. Had it done so there is strong reason for believing that its report would have taken a very different colour, instead of being dominated by a five-years-old report by the Government Actuary, a report which has already been shown to have been faulty in its deductions. Objections to the Bill. Sections 1 and 2 : The Act proposes to bring the Government Railways Superannuation Fund into line with the other Government Superannuation Funds. This is most improper for two reasons: (1) the Railways Fund started several years before the others, and (2) the Railways employ a higher proportion of wage-earners to salaried men than either of the other services. It is obvious that the Bill has been prepared with " officers " in view, whereas a proper consideration of the Railways Fund would give chief prominence to the wage-earners, as their contribution constitutes over 75 per cent, of the total annual contributions of members (see page 11, D.-sa, 1932), and the proportion of higher-rated retiring-allowances is consequently much lower in the Railway service than it is in either the general Public Service or the Education service. Section 3 ; This takes away the right to retire after forty years, by adding a requirement that the age of retirement must be sixty years for a male and 55 for a female. The serious objection to this section is that, besides breaking contract with those who joined the Fund under a State guarantee, it re-introduces the principle of unduly long service in a State Department. The principle of a forty-years maximum service was fought for and decided upon many years ago as one way by which undue conservatism in State management of business might be prevented, and as a means of giving reasonable opportunities of promotion to the younger members of the services. It is a known fact in psychology that after a certain age there is a reluctance to accept new ideas, and the history of State Departments in this country shows that an improvement in management was only effected when the compulsory retirement of senior men after forty years of service was introduced. In regard to railway work, and in comparing it with employment in other branches of the Public Service, it is known and recognized that because of its arduous nature, the very irregular hours which so many of the staff are required to work, and the large proportion of members who have to carry on outdoor occupations in all kinds of weather, the average chance of surviving through even forty years of service is comparatively small. Further, should such members be kept on for a longer period, a definite element of danger to the public is introduced. For instance the public, and certainly the management, could not contemplate with equanimity the picture of a 65-year-old engine-drive on the " limited " speeding through the dangerous Kingcountry with a 65-year-old fireman trying to keep up steam while helping to watch for signals, with passengers in the care of a 65-year-old guard, and the express all the while accepting signals set by 65-year-old. signalmen. Every practical railwayman knows that, excepting in unusual circumstances, a railwayman engaged in any of these occupations before reaching 65 has had his nerves shattered, his eyesight strained, his hearing weakened, and his general physical efficiency reduced in other ways, long before he is 65, as a result of the exacting nature of the service which his work entails. For most of the work, comparatively young and constantly alert members are necessary if the high standard of safety, for which railways now hold an enviable record, is to be maintained. As showing the difficulty of " going the whole distance " even under present superannuation conditions, it should be noted that fourteen thousand out of thirty-one thousand joining the scheme had faded from active participation either by withdrawal or by dismissal between the years 1903 and 1927 (see D.-sa, page 9, 1932). It is certain that no comparable losses from these causes can be shown in regard to male members in the other Superannuation Funds. In this connection it is interesting to note that at the 31st March, 1926, there were only 1,367 members actually on the Fund. Even with the heavy loading placed on the Fund by the retirement in the last two years of large numbers as part of the Government's economy campaign, it is interesting to note that there were only 2,296 ex-members on the Railways Fund at the 31st March, 1932. This clause really proposes to change the entire basis of the existing superannuation rights of Railway employees, and, as such, must be totally condemned for its contract-breaking contents. Section 4 : This section professes to indicate how actuarial allowances are to be computed. If it actually did this, it would be a most enlightening clause. All it does do, however, is to indicate that the Government places complete reliance upon a certificate by the Government Actuary as to the amount upon which a contributor's retiring-allowance is to be calculated. As no tables to indicate the actual effect upon the retiring-allowances of members to be produced by this section have been prepared, the result of this proposed legislation cannot possibly be calculated, and if the Government agrees to putting such a clause into effect it will not only be repudiating solemn contracts by the State, but will also be breaking these contracts without any accurate knowledge of the actual effect of the breakage.

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Subclause (3) of Section 4: This paragraph is contradictory, a breach of contract, and unfairly discriminatory. It proposes to provide that when a contributor retires before completing his full period in the Service, the computation of allowance should be projected forward to arrive at the average amount which the contribution might have earned during the last ten years of Service. To reduce this average —as is proposed in the last four lines of this subclause —to make it the average of the last three years in the Service, would be unfair discrimination as compared with the position of the man who had an opportunity to complete his service, because the actuarial calculation (as indicated in the first part of this clause) has already taken the ten-year period into account. The only possibility of the first part of subclause (3) of section 4 becoming operative would be in the case of an employee having his wages reduced during the last three years of his service. In such a case it would be used to make his retiring-allowance less than it would be if based on the average of his earnings during the last three years of service. Nor would voluntary contributions on a higher basis save him. The inequitable effect of this clause can only be ascribed either to careless drafting or to a deliberate design, under an appearance of fair-dealing, to rob superannuitants of their contracted rights. The remaining clauses of the Bill are all designed to carry out, in their worst form, the recommendations of the National Economy Commission, and do not require special comment here, as they have been dealt with in our previous statement upon the Commission's report. There are two sections of the Bill, however —namely, sections 37 clause (5), and 39, which must be given special mention. These are the clauses designed to cancel 119 and 125 of the Government Railways Act of 1926 —clauses which were essential parts of the original Government Railways Superannuation Act of 1902. The clauses which it is now proposed to repeal read as follows : — " 119. (b) If the Minister of Finance is satisfied that the deficiency exists and that provision should be made therefor, there shall, without further appropriation than this section, be paid into the Fund out of the Working Railways Account a sum sufficient to meet the deficiency." " 125. The rights and benefits provided for by this Part of this Act shall be subject to all such modifications as may be provided by any Act hereafter passed in amendment or repeal of this Act: Provided that all benefits under this Act shall be conferred upon any person who has actually contributed, and shall remain in force, and shall not be prejudicially affected by the amendment or repeal of this Act : Provided also that nothing in this section shall affect any payments actually made to any member or other person under this Act prior to the passing of such amending or repealing Act." These clauses represent the foundation upon which the Railways Superannuation Fund was built. They have no counterpart in the foundation Acts of either of the other State Superannuation Funds. They provide a State guarantee for the stability of the Fund, in lieu of a year-by-year State subsidy, to supplement the payments to the Fund made by employees. It was this guarantee which made the establishment of the Railways Superannuation Fund possible. By these clauses the State guaranteed the benefits of the Fund, to the extent nominated in the 1902 Act, to all those employees who were willing to join the Fund at that time and to all who might be required by the terms of their engagement to join the Fund in subsequent years. It was a definite pledge, made by the State, with a protection that, so far as those who joined the Fund while these clauses were in force were concerned, no subsequent variation of the Act could take away the rights so secured to them. It is questionable if this can now be done constitutionally, as witness the recent decision upon the point by the Full Court of the High Court of the Commonwealth of Australia. If ever a State guarantee was binding, this was binding. The State gave its word and its bond that the employees coming under the protection of this clause of the Act would be guarded, while honour in the State lasted, against any subsequent interference with the rights so secured to them. The proposal now to cancel this clause, and thereby to make it non-effective so far as present employees and annuitants of the Railways are concerned, would, if carried into effect, place the last seal of infamy upon the Government which forced such a measure through the House. Faith in the State, faith in the British Empire, faith in constitutional Government under the British flag, would all be destroyed should this proposal be carried out. We, the Amalgamated Society of Railway Servants of New Zealand, confidently appeal to the members of this properly constituted Select Committee of the Parliament of New Zealand to realize the effect of this proposal for a repeal of the most vital clause in the original Act, to weigh up the apparent advantages of repeal against the real blow which would be given to the stability of the State if a State guarantee is to be treated as so much waste paper, and to decide that, while law and order, and not anarchy and bankruptcy, are the characteristics of Government in New Zealand, they will be no parties to setting so dangerous a precedent in the management of affairs of the State. There should be no need for State employees to call for an observation by the State of its contracts. The Empire went to war because of the failure of Germany to observe its written contract regarding Belgium. Sir Joseph Ward and Mr. William Ferguson Massey said that New Zealand would give the last man, and spend the last shilling, to guarantee that no nation ever again broke contract in this way. Speaking on the same subject, Mr. Asquith said, "Ifl am asked what we are fighting for I reply in two sentences : In the first place to fulfil a solemn international obligation, an obligation which,

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if it had been entered into between private persons in the ordinary concerns of life, would have been regarded as an obligation not only of law but of honour which no self-respecting man could possibly have repudiated I say, secondly, we are fighting to vindicate the principle which, in these days when force, material force, sometimes seems to be the dominant influence and factor in the development of mankind, we are fighting to vindicate the principle that small nationalities are not to be crushed in defiance of international good faith, by the arbitrary will of a strong and overmastering power. Ido not believe any nation ever entered into a great controversy—and this is one of the greatest history will ever Know with a clearer conscience and stronger conviction that it "is fighting not for aggression not for the maintenance of its own selfish interest, but that it is fighting in defence of principles' the maintenance of which is vital to the civilization of the world." And Mr. Lloyd George said,^" It is the interest of Prussia to-day to break the treaty, and she has clone it. bhe avows it with cynical contempt for every principle of justice. She says, 5 Treaties only bind you when your interest is to keep them.' « What is a treaty,' says the German Chancellor, ' A scrap of paper Have you any £5 notes about you ? lam not calling for them. Have you any of those neat little Treasury £1 notes ? If you have, burn them ; they are only scraps of paper. What are they made of ? Rags What are they worth ? The whole credit of the British Empire. Scraps oi paper ! I have been dealing with scraps of paper within the last month. One suddenly found the commerce of the world coming to a standstill. The machine had stopped. Why « I will tell you We discovered many of us for the first time, for Ido not pretend that Ido not know much more about the machinery of commerce to-day than I did six weeks ago, and there are many others like me—we discovered that the machinery of commerce was moved by bills of exchange. I have seen some of them, wretched, crinkled, scrawled over, blotched, frowsy, and yet those wretched little scraps of paper move great ships laden with thousands of tons of precious cargo from one end of the world to the other. What is the motive power behind them? The honour of commercial men. Treaties are the currency of international statesmanship. _ Let us be fair : German merchants, German traders, have the reputation ot being as upright and straightforward as any traders in the world, but if the currency of German commerce is to be debased to the level of that of her statesmanship, no trader from Shanghai to Valparaiso will ever look at a German signature again. This doctrine of the scrap of paper, this doctrine which 1S proclaimed by Bernhardi, that treaties only bind a nation as long as it is to its interest, S° es ™der the root v public law. It is the straight road to barbarism. It is as if you were to remove the Magnetic Pole because it was in the way of a German cruiser. The whole navigation of the seas would become dangerous, difficult, and impossible ; and the whole machinery of civilization will break down if this doctrine wins m this way. We are fighting against barbarism, and there is one way of putting it right. If there are nations that say they will only respect treaties when it is to their interest to do so, we must make it to their interest to do so for the future." Summary. In the foregoing representations the following principal points have been made From the Taxpayers' Point of View.—(l) That there is no present need for the Government to do any more than it is doing, so far as the Railways Superannuation Fund is concerned. . Railways Superannuation Fund was actually in credit to the extent of £1 454 173 at tiie 31st March, 1932. ' ' (3) That in case of necessity the Government could even decrease its present payments of £170 000 per annum to the Railways Superannuation Fund from the Working Railway revenue in order to meet present liabilities m other directions, provided that the State guarantee, as given and maintained up to the present time, is not withdrawn. (4) That the theoretical actuarial deficiency of £9,000,000 alleged to exist in the Railways Superannuation Fund is a purely fictitious and panic estimate, which has been shown in our above representations to be quite unsound, having been based on factors which did not take a true account oi present-day tendencies and conditions. From the Present Superannuitants' Point of View.-(l) That the superannuate joined the Fund under State guarantee of superannuation at certain rates, with an assurance that this served the purpose o insurance and other provident funds, and that the Government, having so given a guarantee cannot Sit™»! nXly- g °"" ,ee ™ 7 m °" """ ,ef " e to "« »bligi„rt„ L (а) The people from whom it has borrowed money ; (б) The people who have invested in Government Life and Fire Insurance schemes • ,1 rrf' 3 contl ; lbutors and superannuitants of the National Provident Fund • and ' (d) Ihe people who have entrusted their money to the Post Office Savings-bank. i« mS. if > in defi ™c e of the State's solemn obligation, any alteration in superannuation benefits SV it rM l, 6 w cnmmation as between one get of guperanimitantg and another °°" Ps " " le ™ peot ™ arul Contributors' Point of View.~( 1) He has fulfilled his obligations to the Fund and it is the Government s duty, when the time arrives, to fulfil its share of the contract. Any present decision by the Government to legislate away rights legally conferred strikes at the very roots of civilization, because civilization is based upon faith as between man and man, as between State and State, and as between Government and people.

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(2) The Railways Fund should not be compared with the other Funds because— (a) It was started first, and hence has had a longer active life than any of the other Funds ; (b) It has a larger percentage of wages-men than either of the other Funds ; and (c) It has a very much lower proportion of female employees, and consequently a lower proportion of those retiring under the " five years earlier" benefit conferred on women. (3) If the Government proceeds with this Bill, so far as the Bill is intended, without the consent of both parties to alter the conditions of superannuation contracted for by Railway employees and superannuitants, the Government will be supporting that negation of all principles —" contracts only bind you when your interest is to keep them." If this should happen, despite all the solemn protests of our members, then we ask that the following reasonable provisions should be included in the Bill: — (a) That present contributors to the Fund should be given the right to reconsider their position in the light of the new conditions created, and allowed if they so desire to recover their payments to the Fund, with accrued interest at the average rate earned by the Fund since they have been contributing, in order that they may make for themselves other suitable arrangements for old age, which will be divorced from the possible fickleness of State security. (b) That if the members have contributed voluntarily at a rate calculated on the rate of pay they were receiving prior to either the 1921 or the more recent reductions in pay, and if the higher rate is not to be taken into account under the proposed legislation, then the members concerned should be entitled to receive refunds of the amounts so contributed to the Superannuation Fund, with accrued interest as in previous paragraph (a). (4) That in no case shall the rate of contributions now made by the 3-per-cent. men be increased, because with two 10-per-cent. reductions in pay and a 5-per-cent. wages-tax, the net. amount of wages these men are now receiving is so small that where they are paying, as so many of them are doing, contributions based on the rate of pay prior to reductions, the suggested increase in rate would make it quite impossible for them to keep up these payments, with the result that the reasonable expectation of their lives, for which they have sacrificed so much already, would be ruthlessly taken from them. (5) That if section 116 (2) is repealed, as proposed, with a view to still further reducing the retiring-allowance of men retired as a result of injury or infirmity through rendering service to the country, it will be to the lasting discredit of the Government. Facts supporting all the above statements are clearly and fairly set out in the foregoing analysis of the Commission's report and the Bill to which it has given rise. Chairman: Having listened to the report from Mr. Mcllvride, it will now be for the Committee to ask any questions they may desire. Mr. Savage: On page lof the report you say, "We cannot agree with their recommendations so far as the Railways Superannuation Fund is concerned, and submit that such recommendations should not have been made before the representatives of the contributors had been given an opportunity of stating their case." Are we to understand that contributors had no opportunity of giving evidence before the Commission ? Mr. Mcllvride: They had no opportunity. Mr. Savage : On page 20 the Superannuation Boards are mentioned—that they should have been given the opportunity of considering the proposals of the Commission, There again I take it you have definite evidence to the effect that the Superannuation Boards were not consulted ? Mr. Mcllvride : Exactly. We have definite information to that effect. Mr. Bodkin : On page 4 you state that the General Manager sent a circular letter to every member of the Railway service setting out the terms upon which they would be invited to join the Fund. Do you know if copies of those letters are on record ? Mr. Mcllvride: They are on record ; and I believe the honourable gentleman could have copies of them if application were made to the Department. Mr. Bodkin: Is there any reason to believe that there w T i.ll be a greater burden thrown upon the Fund within the next ten years than there was last year ? Mr. Mcllvride : I have reason to believe to the contrary. After the particular period I have mentioned has passed, I honestly believe that with the 5-per-cent. contributions the Fund will be able to carry on, even without the Government subsidy. Mr. Bodkin : You distinguish between wage-earners and officers, the wage-earners being the lower-paid men. Would the ten-year term for the computing of the pension put a hardship on the average wage-earner ? Mr. Mcllvride: As I read it, yes, decidedly so, for this reason : Take the last three years of a man's service in the Department. For the first two of the three years he received £5, and for the last year he was in receipt of £4. According to this legislation it would mean an eight-year average at £4 a week, and two years at £5, and that would result certainly in a lesser amount being given to that individual as a retiring-allowance. Mr. Bodkin : What is the view of the Amalgamated Society of Railway Servants with regard to the policy that should be adopted with regard to the First Division ? The First Division men retiring on the average of the last three years of salary must be retired at a time when their earning capacity is right at the peak. Do they approve of it, or do they think there should be some modification ? Mr. Mcllvride : I stated in my statement that we stand for the preservation of all contracts entered into when the Fund was inaugurated, whether applying to the First Division or the Second Division.

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Mr. Bodkin : You state that the average age at joining is twenty-two years. If there were a proviso that every male had to retire at sixty, and every female at fifty-five, irrespective of the years of service, would that operate as a very great hardship to many men ? Mr. Mcllvride : If their retiring-pension were actuarially calculated it would be decidedly unjust, and a very great hardship. Perhaps I could give you an illustration. We presented a case similar to this when the Government introduced the thirty-years clause in the Finance Act of 1931. We had men compulsorily retired with thirty years' service. I gave an instance of a man forty-nine years of age, on £265 per annum. If that man had been granted a retiring-allowance of thirty-sixtieths of his wages he would have received £132. His retiring-allowance actuarially calculated amounted to £77. But that is not all. Had that man been allowed to work for the further ten-year period he would have received in that ten years £1,882 by way of wages. If he had gone his ten years his retiring-allowance would have been £176. He lost £1,882 in wages ; he lost £100 a year, practically speaking, on his retiring-allowance because he only got £77 as against £176 which he otherwise would have received. Mr. McGombs : I must first of all congratulate Mr. Mcllvride upon his very clear and able statement. He interpolated an illustration of a surfaceman who contributed £1,924 and received back £546. What was the rate of the pension he received ? Mr. Mcllvride : Approximately £3 per week. Mr. McCombs : Very little, you say, more than the right to the old-age pension. Mr. Mcllvride : I took the case of a surfaceman to show that we were really paying, by way of contribution into the Fund, a sum which was more than sufficient to grant any retiring-allowance that would be paid. I took the surfaceman's contribution at 5 per cent, of the ordinary rates of pay from Ist April, 1903 to 31st March, 1943, —i.e., forty years, plus compound interest at 5 per cent., with half-yearly rests over the full period. At the close of the forty years the sum amounts to £962 3s. 6d. If the Government had paid in the pound-for-pound subsidy, similarly compounded, there would be another £962, making a total of £1,924 6s. 4d. That man would receive approximately £3 a week. His average expectation of life after he retired was 3-| years, so that he would take out of the Fund approximately £546. Allowing for interest, there again compounded, he would leave the Fund, as I have already stated, almost £1,600 to the good. And when you take into consideration the actuarial calculation and the reductions made in the retiring-allowances of these men, you will find that they have been paying in all along for superannuation amounting to little more than they would have received as of right from the State by way of the old-age pension for themselves and their wives. Mr. McCombs : Can you get anybody to calculate the effect of lifting the £300 maximum limit ? Mr. Mcllvride: We have not been able to get that so far, and that is why we are asking in our statement that that should be stated, so that we would know the extent of the liability on the Fund if that were lifted. Mr. Wilkinson: Would it be a practical suggestion that the Railway Fund should be controlled entirely by railway men, on a definite contribution by the State ? You say in one of your recommendations that if necessary the railway subsidy of £170,000 could be reduced. Could not the railway men manage this business themselves entirely on their own account, with a definite sum from the Railway Board every year, taking it entirely out of the hands of the Government ? Mr. Mcllvride : That is really the position of the Fund at the moment, with the exception, of course, that the State as employer guarantees any possible deficiency. The State so far has not required to come to the assistance of the Fund to any very great extent. Mr. Wilkinson : You place very definite value upon the Government's guarantee, apparently. Mr. Mcllvride : As we say what greater security can you have than the security of the State. Mr. Wilkinson : But you are attacking the State all along the line. Mr. Mcllvride: Only if the State is prepared on the recommendation of certain individuals to violate the national honour to the detriment of the country. Mr. Wilkinson : It seems a little inconsistent that you should place value upon the State's guarantee, and yet you have such a poor opinion of it at the same time. Mr. Mcllvride: But what do you mean by a " poor opinion " ? Mr. Wilkinson : The report that you have read attacks the State hammer and tongs for its suggestion of interference. Mr. Mcllvride: From this point of view, if you will permit me —provided the State does the things that are proposed in this Bill. If the State does not do that, and if this Committee will give a recommendation that it should not do it, we will say just as nice things about the State then as we are saying nasty things now. Mr. Wilkinson : I should have thought you would have had very little to say for the Government, after condemning it in such measured terms. On page 8 you make the statement that Civil servants are paid lower rates of pay than are those outside the Service. If that is a fact, why is there such a rush for positions in the State service ? Mr. Mcllvride : Again there is reliance on the guarantee of the State ; and the fact that there is a pension for their old age. Let me give you an instance : During the early stages of the war I can say definitely that the respective State Departments would never have held their servants, in view of the law of supply and demand operating outside, if it had not been for the assured pensions that this scheme offered on retirement. Mr. Wilkinson: You really think that young men entering the State service to-day consider that point more than they do the amount of wages they are going to receive ? Mr. Mcllvride : They certainly consider the point; and if they do not give it mature consideration when they enter the service they are not very long in before they do, because with increasing superannuation rights they very seldom leave.

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Mr. Wilkinson : lam inclined to think you are overstating the ease. On page 15 you state that there are no indications regarding reduction of interest. Have you not noticed that there are indications of a big reduction in interest rates all over the world ? Mr. Mcllvride: I quoted figures to show that there were no indications of it here. I have figures showing the yearly interest over a number of years, and, practically speaking, they fluctuate between 5 per cent., 5J per cent.., and 6 per cent. Mr. Wilkinson : It is admitted you have earned that money in the past, but your assumption in regard to the future is what I am questioning. Mr. Mcllvride: Is the Government not issuing any debentures and bonds at the moment at 51 per cent. ? Mr. Wilkinson : No, 5 per cent, is the rate. Mr. Veitch : You say, on page 13, third paragraph from the bottom, that employees of the Railway Department contributed to the fund £182,200 ; and on page 24, again the third paragraph from the bottom, you give £170,000. How do you account for that ? Mr. Mcllvride : I made allowance for the £12,200 paid in by the Working Railways Revenue Account to the Widows and Children's Fund. Adding £12,200 on to the £170,000 makes £182,200. Ido not know that it should, strictly speaking, be added to the £170,000. You will find it in D.-5. Mr. Ansell: At the foot of page 10 you refer to those joining before twenty years of age. Do I take it that the position is this : A lad joins at fifteen, and has to go on till he is sixty years of age, which gives him forty-five years of service. He will get a certain retiring-allowance. Another one joins at twenty years of age, and goes on till he is sixty. He is in the Service for forty years. One man pays in for forty-five years, and the other for forty, and yet they receive the same retiringallowance—is that correct ? Mr. Mcllvride : Yes. It means that an injustice will be done there, because at the present time the Act as constituted provides that an apprentice joining at fifteen years of age would have his forty years' service at age 55; he would be able to retire at fifty-five and get his pension of fortysixtieths. Under the proposed legislation he would be required to work until he is sixty. It means that he works five years longer contributing all the time to the fund, from which he will not get any extra remuneration, and that is one great grievance that we have against the proposed legislation. Mr. Ansell: Supposing this suggestion must be carried out, how would it appeal to you to suggest that these men should not be allowed to join the fund till they are twenty years of age ? Mr. Mcllvride : The condition of employment is that they should join the fund at the commencement of employment. Mr. Ansell: Would that suggestion not appear equitable, in order to place them on the same basis for the number of years they pay in ? Mr. Mcllvride : We think the present arrangement is much more equitable, because after a man, even if he starts at age fifteen, has given that number of years' service, particularly in the Railway Department, he is due for retirement. Mr. Ansell: The statement has been made to me, not to the Committee, that at the inauguration of the Railway Superannuation Fund scheme the arrangement was made that the salaries should be based for retiring-allowance on the last seven years of service, and that it was then reduced to five years, and then to three years. Is there anything in that statement ? I cannot find it. I wondered whether you knew, because you say, on page 7, that it used to be computed on two-thirds of the salary at the time of retirement, and that it was then altered to two-thirds of the salary over the last three years. Mr. Mcllvride : You notice on page 4 the General Manager's circular says, " Being then sixty years of age he would be entitled to retire on superannuation allowance of £65 14s. 7d. per annum for life, being equal to 36-60ths of his annual rate of pay." Mr. Ansell: That is the first Act ? Mr. Mcllvride: Yes. Mr. Veitch : Might I be allowed to comment regarding the validity of the circular issued by the General Manager. I was employed as an engine-driver when that circular was issued, and I was requested to take it round and explain it to a large number of men in the Service, so that I can definitely assure the Committee of the validity of the circular. Mr. Ansell: You refer to the rates of pay —page B—and8 —and you make the suggestion that the rates of pay inside the Service are not so great as those outside. Can you give the Committee any details of any particular branch of industry—engineers or anybody else —to show that your statement is correct that the rates of pay inside the Service are less than those outside ? Mr. Mcllvride : Not just at the moment, but I have personal experience that that is so. The rates inside fluctuated during the war period, lagging more than usual behind outside rates, but the rate inside has always been recognized as being slightly lower than the rate outside. Mr. Ansell: We would require that for the qualification of the Government's contribution being in the nature of deferred pay. Mr. Mcllvride: Might I suggest that these figures can be available on application to the Railway Department, and that that will enable you to determine exactly just what the position is. Mr. W. Nash: On page 3 of the statement you say that the superannuation benefits are recognized as deferred pay to employees of the Railway Department. You contend that that is what they are paid for. They get so-much per week by way of pay and so-much is paid into the Superannuation Fund towards their retiring-allowance ? Mr. Mcllvride : That is exactly the position ; it is a recognition for services rendered.

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Mr. W. Nash : You say on page 3 that " Had a cash payment been made annually by the Government, as originally intended, there can be no doubt that the state of the Fund would have been actuarially sound to-day." Have you any figures to give to the Committee in of that statement ? Mr. Mcllvride : I have not the figures before me in regard to that at the moment, but given sufficient time they can be produced. Mr. W. Nash : If it could be proved that if that cash payment had been made the Funds would have been actuarially sound it would be very helpful to the Committee. Then you say on page 4, " All that is required is that the income shall be made equal to the expenditure for the next five years, after which the Fund will be, from an actuarial point of view, self-supporting." The table submitted in the last report, although five years old, states that there will be a tremendous loading going on to the Fund within the next ten years or so. If we could get instances to prove your statement that would definitely help the Committee. If you could supply any evidence to prove that, provided the Government meets the expenditure for the next five years, the Fund would then be actually selfsupporting, that would aid the Committee considerably. Mr. Mcllvride : I have in mind the fact that most of the 3-per-cent. contributors and the thirty-five-year men will soon have gone, and the Fund will then have nothing less than 5-per-cent. contributors. In the years ahead the Fund will be even more sound in view of the fact that the thirty-five-year men and the 3-per-cent. men will have gone. Mr. W. Nash : On page 8 you refer to recent evidence from Britain with regard to superannuation funds. Could you supply that material to the Committee ? Mr. Mcllvride: I believe I could get that for you. Mr. W. Nash : With regard to the pay of railway men and the pay of other Government employees and people outside the Service, you say that the railway men and others in the Service, particularly railway men, are paid less than those outside because of the fact that the superannuation benefits are taken into account. You say, "It is thoroughly well known to all those engaged in the great business of conciliation and arbitration awards that the rates of pay in almost all sections of the Civil Service, including Railways, are lower than they are outside the Service, and those who have had the business of conducting negotiations for the various State Departments in regard to wage scales know and have recognized throughout the period since superannuation funds were created that these funds are a definite factor in explaining this disparity as between rates of pay inside and outside the Services." Could you supply evidence to support these statements ? Mr. Mcllvride : Yes. We will see what we can do. Mr. W. Nash : With regard to the lowering of the interest rate. You state that the interest rate is approximately 5§ per cent, per annum. If interest rates are reduced the Fund will be eSected ; that is obvious. But will not there be a corresponding benefit to the superannuitants and members of your society because of that reduction in interest rates ? There will be a reduction in their interest liabilities in connection with houses in certain areas—Addington, Christchurch, and Hutt. If interest rates are reduced they will get a reduction in their charges, will they not ? Mr. Mcllvride : Yes. That is so. Mr. W. Nash : If it is definitely established that interest rates will decline, then the Fund will be in a difficult position. Mr. Mcllvride: Ido not think so. Ido not think the Fund would be in a difficult position. It might mean a little less surplus, but with the credit balance that it has at the present time I think the Fund would be able to operate successfully even then. Mr. W. Nash : When it is established that the interest rates will come down to 4 per cent, on safe Government securities this Fund, on the evidence that is available, will not be in a very difficult position. Mr. Mcllvride : It would not affect the pensions to be paid if the State guarantee is maintained. Mr. W. Nash : If we accept the principle definitely and clearly that the State guarantee is behind the Fund and will pay out the pensions, then interest rates do not come into the question. I should say that interest rates will come down. Are you basing your main case on the cardinal principle that the State has definitely guaranteed these pensions, and as they have been guaranteed by the State they shall not be taken away ? Mr. Mcllvride: Yes. Mr. W. Nash: That is your case ? Mr. Mcllvride: That is our case. Mr. W. Nash: Then on page 17 you say that the liability of the State is to the employees and not to the Fund. The point that is made in the Commission's report is that it is the funds that have the deficit; your opinion is that the liability is to the employees and not to the Fund ? Mr. Mcllvride: Yes. Mr, W. Nash : And there need be no fund at all in the funding sense provided the employees paid their contributions every month and the State guaranteed to pay the superannuation benefits ? Mr. Mcllvride: That is exactly the position. Mr. W. Nash : If there was an agreement made between an outside organization and its employees, similar to the one made by the State with its employees, would it not be the duty and purpose of the State to compel that outside organization to meet its obligations in accordance with the agreement made ? Mr. Mcllvride : The law enforces the agreement in the case of an outside firm. Sir Apirana Ngata : Would it not go to the Supreme Court ? Mr. W. Nash : Sir Apirana states that it would go to the Supreme Court. The Supreme Court would compel an outside organization to meet its obligations. Another point I wish to bring up is in regard to what Mr. Mcllvride said with regard to people taking into account the superannuation

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benefits when entering the Public Service. Is it not a fact in your experience that parents definitely place their boys and girls in the State Service on the understanding and belief that they will ultimately get superannuation benefits ? That point is taken into consideration at the time the boy or girl leaves the school to enter the State employ, is it not ? Mr. Mcllvride: That point has been very much evidenced since I have been in my present position. Mr. W. Nash : On page 19 you say with regard to the people getting over the £300 limit that the objections raised by the Commission are met by the fact that the difference between contributions made and annuities received, if in favour of contributions, is returned to the contributors. Is that correct ? Is that an existing rule ? Mr. Mcllvride : Yes. It is returned to the contributors. Mr. W. Nash : With regard to the retiring-age of railway men, do you contend that it is not possible for a railway employee to carry out his duties with safety to the people after the age of sixty years. lam talking about the operating employees ? Mr. Mcllvride : That is the experience we have had. Mr. W. Nash : Then if the age-limit is increased to sixty-five it will not only be an injustice to the employees but will also be a menace to the safety of railway passengers ? Mr. Mcllvride : Yes. Mr. W. Nash : On page 24 you say, "In case of necessity the Government could even decrease its present payments of £170,000 per annum to the Railways Superannuation Fund from the Working Railway revenue in order to meet present liabilities in other directions, provided that the State guarantee, as given and maintained up to the present time, is not withdrawn." Assuming that the Railways were not able to operate profitably and there was no money in the Working Railways Account to meet its ordinary liabilities, do you suggest that the Fund would still be solvent and solvent in ten years' time if the Government failed to pay its subsidy of £170,000 ? Mr. Mcllvride : I say it would if the State guarantee is not withdrawn. Mr. W. Nash : That means that it is the State guarantee you are relying on and not the £170,000 ? Mr. Mcllvride : Yes, the State guarantee that they will meet the liabilities to the contributors when the time comes. Mr. W. Nash : You are not relying on the subsidy in any way. You are relying on the guarantee to pay according to the agreement ? Mr. Mcllvride: Yes. Sir Apirana Ngata : You stated in your evidence that the Fund is carrying the peak load just now and you anticipate that that will be the position for the next four or five years ? Mr. Mcllvride: Yes. Sir Apirana Ngata : You think the State should keep up the payments of at least £170,000 ? Mr. Mcllvride : Yes. But what we are asking for is that the State, when the liabilities occur, will meet the liabilities to the contributors. Sir Apirana Ngata : But you go further than that and say that if this payment is maintained for five years and nothing unforseen happens in regard to the right of retirement and so on in five years the Fund will be self-supporting ? Mr. Mcllvride : What I had in mind there was the fact that the thirty-five-year men and the 3-per-eent. contributors will have gone, and those remaining will be contributing at the rate of 5 per cent., and from a practical operative point of view after that period the Fund will be self-supporting. Sir Apirana Ngata : Without further payments from the Working Railways Account ? Mr. Mcllvride : Not altogether from a business point of view. Sir Apirana Ngata : At the back of that there would be recourse to the Consolidated Fund if there was a break ? Mr. Mcllvride : Yes. Mr. Dickie : With regard to the cost-of-living bonuses, have they ever been a charge on the Fund ? Mr. Mcllvride : They have never come out of the Fund. The cost-of-living bonuses to superannuitants came out of the Working Railways Account. Mr. W. Nash : In the first place they were paid out of the Consolidated Fund and now out of Railway revenue. Mr. Dickie : They never came out of the Superannuation Fund ? Mr. W. Nash : No. Mr. Dickie : Do you know the amount paid out in cost-of-living bonuses ? It is pointed out on page 4 that a man sixty years of age would be entitled to retire on a superannuation allowance of £65 14s. 7d. per annum for life, being equal to thirty-six-sixtieths of his annual rate of pay. Would that amount be increased to £100 by the cost-of-living bonuses ? Mr. W. Nash : There is a £26 maximum. The limit is £26. The Chairman : You are anticipating that the Bill as presented to Parliament was the last word of the Government ? Mr. Mcllvride: No. We were hoping it would not be. The Chairman : On page 13 you say, "It is noted that the Government proposes to make the penalty as severe as possible, choosing the ten-year period rather than the seven." Are you suggesting that you would like to have the seven-year period instead of the ten ? Mr. Mcllvride : We suggest all through that we adhere to the original contracts and that nothing be altered. The Chairman: The Prime Minister made a statement to the House in regard to the Bill, and rather than interfere with the proposals at all it was thought preferable to take the Bill as it came from the Commission and refer it to this Committee. You understand that that is the position ? Mr. Mcllvride: Yes.

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Mr. Hargest: On page 26 you refer to the 3-per-cent. men and suggest that in no case should the rate of contributions now being made by them be increased. Is there not a feeling existing in the Service to-day that the original contributors got away with better conditions than they were entitled to ? Mr. Mcllvride : I do not know that I could say that. That was the original contract and, of course, it has always been accepted by other members of the Service. Mr. Hargest: You are quite satisfied in regard to that ? Mr. Mcllvride: Yes. The point I was making there was that these 3-per-cent. men elected to pay on the higher rate of pay by virtue of the fact that they were only paying 3 per cent. If this percentage is increased it will make the difference between the possible and the impossible, and as I said the reasonable expectation of their lives of an adequate retiring-allowance will be taken away from them. Mr. Hargest: Take a boy fifteen entering the service in 1903. He would now be in receipt of almost the highest emolument he could get in that particular branch of the Service ? Mr. Mcllvride : That would depend on the branch. Mr. Hargest: If he were he would be just as well able to pay the extra 2 per cent, as the other superannuitants ? Mr. Mcllvride : Ido not question that. The point we are after is the sanctity of these contracts, and when the Bill was passed in the first place the 3 per cent, was chosen instead of the 2| per cent, of the London North-western because 3 per cent, was sufficient to provide the pensions. Mr. Hargest: I saw a circular some time ago to the effect that the Fund was plundered by some of the superannuitants getting superannuation far in excess of what they were entitled to. Do you still hold that view. Mr. Mcllvride : I have no knowledge of any official statement to that effect having been issued by the society. I say again that where the contracts were made we are standing fast, first and last, for the preservation of contracts. Mr. Hargest: You are satisfied that the administration of the Fund is just ? Mr. Mcllvride: Yes. Mr. Hargest: I would like to point out that if a body was set up to administer this Fund and the other Funds an element of risk enters into it. For instance, in the Public Service Fund 1-» million pounds is invested in mortgages, and to-day one-half of those securities would be questionable, and it would be very hard to bring out an estimate of their value, but it is pretty safe to say that there would be a big loss on that 1| million pounds. That does not effect the Railways Fund, of course, but I was just pointing out the danger. Mr. Bodkin : You state that you stand solidly for the preservation of existing contracts. Does that apply to those pensions granted to superannuitants who went out prior to 1921 with particularly high superannuation ? Mr. Mcllvride: Yes. We stand for the preservation of all contracts right throughout. We cannot, with consistency, ask for the preservation of one contract and the breaking of another. Mr. Bodkin : Did your branch make any protest to the Government to the effect that the retirements of 1922 and 1930 would place an undue strain on the Fund. Mr. Mcllvride : Not that I am aware of. In any case we had the State guarantee. Mr. W. Nash : I would like to ask one question about this actuarial basis. Mr. Mcllvride in his evidence has given some figures with regard to the Actuary and the Actuary's report. He is not basing his main case on those figures in any way whatever ? He is basing his case exclusively and entirely on the fact that the State should stand by the agreement made with its employees. Mr. Mcllvride : That is so. The Chairman: We will now take the statement of the Engineers, Firemen, and Cleaners' Association. I would like to know how many speakers there are this morning ? John Hensley Sim, President, New Zealand Locomotive Engineers, Firemen, and Cleaners Association. (No. 5.) Mr. Sim : Mr. Stephenson and myself. As President of the Engineers, Firemen, and Cleaners' Association, I wish to enter an emphatic protest on behalf of the members to any alteration in the original Act as it is proposed in this Bill. We contend, Sir, that it is not only a breach of contract, but it breaks faith with the Association which I represent as members of the Public Service. Should the question of costs arise in your mind, let me take you in retrospective back to August, 1914, when in reply to the German statement as to the cost of respecting the agreement entered into by Britain with Belgium concerning neutrality, the question was asked, " Have you counted the cost to keep to that agreement ? " and Mr. Winston Churchill, that British statesman said, " England never counts the cost when in the right." I submit to you that the whole prestige of the English Nation is based on statements such as that. We have worked up a case which we contend is a strong one. Ido not want to reiterate what was said yesterday, because there was a lot said that could be left unsaid to-day. It is my intention to ask Mr. Stephenson to take our case. He has submitted a strong case, and we leave it to your consideration. The Chairman : Thank you, Mr. Sim. Thomas Houghton Stephenson, General Secretary, New Zealand Locomotive Engineers, Firemen, and Cleaners' Association. (No. 6.) The question of superannuation is one of vital importance to the members of the Locomotive Engineers, Firemen, and Cleaners' Association, and we are considerably perturbed at the manner in which the Bill now before the Committee proposes to deal with the matter. It is unfortunate that, the investigation of the Superannuation Fund should have been brought under review at a time of

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unprecedented economic depression, for such an atmosphere has undoubtedly a very detrimental effect upon the position, and it is apt to be considered from a purely immediate financial aspect. I would draw your attention to the fact that the report of the National Expenditure Commission, upon whose recommendations the present Bill is based, was purely an economy Commission set up by the Government for the specific purpose of effecting economies in State expenditure, and the fact that savings were embodied in their report which did not even reach double figures is an indication of their thoroughness, their anxiety, and the extent to which they have gone to achieve that end. Previous Committees have been set up by the Government for the purpose of investigating the various Superannuation Funds, and to which the various organizations were to be given the opportunity of giving evidence. These Committees have never functioned, and I submit that the National Expenditure Commission investigated the position of the Superannuation Funds without hearing evidence from the organizations concerned, and with one object in view—viz., that of economy. I propose to show to the Committee that in spite of the fact that the Commission estimated an actuarial deficiency of approximately £9,000,000 in the Government Railways Superannuation Fund, and in spite of the fact that it has placed the responsibility almost entirely at the door of various Governments, it is now proposed in an almost unbelievable fashion to place the whole of the burden on the shoulders of annuitants and contributors, and to possibly reduce the contribution which is now being paid by way of subsidy from Working Railways Account; that is, provided lam justified —and I think I am —in assuming that the subsidy will be £1 for £1. In other words, the past liability of the State is now to be definitely and specifically transferred from the State to those who have fulfilled faithfully every part of their contract. Commencement of the Fund and the Contract. I suggest that on launching out on a superannuation scheme the Government did recognize the value to the State itself, and I might mention the inducements which were held out by the Government to the then members of the Service when the Government Railways Superannuation Fund was inaugurated on the Ist January, 1903. The provisions of the Act were explained to the men by the officers of the Department who toured the country. It was pointed out that superannuation definitely provided a certain retiringallowance at a specified age or length of service, and made all provisions necessary to ensure a reasonable allowance being paid during their declining years. They were cajoled to join the Fund, and the men accepted that assurance, many of them sacrificing the provisions they had already made for their old age. As is well known, the basis of a superannuation scheme is usually a contribution by the employer and the employee, although some schemes are actually non-contributory. In this instance, however, the Government made provision for a State guarantee of the Fund in lieu of a cash payment, and the State therefore came in as guarantor of any possible deficiency. In effect the solvency of the State was the solvency of the Railways Superannuation Fund. I propose to place on record section 19 of the original Act relating to the State guarantee, which reads as follows : — " In the event of the Fund at any time being unable to meet the charges upon it, and as often as such occurs, the following special provisions shall apply : — " (1) The Board shall forthwith report the fact to the Colonial Treasurer, setting forth the amount of the deficiency and the cause thereof. " (2) The Colonial Treasurer, upon being satisfied that the deficiency exists, and that provision is necessary therefor, shall, without further appropriation than this Act, pay into the Fund out of the Consolidated Fund a sum sufficient to meet the deficiency. " (3) The Board's report, together with a statement by the Colonial "Treasurer of his action thereon, shall be laid before Parliament within ten days after the receipt of the reports if Parliament is then sitting, or if not, then within ten days.after the commencement of the next ensuing session thereof." There will be no question, therefore, regarding the State guarantee of any deficiency of the Fund, as contained in the original Act under which original contributors joined the Fund. However, that is not all, for in order to afford more protection and inducement to the contributors, section 26 of the original Act provided as follows " The rights and benefits provided for by this Act shall be subject to all such modifications as may be provided by any Act hereafter passed in amendment or repeal of this Act : " Provided, however, that all benefits under this Act shall be conferred upon any person who has actually contributed, and shall remain in force and shall not be prejudicially affected by the amendment or the repeal of this Act." Such were the inducements held out to original members to join the Superannuation Fund, and I desire to emphasize the point that in lieu of a cash payment the State guaranteed the stability of the Fund and provided protection for contributors against violation of the contract and interference by future legislation. These provisions stand in the Government Railways Superannuation Fund to-day, and it should be remembered that although the Act was amended in 1907 by increasing the percentage of contributions from 3 to 5 per cent., and in 1909 by placing a limit of £300 upon retiring-allowances, no alteration was made to the conditions under which members joined the Fund prior to that time. No Government during the past thirty years has interfered with this contract between the State and its servants. To indicate the implicit faith placed in the scheme and in the Government's guarantee of the Fund at its inception, all but sixty-six out of a membership of 6,504 voluntarily gave their allegiance to the Fund. Thereafter employment in the Service was conditional upon joining the Superannuation Fund, and membership was therefore compulsory.

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The contract on the one hand was 3-per-cent. contributions from the employees (raised to 5 per cent, on the Ist January, 1908) and retirement at forty years' service or sixty years of age, with a retiring-allowance of one-sixtieth of salary for every year of service, and on the other hand a State guarantee for the solvency of the Fund. The contract was made by the State as between itself and its servants, and there can be no question that the servants have carried out their part of the contract to the very letter and have fulfilled their obligations to the last penny. That is unarguable. The State, on the other hand, has consistently failed to honour its part of the contract. It has called upon its own employees to fulfil every part of the contract, while it has failed miserably to do likewise. It transferred to the Fund pensions which were rightly a charge on the Consolidated Fund, and relieved itself of its obligation by making the Fund find the pensions of persons who had been contributing only a short period. It has subsidized the Superannuation Funds of other organizations and failed to safeguard its own servants and its own Superannuation Fund. It has failed to discharge its obligations in respect of back service from the very commencement of the Fund, with the result that annuities have been paid entirely out of contributions of the employees. It has used the Superannuation Fund to facilitate retrenchment; and I submit that the present position of the Fund is due entirely to the failure of the various Governments to honour the contract entered into with its own servants, and that any proposal which aims at removing that responsibility from the Government on to the shoulders of the present contributors is a serious breach of faith by the State and is absolutely unjustifiable. I agree entirely with the Commission when it said, " The State has a liability from which it cannot honourably escape," and I say without hesitation that the State as the stronger party cannot honourably evade its responsibilities and its proven liability by legislating itself out of a sacred contract while at the same time the weaker party has faithfully fulfilled every obligation. Advantages to the State of Superannuation Scheme. The principle of pensions in various forms and for various reasons, some contributory, others non-contributory, is everywhere accepted and is in operation in almost every country in the world. So far as the Government Superannuation Fund is concerned, I desire to point to some of the advantages derived by the Government from the scheme. It is undoubtedly one of the best recruiting agents for the Government, drawing to the Service the type of individual who is prepared to devote his life's work to the service of the State. It retains men who are an acquisition to the Service, men who could unquestionably improve their position outside the Service but who are restrained by reason of the fact that they had valuable superannuation rights, or at least they thought so. It relieves the Government of the payment of considerable sums of money by way of compassionate allowances, gratuities, and other pensions. It promotes efficiency in the Service by facilitating the removal of those members who, through old age or medical unfitness, should be retired, and the National Expenditure Commission considered that a superannuation scheme is necessary even for this purpose alone. (Paragraph 1389.) Superannuation is also looked upon as deferred pay (Paragraph 1390), and it therefore follows that if there was no Superannuation Fund increased remuneration would have to be paid, and it is no exaggeration to say that such payment would have involved the State in a sum considerably in excess of what it has paid to the Superannuation Fund during the past thirty years. It must be admitted, therefore, that the State derives many advantages from a scheme of superannuation, and I submit that the contract is not one-sided, and that the State has not paid sufficient for the benefits it has derived from the scheme. The State's Liability. I have said that the responsibility for the present condition of the Fund has been placed by the Commission mainly at the door of Governments. I will go further and say that the responsibility is entirely that of the State, but for the moment I will content myself by quoting the views of the Commission regarding the State's liability and its failure to discharge its obligations. Commencing at paragraph 1387, the Commission states, " We have considered in detail the whole question of superannuation to retired officers, and believe that unless the State is able to make good its obligations to the funds some radical alteration must be made in the calculation of retiringallowances if the interests of the present contributors are to be conserved." I emphasize the qualification in that paragraph "unless the State is able to make good its obligations to the funds some alteration must be made." In the following paragraph (1388) it is stated, " We also draw special attention to the huge potential liability on the State in regard to the funds, a liability from which it cannot honourably escape." In spite of such an indictment, however, and in spite of the fact that the Commission had a full realization of the State's obligations, the Commission itself provides the State with a happy release, as I propose to show. Again, in paragraph 1394, it is stated, inter alia, " On qualifying for retirement, contributors had the option of accepting an annuity from the Fund, or they could elect to accept their accrued compensation, together with a refund of their total contributions to the Fund, without interest. The Consolidated Fund was accordingly relieved of a considerable liability for accrued compensation. This matter of compensation is important, and should be remembered in considering the liability of the Government to the Superannuation Fund." Coming now to paragraph 1423, further reference is made to the State's liability in the following words : "In this fund also the initial contributors qualified for an annuity based on their total length of service, so that there was a large initial liability on the funds in this respect, and no provision has been made by successive Governments to meet this liability."

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Further liability has been placed on the Fund by the compulsory retirement of members with thirty-five years' service, and the Government has used the Fund for the purpose of facilitating retrenchment, and there again the State must accept its share of the responsibility. (Paragraphs 1424 and 1438.) The Commission again refers to the State's obligations in paragraph 1430, which states, inter alia, Actually it was the duty of the State to make suitable provision to meet the initial liability cast on the funds ..." The State, however, adopted the plan of postponement, and such postponed liabilities have up to the present been only partly liquidated. The result is that the liabilities for annuities arising from service prior to the initiation of the funds is now being met from current contributions of employees. In paragraph 1431 it is pointed out that the continued failure to meet the State's obligations has resulted in the rapid growth of the deficiencies, amounting to the extent of £6,810,204 in 1927 in the Railways Fund alone, or a total of £18,117,772 in all funds. Paragraph 1434 again brings into prominence the State's liability in the following remarkable manner. "It seems clear that the actuarial liability of the Government in respect of the three funds is approximately £23,000,000." Coming to paragraph 1437, the Commission states, " The very essence of a sound scheme is the accumulation of the sums contributed by the employees for the purpose of meeting the portion of current and future liabilities for which they were intended, and it is largely in this respect that the otherwise satisfactory schemes of the Government have become unsound." The foregoing paragraphs clearly indicate that there was never any doubt in the minds of the Economy Commission where the responsibility for the present state of the funds lay. An impartial review of the position could not possibly lead to any other conclusion. I pointed out that the Commission's sole object was the cutting-down of State expenditure, and in spite of the fact that paragraph after paragraph reveals the fact that the State has utterly and completely failed to fulfil its obligations right from the very inauguration of the funds until the present day, culminating in a total actuarial deficit of £9,000,000 in the Railways Fund (or £23,000,000 in all funds), the Commission, and the Bill before the Committee, proposes to repudiate that responsibility, to relieve the State of meeting its just and proven debt to the Superannuation Fund, and to escape its liabilities by further increasing the burden on contributors and annuitants. The Commission has very definitely expressed in words the failure of the State to fulfil its obligations, and in order that a clearer view of the position may be obtained at a glance I submit the following table showing the contributions (and donations) of members, together with the contributions of the State since 1903, and the excess receipts over expenditure of the Consolidated Fund since 1908.

4—l. 15.

V«.r ! Contributions of „ , ., Surplus or Deficit Year " Members. Subsxd y- r", l solidated Fund. | ~~ £ s. d. £ s. d. £ 1903 .. .. 3,433 5 1 1904 .. .. 39,788 16 1905 .. .. 43,386 19 6 1906 .. .. 42,790 3 9 1907 .. .. 43,933 17 5 1908 .. .. 45,669 0 9 .. 850,024 1909 .. .. 64,934 11 8 .. 106,654 1910 .. .. 58,946 16 10 .. 247,995 1911 .. .. 60,870 6 3 25,000 0 0 954,167 1912 .. .. 59,454 18 11 25,000 0 0 720,792 1913 .. .. 66,847 12 4 25,000 0 0 652,232 1914 .. .. 71,692 14 7 25,000 0 0 392,397 1915 .. .. 75,034 1 9 50,000 0 0 72,142 1916 .. .. 78,403 3 8 25,000 0 0 2,017,030 1917 .. .. 83,003 7 5 25,000 0 0 4,308,777 1918 .. .. 81,249 15 4 25,000 0 0 5,085,934 1919 .. .. 78,619 17 11 25,000 0 0 3,678,773 1920 .. .. 103,845 17 5 75,000 0 0 2,299,416 1921 .. .. 122,532 5 9 75,000 0 0 6,192,232 1922 .. .. i 135,008 15 4 75,000 0 0 339,831* 1923 .. ..I 128,941 19 1 75,000 0 0 1,315,683 1924 .. .. 133,153 8 2 125,000 0 0 1,812,365 1925 .. .. 144,777 9 8 105,000 0 0 1,243,800 1926 .. .. 153,902 19 9 170,000 0 0 1,155,679 1927 .. .. 157,784 14 0 170,000 0 0 587,142 1928 .. .. 158,600 15 9 170,000 0 0 179,076 1929 .. .. 166,439 3 3 170,000 0 0 577,252* 1930 .. .. 175,872 3 0 170,000 0 0 148,979 1931 .. .. 170,685 10 10 170,000 0 0 1932 .. 142,239 3 7 170,000 0 0 Totals .. 2,891,842 6 3 1,970,000 0 0 33,961,298 ___ 917,083* nofioif

1.-—l5.

11l 1908 the contributions of members were raised from 3 per cent, to 5 per cent. Apparently at that time it was evident to the Government that 3 per cent, was not sufficient to carry on the Fund, and accordingly the amount was increased to 5 per cent. ; but with that knowledge the Government still failed to pay in any money to the Superannuation Fund for another three years, and in spite of the fact that it was apparent to the Government that the 3 per cent, was not sufficient and the contribution was raised to 5 per cent., it still failed to pay in any subsidy to the Fund. Again, I would point out in connection with the subsidies and contributions of members that from 1926 to 1932 the contributions of members have, in five instances out of the seven, been below the £170,000 which has been paid in by the Government. The Bill proposes that the Government shall pay a subsidy of £1 for £1, and I would point out that if the Government had been paying that into the Fund it would have paid £71,000 less than it actually has paid during the last five years, by reason of the fact that it has been paying more in in subsidies than the contributions have amounted to. The total contributions of members is £2,891,842 6s. 3d. The subsidies paid in by the Government amounted to £1,970,000. The surplus in the Consolidated Fund from 1908 to 1930 was £33,961,298, and the deficits in the same period amounted to £917,083. It will be seen from the above figures that it was never intended that the Railways Superannuation Fund should be placed on an actuarial basis, otherwise the State would not have allowed the Fund to continue for eight years before making any contribution. I have submitted in figures what the Commission has submitted in words, and the whole story is one of dismal failure on the part of the State and a desperate struggle to escape the consequences even to the extent of recommending a breach of contract with every servant of the State and superannuitants. The Way Out for the State. It has been stated previously that the Commission placed the responsibility for the present position of the funds at the door of the State, and I have shown by the previous table the manner in which the State consistently failed to face up to its financial obligations, relying undoubtedly on the fact that the Fund was State guaranteed and that the solvency of the State meant the solvency of the Fund. Reference has also been made to the fact that the Commission made the statement that the State had a liability " from which it could not honourably escape," and I feel sure this Committee will want no further evidence regarding that aspect of the case. But the most extraordinary thing about the whole matter is that the Bill is full from end to end with provisions for bringing into the net almost every annuitant who has retired from the Service during the past ten years, and also every present and future contributor to the Fund, while there is every possibility that the subsidy paid to the Fund during the past few years will actually be reduced. Surely such a procedure is unjustifiable. I believe the Government will freely admit its liability, but surely it would not dare apply the principle it adopts in this Bill to, say, individuals or to any business transactions. It is a form of bankruptcy, and the result would be chaos. It should not be forgotten that the nation went to war to oppose the very principle which the Bill proposes to adopt. Analysing the Relief to the State and the Increasing Burden on Annuitants and Contributors. It has already been pointed out that the State guaranteed the Railways Fund against any deficiency in lieu of making monetary contributions. The Bill now before the Committee proposes- — (1) To abolish the State guarantee (and compel the contributors to pay its accumulated debt). (2) That the subsidy shall not be less than the total contributions made to the Fund by contributors in each such year. The contributions of members to the Fund for the year ended 31st March, 1932, was £142,239 3s. 7d., while the subsidy amounted to £170,000. If the subsidy be pound for pound on last year s contributions the subsidy will be reduced by £28,000. So much for the relief granted to the State. The Bill proposes, on the other hand, to impose the following load on superannuitants and contributors, and to make the Fund actuarially sound at their expense, by- — (1) Increasing the length of service before qualifying for a pension as of right (thus reducing the period on the Fund, and increasing the period over which contributions will be paid) ; (2) Altering the basis for calculating pensions ; (3) Calculating the retiring-allowance on the salary received over the last ten years of service in lieu of the past three years of service ; (4) Increasing by 2 per cent, the contributions of members who joined the Fund prior to 1908 ; (5) Computing on an actuarial basis the pensiops of all members who retired with the consent of the Minister without completing forty years' service. The above amendments definitely make the Fund actuarially sound in the following startling manner: — (1) Immediate relief to the State of £9,000,000. (2) Reducing the State subsidy below £1 for £1 of contributions, which is the accepted basis of contributory superannuation schemes. (Paragraph 1449.) (It does not appear necessary that a pound-for-pound subsidy will be required for all time, as when the liability for back service is ended —i.e., forty years from the inception of the Fund a much smaller subsidy will suffice.) (3) Transferring to contributors an immediate liability of £9,000,000. (4) Increasing contributions. (5) Reducing pensions.

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It is clear, therefore, that present contributors are being forced to accept responsibility for something which occurred before they joined the Service and the Fund, and that by adopting the amendments contained in the Bill the past liability of the State is abolished and its future liability will become progressively less. If these proposals are adopted the Economy Commission has certainly accomplished its task —the curtailment of State expenditure. After being in operation for thirty years, therefore, the Fund is now to be made actuarially sound wholly at the expense of contributors and annuitants. But surely the Committee and the Government cannot approach this important matter from a purely financial viewpoint, and cannot subordinate all other matters to that of economy. It must take a wider view of the whole position and consider the far-reaching effect that this legislation will have on the spirit of the Government Service, the transactions of the State, its business activities, and even the Dominion itself. Advantage is already being taken of the position, and it will not be necessary to wait for the second failure of the State to shatter the faith in the Government or in its superannuation fund schemes, as the Commission pointed out. Once will suffice. A Comparison. Lest it should be considered that public servants in New Zealand were in a much more favourable position than those of other parts of the British Empire, a brief comparison with other schemes may here be helpfnl. The Railways Superannuation Fund of New Zealand was founded on the lines of that of the Great Western Railway Company in England, a scheme which was based on 2f per cent, of contributions and a similar contribution by the employer. This scheme has met all claims, gives benefits equal to that of our own Fund, and has accumulated large reserves. The Civil Service employees of Great Britain are granted pensions without payment of contributions. Hitherto the Canadian National Railways has borne the total cost of pensions for its employees, but they are now required to make a contribution. A closer and more striking example of how the Government provides pensions may be taken from the Australian States, New South Wales, Victoria, and South Australia having funds more or less similar in structure, the contributors paying half the cost of the scheme and the Governments the other half. Taking Victoria as an example, when a member retires on a pension that pension is paid to him by the Superannuation Board, but included in the pension is a contribution actuarially determined and paid by the Government. At present, because of the limited time in which the scheme has been in operation (from 1925), the major portion of the pension is being met by the Government, as for instance : On a pension of £104 per annum, the Superannuation Board's share amounts to £6 13s. 2d. and the Government's share amounts to £97 6s. lOd. Again, out of the total amounts paid in pensions and retrenchments in Victoria up to the 31st August, 1932, the Fund had contributed £236,970, while the Consolidated Fund had contributed £1,587,801. I need only ask the Committee to compare the position of a fund based actuarially with the position of the Railways Fund where £205,468 was paid entirely out of contributions from 1903 until 1910 without one penny-piece being contributed by the Government. In the name of equity how can the Railways Superannuation Fund be looked upon from an actuarial viewpoint, and why should it be made so at the expense of contributors and annuitants because of an adverse budgetary position. Actuarial Deficit. It is sufficiently well known that the Railways Fund was not founded on an actuarial basis but it was founded on the basis of a contribution from the employer and the employee. The Actuary in his report on the Railways Fund as at the 31st March, 1927, quotes an extract from the report of a Commission on the pension funds of the City of New York, as follows .— " The Commission has made a broad review of existing pension systems in operation both in the United States and abroad on which it was able to secure information. This inquiry has brought out the fact that the development of pension measures as the result of an experience of over a hundred years is in the direction of equal division of costs between the employer and the employed, and that this tendency applies equally to systems for public employees and for industrial workers." It is clear, therefore, that the Government should have made its contributions when the employees made theirs. But instead of a cash payment the State came in as guarantor of the Fund, with the result that it accumulated a debt for itself which it now finds embarrassing. The contributors, however, have for thirty years made their payments in the identical manner in which payments are made to funds actuarially founded, and it is therefore the State's duty to do likewise. If it fails in this direction the State guarantee of the Fund is absolutely worthless. When mention is made of placing the Fund on an actuarial basis, it is interesting to note the payments which were made entirely out of contributions from 1903 until 1910, and before the Government had made any contribution whatever to the Fund : Expenditure for year —1903, £18 16s. 6d. ; 1904, £7,516 2s. lid. ; 1905, £17,532 9s. Od. ; 1906, £24,214 Bs. lid. ; 1907, £29,095 4s. Bd. ; 1908, £35,354 2s. id. : 1909, £41,282 os. id. ; 1910, £50,454 16s. Od. : total, £205,468 os. 2d. 4*

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If, as the Commission points out, " The very essence of a sound scheme is the accumulation of the sums contributed by the employees," it can readily be understood how unsound the Railways Superannuation Fund was during the first six years of its existence. If the Fund is to be made actuarially sound at this stage, there is no legitimate reason why it should be saddled on the contributor. In spite of the fact that the Fund is, and always has been, actuarially unsound, and that the Government has failed to pay its subsidy, the reserves have increased from £40,357 in 1904 to £1,494,223 in 1932. The annual liability of the Fund to-day is £431,000, but few men will be placed on the Fund during the next few years, and the liability for " back service " will soon be at an end. The Fund therefore has about reached its peak load, and the annual liability is therefore near the maximum. It is at this stage that the Government should support the Fund by additional payments instead of legislating for reduced subsidies. If the Fund could be helped over the next few years when every contributor will have subscribed to the Fund during his whole period of service (a position in which it is recognized that every contributor provides his own pension), there is every prospect that the Fund will be —if not from an actuarial point of view at least from an operative point of view—sound. It should not be forgotten, however, that the interest alone on the State's deficit at 1927 amounted to £306,459 per annum, and a pound-for-pound subsidy on contributions is totally inadequate to relieve the position. Recommendations of Government Actuary. In view of the proposals contained in the Bill, paragraphs 25 to 29 of D.-sa, 1932, are most important. The Actuary indicates that the annual subsidy must be fixed at some greater amount than £306,459, and that this figure only represents interest and will not redeem the deficiency. He farther suggested an automatic basis, and recommends for consideration an annual subsidy of 10 per cent, of the salary roll, which would give a commencing subsidy of £340,000 per annum. " My recommendation," says the Actuary, " for the future State subsidy to be 10 per cent, of the salary roll, does not differ very much from apportioning the cost equally between the employer and the employee when account is taken of the initial deficiency created in the Fund 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 amount by which past subsidies have fallen short of the contributions paid by employees." The report proceeds to point out that in recommending a 10-per-cent. subsidy of the pay roll he has not only endeavoured to place the Fund on a firmer footing, but also to keep the cost to the State as low as reasonably possible. Continuing, however, the Actuary states that, " Should it be desired to go further than I have indicated, so as to more rapidly redeem the deficiency, a higher subsidy than 10 per cent, could be fixed or, alternatively, the Fund could be strengthened by suitable amendments to the Government Railways Act." Truly, the sting is in the tail. The Commission agreed that unless the State was able to make good its obligations some alteration would have to be made. The Actuary also declared that as an alternative and to more rapidly redeem the deficiency suitable amendments would strengthen the Fund. But the Bill goes much further than the Actuary even suggested in his report. If the subsidy of £340,000 per annum was sufficient to keep the Fund sound, and this amount only apportions the cost equally between employee and employer, the Government should in all fairness pay, and there is no justification for non-payment. The actuarial deficit of £9,000,000 only clouds the issue, and no such sum is required for the stability of the Fund. It only creates a favourable atmosphere to impose an injustice on public servants, to the advantage of the State, and the amendments are unwarranted. It is notorious that throughout the Actuary's report the Government's responsibility is clearly defined, but alternative methods are suggested which place the onus of carrying that responsibility on the contributors. The Government has evaded every recommendation of the Actuary which refers to its own obligations, and on the other hand has placed in the Bill every alternative method which shifts the responsibility from the State to the contributors. The Bill definitely takes the extreme course of redeeming the deficiency more rapidly, and is undoubtedly panic legislation, striking a blow at the very foundation of the superannuation scheme, while little of the original Act would remain. The Bill. I do not propose to discuss the Bill at length, but desire to refer to some of the clauses which affect my Association. Referring to clause 4, subclause (3), I am unable to reconcile the first paragraph with the last paragraph. The first paragraph provides that " . . . In the case of a contributor who on his retirement was contributing to the Fund on the basis of a higher rate than his actual salary, the Government Actuary shall further assume that if he had remained in the Service he would have continued to contribute on that higher basis." The second paragraph provides that, " Where for the purpose of any computation to be made under this section the Government Actuary is required to ascertain the average annual rate of salary of a contributor, such average rate shall not in any case be deemed to exceed the average rate of salary actually received by the contributor during the three years immediately preceding his retirement." The above clauses appear to be in opposition, and the final paragraph is definitely in conflict with clause 32.

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Clause 29 increases the contributions of members who joined the Service prior to the Ist January, 1908, and here again the State proposes to break its contract with many of the contributors. These members voluntarily or compulsorily accepted the conditions laid down by the contract, and even if the State did make a bad bargain it is not justified in altering the contract. Section 125 of the principal Act specifically provided against interference of the conditions or benefits provided under the Act, and provided that they would not be prejudicially affected by the repeal or amendment of the Act. Even although the contributions were increased from 3 per cent, to 5 per cent, in 1908, the Government agreed that its previous contracts should remain inviolate. Every Government since has been opposed to breaking the contract in operation at the time it was entered into, hence no alteration has been made retrospective. One of the most drastic proposals from the point of view of my Association is contained in clause 30, whereby subsection (1) of section 102 of the principal Act is repealed. Subsection (1) of section 102 of the principal Act enables a contributor whose length of service in the Department is not less than forty years, or whose age is not less than sixty years, to retire from the Service at the expiration of three months' notice of his intention so to do, while the Board may, with the consent of the Minister, extend the provisions of this section to any case where the contributors' service is not less than thirty-five years. I desire to record the strongest possible protest against any interference with the present right of retirement for locomotive men. The conditions of service in the Locomotive Department are of a particularly strenuous nature, involving both physical and mental strain. The men have no regular hours of duty, and they have no regular hours for meals or rest. They are on duty at all hours of the day and night, and are subject during the whole of their careers to the greatest extremes of heat and cold. The conditions of work in the Locomotive Department have been considerably speeded up, while the work has become intense to a degree never before experienced. It is an acknowledged fact that the geographical contour of this country makes the operations of trains a difficult problem. The speed of trains in New Zealand is as high as that of any other country in the world having a similar gauge, and it is believed that owing to the small diameter of the wheels the piston-speed is the highest in the world. This fact produces excessive vibration and hard riding, and imposes a severe strain on enginemen. The great increase in motor transport, with the ever present danger of level-crossing accidents (there is almost one level crossing for every mile of railway), is also an important factor which calls for greater alertness and produces more strain on the men. The whole trend of modern railway development is to throw greater responsibility and greater strain on locomotive men. Such conditions bring about a greater drain on their vitality, and in consequence imposes a certain degree of physical incompetence which increases with age. The effect of this Bill would increase to a larger degree this physical incompetence through a lower vitality on account of age, and the effect would be that men would be driving trains under the most difficult conditions when up to sixty-five years of age. The men realize that this physical and mental strain in advancing years is inimical to public safety, and they have for years past made constantly increasing requests that locomotive men should be allowed to retire after thirty-five years' service. We still want that, and of right. The Railways have a record of 150 million passengers carried in six years without one fatality, and I ask members of the Committee if such a record should be endangered by increasing the retiring-age. I just want to leave the statement for a moment and call attention to the difficult work of the locomotive men. I want to quote to the Committee part of a letter which. I have received during the last week or so in connection with the nature of their work. This letter refers to a run of two hundred miles and which involves being on duty ten hours : " The road is most exacting on the engine-crew, which makes the work extremely arduous. There are twenty-eight tunnels, and only two stretches of straight fiat road about two miles each way. The remainder of the distance is curves and hills. Local officers admit the arduous nature of the work, and the men are continually complaining of being overtired and of not being able to get a few minutes in order to get a bite to eat. To eat at all it is necessary to do so with a shovel or lever in one hand, and a piece of bread in the other, and it is impossible to get a drink except water or stewed tea. The result of this is that when a man does get home he is so tired and done up that he does not feel like having the only decent meal possible that day." That is the way the men look on the position, and these are men who are in the prime of life, probably thirty or thirty-five years of age. How would a run like this affect men of sixty-five years of age when it is too hard and arduous for them at thirty-five years of age ? There is another point I would like to make. The general opinion of some people in this country is that members of Parliament spend half their time probably attending to their work in the House and the other half travelling in the train. To use the words of the Commission, "Be that as it may." The question of safe travelling is one of vital importance to members of the Committee. You have to run the gauntlet of an election every three, perhaps every four, years, and I would ask the Committee to ensure their seats in the House by voting this clause out of the Bill. When you throw the whole Bill out make sure this clause is in it, because you are running a very grave risk of losing your seats in the House if you do not do so. I would suggest that you make the necessary arrangements to travel on the engine of the " Limited " express on some dark winter night travelling at fifty miles an hour, and see whether you would like a man sixty-five years of age to be at the throttle.

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Clause 32 of the Bill proposes to compute the retiring-allowance to be granted. It proposes to base the retiring-allowance on the last ten years of service in lieu of the present position whereby the retiring-allowance is computed on the last three years of service. While the retiring-allowance should bear some relation to the average salary over a period, it would possible inflict hardship on members who are retired on an actuarial basis through no fault of their own, and also upon members who were retired medically unfit. Members retired under such circumstances have small pensions, which would be further aggravated by the suggested alteration. In such cases the present three-years' computation should be maintained. Clause 33 of the Bill proposes to abolish the £300 limit for those members who joined the Service after the 24th December, 1909. In view of the wholesale manner in which it is proposed to break the contract with all contributors and annuitants in order to stabilize the Fund, it is difficult to understand why it is proposed to abolish this limit. If it was necessary to impose this limit in 1909 to stabilize the Fund, it is still more necessary to-day. It is difficult to understand why the Commission quoted such out-of-date figures on this question when the present position could have been ascertained in a few minutes. The amount paid in excess of £300 in 1920 was £1,341, and it is the report of the Actuary for this year that the Commission quoted. In 1929, however, no less than £18,795 was being paid in excess of £300. These figures can be worked out in two minutes, and it is most difficult to understand why the Commission should rely on figures twelve years old. Taking the cumulative effect of pensions paid in excess of £300 from 1929 to 1932, we find that the 1-8 per cent, quoted by the Commission has increased to 6-64 per cent, of the present annual liability, amounting to £28,684. If it is to the advantage of the industry that high retiring-allowances should be continued, it is certainly not to the advantage of the Superannuation Fund, and the advantage accruing to the industry should be borne by it, not by the Superannuation Fund. In clause 37, subclause (5), the Government proposes to abolish the State guarantee of the Government Railways Superannuation Fund, and so relieve itself from any responsibility for the stability of the Fund. It is hardly necessary to reiterate that the State came in as guarantor of the Fund, and, as the late Sir Joseph Ward said, " If the system was found to be unsound, it could only be because the State refused to make up the deficiency." But what was the position ? The State has accumulated for itself a liability of approximately £9,000,000, and with one stroke of the pen its responsibility for this and future deficits is removed. The Commission stated that the State had a liability from which it could not honourably escape, and it was a matter of the gravest concern that a State guarantee could be brushed aside in such a manner. Even section 125 of the principal Act, which protects the contracts of contributors and annuitants, is repealed by the Bill, and contributors are left entirely at the tender mercy of future Governments. There is no guarantee that future Governments will even pay a pound-for-pound subsidy to the Fund, for what can be done by the present Government can be done by future Governments. It is a most serious position for the State, and a still more serious position for every contributor to the Superannuation Fund. I would urge the Committee to consider the effect that the abolition of the State guarantee will have upon the Public Trust Office, the State Fire Insurance, or the Government Life Insurance, or any other State transactions, for there is no doubt that the general public look to the State for safety and security, believing that the State can do no wrong. In my opening remarks I referred to the fact that the Superannuation Funds had been investigated by the National Expenditure Commission, and that in spite of the fact that it had laid the responsibility of the Fund chiefly at the door of the Government it had achieved its object by relieving the Government of its liability and transferring that liability to the contributors. The question is not one of economy. It is too important and far-reaching to be dealt with from that viewpoint. The scheme was inaugurated by the Government only after the most careful and searching investigations, and, so far as contributors were concerned, it was founded on a basis equivalent to other schemes which were fundamentally sound. The contributors are in no way responsible for the state of the funds, having fulfilled their every obligation. The same cannot be said of the State. It is the bounden duty of the State to pay the debt for which it contracted, and economic necessity is not sufficient justification for the violation of its contract. The Bill was a most unfortunate production, and had already shattered the faith of employees and others in the State, while it was a clear indication that the State's management of its superannuation schemes had been a colossal failure. Not a single effort is made by the State to redeem its own position, while every clause in the Bill penalizes the contributors, past, present, and future, to such an extent that if the Superannuation Fund must similarly run the gauntlet of future Governments the whole scheme is of doubtful value. The Bill makes the position from the contributors' point of view more insecure than ever, and in view of the fact that the contributions to the Railways Fund amounted to nearly £3,000,000 the members were entitled to adequate protection. My organization is definitely opposed to the Bill, and if the Government does alter the present contract to suit its own conveniences it is not justified in forcing contributors to accept any conditions which it may impose. Before I answer any questions there is one other matter to which I wish to refer. When the first cut was imposed in 1931 provision was made for members to contribute to the Superannuation Fund on the higher rate of salary they were receiving prior to the cut. The majority of those men did contribute on the higher rate, but in the case of those men who did not wish to do so,

I. —15.

their excess contributions were held as an offset against future contributions —that is to say, they had a sum of money, perhaps £10, £15, or £20, in the Superannuation Fund in excess of what they should have paid in, and that money was used for future contributions. When the second cut was imposed the same opportunity was given to continue paying in at the higher rate. A number of the members still continued to pay on the higher rate, but a number did not wish to do so. They were in the same position as they were when the first cut was imposed, and they had a considerable sum of money in the Superannuation Fund more than they should have had, and which, if the previous principle had been followed, would have been used for future contributions. The Government, however, refused to give the men the advantage of having that money set off against future contributions, and it is impounded in the Superannuation Fund. It is to be given back to the members on their retirement without interest. My organization contends, that if the Government can keep £10, £15, or £20 in the Superannuation Fund for ten, twenty, or thirty years, when that money is returned the men should get it back with accrued interest, and if the Government does not propose to return the money with interest it should be refunded now. The Chairman : Now we will take questions. Mr. Savage : On the first page of your statement you say that the National Expenditure Commission investigated the position of the Superannuation Funds without having heard evidence from the organizations concerned. Did your organization ever receive any assurance from a previous Minister of Railways that you would have an opportunity to give evidence before a Commission which was then talked about ? lam referring to the time during the Ward Administration —the United party ? Mr. Stephenson : I cannot say that we received any official information to the effect that we would be heard on the matter, but when the Commission was set up Sir Joseph Ward stated that the various organizations would be given an opportunity of giving evidence. Mr. Savage : On page 14, where you deal with the proposal to remove the £300 limit, you state that in 1929 no less than £18,000 was being paid in excess of £300. It has been suggested to me that the amount is somewhere between £25,000 and £27,000. Would you say that that figure was incorrect; that it was too high ? Mr. Stephenson : No. Mr. Savage : There is at least £25,000 a year being paid in excess of the £300 in retiring-allowances at the present time ? Mr. Stephenson : That is quite correct. I can give you the figures for the various years from 1929 onwards : 1929, £18,794 13s. in excess of £300; 1930, an additional £1,104 9s. in excess of £300 ; 1931, an additional £2,123 16s. in excess of £300 ; 1932, an additional £6,661 in excess of £300, making a total of £28,684, to put the position quite clear, however, I would point out that I have not made any deductions for members who may have died and gone off the Fund between 1929 and 1932. Had no members gone off the Fund during that period the total would be £28,684. Mr. Savage: Making due allowance for those who have gone off the Fund, there would be well over £25,000 being paid in excess of £300 ? Mr. Stephenson : Yes, exactly so. Mr. McCombs : Have you any figures to show what might be the effect now or in the future if the £300 limit is lifted ? What would be the burden on the Fund ? Mr. Stephenson : I think the position would carry on probably just as it is. Mr. McCombs : You mean accumulating each year up to the forty ? Mr. Stephenson : Yes, it would accumulate, but I do not know that it would accumulate a greatdeal more during the next few years because the thirty-five-year-service men have gone off. Mr. Wilkinson : I would like to ask your opinion in regard to the continuation of those payments in excess of £300. Does the Railway service favour the continuation of those payments in excess of £300? Mr. Stephenson : The organization is definitely in favour of that part of the Bill providing for a maximum of £300 being retained. Mr. Wilkinson : That is not quite an answer to my question. The point I want to make is this : is the Railway service as a whole satisfied with the present payments in excess of £300 ? Mr. Stephenson : No, I do not say they are. The position at the present time is that those members who joined the service after 1908 knew that they were joining the Fund on the condition that they would be unable to draw more than £300 a year out of the Superannuation Fund. It is not a breach of contract to hold the £300 limit, and if that limit is withdrawn it is giving an advantage to those men who joined after 1908 and who realized at the time they joined the Fund that they would be unable to draw more than £300. Mr. Wilkinson : That is not quite what I want. The Railway service is not very sympathetic towards the payments being made in excess of £300, is it ? The Chairman : You want to get an answer similar to the question asked yesterday. Mr. Wilkinson : Yes, I got a different answer yesterday. Mr. Stephenson : The general opinion is that £300 a year is sufficient for any man to retire on. The Chairman : You do not favour the big amounts ? Mr. Stephenson: No. Mr. McCombs : You do not suggest that there should be any repudiation of contract to those who are now receiving over £300 ? Mr. Stephenson : No, I could not answer for that. Mr. Wilkinson : The question I asked is whether the Railway service is favourably disposed to the payments that are now being made over £300. I have the answer that the Railway service is not favourably disposed to those payments.

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Mr. Stephenson: It does not wish to make the matter retrospective. Mr. Wilkinson : I want to ask whether in view of the financial situation of the Fund the Railway service would favour the proposal to take over the whole of the superannuation business on a pound-for-pound contribution by the Government. Before you answer that question I would like to quote these figures : The contributors have already paid £2,891,000, and the subsidy has been £1,970,000. There is a credit balance in the funds of £1,434,000 to-day. In view of the financial situation, and also in view of the fact that last year you had a credit of £5,000, would the Railway service favour taking over the Fund itself with a contribution from the Government of £1 for £1. Mr. Stephenson : I would say certainly not under present conditions. The Commission has pointed out that the Government liability is £9,000,000, and it would not be a fair proposition to ask the railway servants to take over the Fund which is, in the words of the Commission, bankrupt. Mr. Wilkinson : You have disputed that statement. You say all along that that is not correct. Mr. Stephenson : Yes ; but if it is proposed to place the funds on an actuarial basis it is also right and proper, if we are asked to administer the funds, that we should be given a fund that is sound. It is not a fair proposition that we should be asked to take over a fund which is, in the words of the Commission, bankrupt. Mr. Wilkinson : In the concluding paragraph of your statement you say that the Commission's report is an indication that the State's management of its superannuation schemes has been a colossal failure. Mr. Stephenson : Exactly. Mr. Wilkinson : Then why do you persist in asking the schemes to be carried on under the management of people who have brought about the failure ? Could you not run the thing better yourselves ? Mr. Stephenson : If the Government had paid its pound-for-pound subsidy in the past, as it should have done, the Fund would have been perfectly sound ; but it is hardly right to ask the railway servants themselves to take over a fund that is bankrupt in view of the fact that the Government has failed to play its part from the very commencement of the Fund. Mr. Wilkinson : You are not prepared to take it over on a Government subsidy of £1 for £1 ? Mr. Stephenson : We will take it over on that basis provided the Government pays its past debt to the Fund. Mr. Ansell: On page 12 you refer to the contributions being increased from 3 per cent, to 5 per cent, in 1908. Why was that contribution increased ? Mr. Stephenson : It was increased by the Amendment Act of 1907. Mr. Ansell: Did that indicate that the contributions were not sufficiently large to keep the Fund sound from the employer's point of view ? Mr. Stephenson : Apparently the Government considered that the 3-per-cent. contribution was not sufficient to keep the Fund going; and it then increased the contribution to 5 per cent. In spite of the fact that it knew that, it paid nothing into the Fund. Mr. Ansell: To whom did that apply ? The whole of the contributors 1 Mr. Stephenson : No, to those members who joined after the Ist January, 1908. Mr. Ansell: Your statement seems to apply to the whole of the contributors. You have not qualified it in any way. You say, " Although the contributions were increased from 3 per cent, to 5 per cent, in 1908, the Government agreed that its previous contracts should remain inviolate." That would indicate that that applied to the whole Service ? Mr. Stephenson : It was not retrospective. Mr. Veitch: It applied to new entrants only ? Mr. Stephenson: Yes, to those who joined after the Ist January, 1908. Mr. Ansell: You make some reference to compulsory retirements and refer to the placing of a heavy burden on the Fund. Have you any knowledge of any recent retirements ? Mr. Stephenson : Yes, during the last year or two. Mr. Ansell: I mean more recent than that. Are there any being forced on the men now ? Mr. Stephenson : Not in my organization, but up to the last three months there have been some. I know of officers in the Department who have been retired later than that on thirty-five years' service, not in my branch, but in other Departments of the Service. Mr. W. Nash : On the thirty-five-sixtieths basis ? Mr. Stephenson: Yes. The Chairman : Is that compulsory ? Mr. Stephenson : Yes. Mr. Ansell: This may not be a fair question to put to you because you are not a member of the Superannuation Board, but has the Superannuation Board any authority to refuse to accept the responsibility for these compulsory retirements and the burden placed on the Fund thereby ? Mr. Stephenson : Ido not think so. I think the functions of the Board are purely to administer the Act. Mr. Ansell: Referring to the age of engine-drivers. Up till what age do they remain on the work of driving the " Limited " under present conditions ? Mr. Stephenson: Express-drivers remain on the expresses until they retire, and under the conditions of the work to-day the men want to retire after thirty-five years. Mr. Ansell: Do they drive these expresses when they are sixty years of age ? Mr. Stephenson : No, under present conditions they would only be fifty-five years of age. Mr. Ansell: Is there any prospect of these men, when they are unfit for such strenuous work, being put on to less arduous duties ?

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Mr. Stephenson : It is possible, of course ; but if there was a general application of the Act to increase the age there would be such a large number that there would not be sufficient work to place the men on, and the older men like to take their places on the express runs. Mr. Ansell: If the basis of the retiring-allowance was altered to seven or ten years would the higher or lower paid members of the Service be more prejudicially affected ? Mr. Stephenson : I think the higher-paid men would be more prejudicially affected because they get their increases later in life. Mr. Ansell: Would it be a fair statement to make that the lower-paid members of the Service would not be prejudicially affected by the suggested alteration ? Mr. Stephenson : Generally speaking, they would not be. I have given specific instances where they would be detrimentally affected. Of course, I want it clearly understood that lam not asking or suggesting that any alteration should be made. lam basing my case on the principle that contracts should not be broken. Mr. Veitch : Will you tell the Committee what is the constitution of the Government Railways Superannuation Fund ? How it came into existence. Was it elected or appointed by the Government ? Mr. Stephenson : The Government Railways Superannuation Board has three elected members of the Second Division, and two elected members of the First Division. Who the other members of the Board are I cannot say. Mr. Veitch : To a large extent the railway men are managing the Fund now. At least, they are administering it. Mr. Stephenson : They are administering it according to the Act. Mr. Veitch : With regard to the £300 limit, have you any figures or any reliable calculation of what is likely to be the effect on the Fund of the removal of the £300 limit when it becomes applicable to the whole Service ? Mr. Stephenson: No. I have no means of arriving at that figure. The Government Actuary will probably have to supply you with that. Mr. Veitch : What is your own opinion about it ? Mr. Stephenson : If the £300 limit had been in operation right along, as I have pointed out, there would be a saving now of £28,000 per annum. Mr. W. Nash : Your contention is that the superannuation scheme is a contract between the Government and its employees ? Mr. Stephenson : Exactly. Mr. W. Nash : As between individual employer and servant ? Mr. Stephenson : Yes. Mr. W. Nash : You say that the Fund which has been set up, whilst it is related to the contract between the employer and employee, is not the factor. It is the contract between the employer and employee that is the factor. You would not worry about there being a Fund at all provided the Government carried out the agreement between members of your Association and itself ? Mr. Stephenson : That is so. Mr. W. Nash : You say that the Government has been relieved of its responsibility for pensions of persons who have been contributing to the Fund for a short period only. The payment for back service, for which service may have been rendered but for which no payment has been made, has been a charge on the Fund and is largely responsible for the £9,000,000 deficiency 1 Mr. Stephenson: I think so. I think we have a fair example of that in Victoria (page 9of statement). The Government there seems to be paying for back service because their scheme has only been in operation for six years, and on a pension of £104 per annum the Government is paying £97 6s. lOd. That is where the fund is actuarially sound. The longer a member is in the Service, the less the Government contribute. As the position goes on the Superannuation Board's share will become greater and the Government's share will become progressively less. Mr. W. Nash : You made some reference to members losing their seats on account of the fact that the retiring-age would be raised to sixty-five years, thereby meaning that engine-drivers of sixty-five vears of age would be driving the expresses. Did you mean that they were likely to lose their lives and thereby lose their seats ? Mr. Stephenson : Yes. Mr. W. Nash: You are not concerned about the management or critical of the management of the Fund as a fund ? Mr. Stephenson : No. Mr. W. Nash : What you are critical about is that the Government has made a contract and failed to carry it out and then, having failed to carry out its contract, proposes to put the difficulties that it has occasioned by its action on to the members of your organization ? Mr. Stephenson : That is the whole basis of our case. Mr. Wilkinson : You said just now that so many men represented the railway men on the Superannuation Board. How many ? Mr. Stephenson : Five. Mr. Wilkinson : Five out of how many ? Mr. Stephenson : Nine or ten. Mr. Wilkinson : At that rate the railway men have control of the Superannuation Fund now. Mr. Stephenson : That is just where the difficulty comes in. I would point out that whereas the Second Division employees number about ten thousand the First Division men number about three thousand. The Second Division has three elected members for ten thousand and the First Division has two elected members for three thousand. The other members of the Board are also probably members of some other Superannuation Board, and although the Second Division men constitute most of the contributors they are outvoted on anything they want to do.

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Mr. Wilkinson : You have five out of nine members ? Mr. Stephenson : The Second Division has only three out of nine members. Mr. Savage : In any case are not the funds administered under the law and the regulations. They do not make either the law or the regulations. They simply administer the Act. Mr. Stephenson : That is so ; but at the same time it would be an advantage if the Second Division men had some better voting-power. The Chairman : On page 1 you refer to the time when officers of the Department toured the country. Have you got any record of that at all ? Mr. Stephenson : I have no record of that in my possession. The Chairman : On page 3 you refer to the State having relieved itself of its obligations towards finding pensions for persons who have been in the Service for a short period. You say, " The State, on the other hand, has consistently failed to honour its part of the contract. It has called upon its own employees to fulfil every part of the contract, while it has failed miserably to do likewise. It transferred to the Fund pensions which were rightly a charge on the Consolidated Fund, and relieved itself of its obligations by making the Fund find the pensions of persons who had been contributing only a short period." What exactly does that mean ? Can you give us any further information about that ? Mr. Stephenson : Yes. Turn to page 5, the first paragraph : "On qualifying for retirement, contributors had the option of accepting an annuity from the Fund or they could elect to accept their accrued compensation, together with a refund of their total contributions to the Fund, without interest." They were entitled to compensation when they retired from the Service, because it specifically states that they could elect to accept their accrued compensation, together with the accrued contributions to the Fund. The Chairman : Was that generally taken advantage of ? Mr. Stephenson : I do not know to what extent it was taken advantage of. The fact remains that there was compensation accruing to those members which should have been paid out of the Consolidated Fund and which was put on the Superannuation Fund. The Chairman : On page 8 you refer to clause 3—transferring to contributors an immediate liability of £9,000,000. You anticipate that that is what the Bill will do ? Mr. Stephenson : I am analysing the Bill. The Chairman : On page 9 you refer to the Great Western. Have you any idea what the basis of pensions was there ? Mr. Stephenson : I cannot give you definitely the pensions, although I am assured they are equal to our own. I have not got the figures. The Chairman : In paragraph 3 you refer to the Canadian National Railways bearing the total cost. For how long did they do that ? Mr. Stephenson : I cannot say how long the fund has been in operation, but I have information, received during the last two or three months, showing that they have borne the whole cost of superannuation ; but now, on account of financial difficulties, the employees are making some contribution to the fund ; for how long they have been doing it I cannot say. The Chairman : On page 6 you say the total amount of the contributions of members paid in from 1903 to 1910 was £352,873, while on page 10 you say that the expenditure for that period was only £205,468. Would you say that that was a reason why the Government paid in those subsidies — because you were able to carry on, seeing that the income was greater than the expenditure ? Would that be one of the causes ? Mr. Stephenson : From an operative point of view the fund was sound. The Chairman : You point out that the reserves increased from £40,357 in 1904 to £1,494,223 in 1932. Are you of the same opinion as the representatives of the Amalgamated Society of Railway Servants, that the fund can be left alone, and no action taken at all for the next five years, provided the State guarantee is behind the fund 1 Mr. Stephenson: I would want to know just definitely what the State guarantee was. If the State guarantee is of no more value in the next five years than it has been in the past The Chairman : I am speaking of the general State guarantee to the fund. Mr. Stephenson : Giving a pound-for-pound subsidy ? The Chairman: It does not matter which way. The pensions are guaranteed, that is all. That was the opinion expressed yesterday. Mr. Stephenson : I am not prepared to agree with that opinion, because for the year ended 1932 there was a credit balance of somewhere in the vicinity of £5,000-odd. The pound-for-pound subsidy will reduce next year's subsidy by £28,000. Therefore on last year's figures there will be a deficit next year of £23,000, on those same figures. The Chairman : What were the years of service, when the fund was inaugurated ? Was it sixty-five years of age, or just forty years' service ? Mr. Stephenson : The original Act provided for forty years' service or sixty years of age. The Chairman : You would say, of course, that the work is more strenuous to-day—l am speaking of drivers and firemen now ? Mr. Stephenson : Yes, absolutely. Mr. W. Nash : In connection with the pound-for-pound subsidy, you quote, on page 11, the fact that the Government Actuary said that it is necessary to pay at least £306,459 a year in to make the Fund solvent, the solvency being the fact that it will be able to pay out all the benefits contracted for. Your point is that the £170,000 in a legal sense would meet the liability, and it is not the fact of a pound-for-pound subsidy now that will put the Fund right, but it would be necessary to pay the amount of £306,459 every year into the Fund, roughly, and then have a pound-for-pound subsidy before the Fund would be solvent; and that is what you would require if the State guarantee goes ?

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Mr. Stephenson: Exactly ; that is to place the Fund on an actuarially sound basis. Mr. Savage : In reference to the question that was asked by Mr. Wilkinson, if the railway men had had the opportunity at the beginning of establishing this Fund with the pound-for-pound subsidy, without any liability for the past, there is no doubt they would have favourably considered the matter ? Mr. Stephenson : Absolutely. Mr. Savage : As regard the government of the Fund to-day, it is true that, although the men are represented on the Superannuation Board, they are restricted by the law and its regulations, in that they have not got a free hand, and they can only administer the money they get —they cannot compel the Government to pay their share ? Mr. Stephenson : That is the position. Victor Robert John Stanley, President, Railways Officers' Institute. (No. 7.) In placing before you the views of the New Zealand Railway Officers' Institute regarding the Government Superannuation Funds Bill, 1932, we desire to say that the proposals in that Bill are viewed very seriously by members of this organization, and it is safe to say that such a serious position has never before arisen in the history of the Railway service. Inauguration of Fund. When the Railways Superannuation Fund was inaugurated in 1902 the question of joining the scheme was one which required the most serious consideration on the part of the then members of the Service ; indeed, it can be said that many employees had grave doubts as to the advisability of joining and placing their faith in the fund, especially as at that time wages were low and a man could ill afford to spare the contributions required. In many cases, joining the scheme involved the surrender of life insurance policies which had been taken out to provide for old age, as it was impossible to pay the superannuation contributions and meet these commitments as well. In addition to this, doubt existed as to the solvency of the proposed fund, knowing, as members did, that numerous old and respected servants were to be granted benefits immediately, without making more than three contributions to the Fund, three months being the minimum contributory period required. To allay these doubts, canvassers, acting under Government instructions, toured the country, and the points of concern were met by strong emphasis being laid, in particular, on two sections in the Act, the first being section 26, providing for the preservation of the contractual rights of contributors ; and the second, section 19, which provided for the Government to meet any deficiency in the fund. The explanations given left no room for fear or doubt, and employees freely joined up and placed complete reliance in the scheme. Although the original Act has been amended, the two vital provisions quoted above, i.e. :— (a) The preservation of the contractual rights of contributors ; and (b) Provision for the Government to meet any deficiency in the fund, — still remain an integral part of the legislation bearing on the Government Railways Superannuation Fund. Contractual Rights. Dealing first with (a), the preservation of the contractual rights of contributors, it will thus be seen that Parliament has in the most emphatic way declared that the benefits given to contributors by the Act should not thereafter be prejudicially affected by the amendment or repeal of the Act. This was done by the first proviso to section 26 of the Act (afterwards the first proviso to section 92 of the Consolidating Act, 1908), now the first proviso to section 125 of the Consolidating Act, 1926. That proviso reads as follows :— " Provided (however) that all benefits under this Act should be conferred upon any person who has actually contributed and shall remain in force and shall not be prejudicially affected by the amendment or repeal of this Act." This is a solemn declaration by Parliament that the right to the benefits under the Act were finally fixed and determined, and that they should not be prejudicially affected by a subsequent amendment or repeal of the Act. This declaration has since been carefully observed by the Legislature. For example, when the rate of contribution to the Fund was increased by the Public Service Superannuation Fund Act, 1907, the increased rate of contribution was made payable only by the person who after the passing of the Act became a contributor to the Government Railways Superannuation Fund. Likewise, when under the Public Service Classification and Superannuation Amendment Act, 1909, the maximum annual retiring-allowance was fixed at £300, this provision was made inapplicable to existing contributors to the fund. The provision contained in section 11 of the Public Expenditure Adjustment Act, 1921, can also be referred to in support of the statement that the Legislature has hitherto scrupulously observed the solemn declaration contained in section 26 of the Act of 1902, section 92 of the Act of 1908, and section 125 of the Act of 1926. It cannot be doubted that Parliament should feel itself bound to recognize the rights conferred upon contributors to the Fund as final and determinate, and should respect its solemn declaration that the benefits conferred by the statutory scheme upon any person should not be prejudicially affected by any amendment or repeal of the Act under which such person became a contributor. Relying on the several solemn declarations of the Legislature and also, it may be added, the utterances of responsible Ministers of the Crown, over the period of the Fund's history, contributors to the Fund, both past and present, have planned their lives on the justifiable expectation that the contract made would be honoured.

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It may be argued that, in these stressful times, Parliament has, of necessity, had to alter various existing contracts, and the recent legislation regarding rents, interest, &c., may be quoted in this regard. We submit, however, that the legislation in this respect is of a temporary nature only, whereas the proposed legislation regarding the Railway Superannuation Fund is. permanent in its effect, and apart from increasing the rate of contribution to a substantial number of contributors, imposes permanent restrictions on the amount of superannuation payable and on the condition of retirement, which largely nullify the value of the Fund. The Hon. the Minister of Finance has emphatically declared that it is wrong to enact permanent legislation to meet temporary circumstances, and we submit that this view applies equally as forcibly to the proposed superannuation legislation. At this stage we desire to state that no alteration to the original Act has been made at the request of this society. It can be said, however, that the principal amendments limiting the superannuation allowances to £300 per annum and increasing the rate of contribution of those joining the Fund after 24th December, 1909, from 3 per centum to 5 per centum were made by the Government in order to relieve itself of certain responsibilities provided by the original Act. State Guarantee. Referring to (b), the Government to meet any deficiency in the fund, the specific legislation on this point clearly defines the State's absolute duty in maintaining the fund in a condition of solvency. Again, in this respect, definite assurances have on. several occasions been given by responsible Ministers of the Crown, stating without any equivocation whatever that the condition of the Fund need give no concern, because the State itself was behind it and fully guaranteed its stability. In fact, stress has been laid on the opinion that the State guarantee is more vital and effective than the payment to the Fund of stipulated subsidies. The State's duty in maintaining the security of the Fund is thus clearly defined. Since the inception of the Railways Superannuation Fund the State subsidy has fallen short of equality with the contributors' contributions by approximately £921,000. Despite this, the accumulated assets have risen from £543,531 in 1922 to £1,454,173 in 1932, and this notwithstanding that additional allowances granted have risen from £40,573 in 1931 (an abnormally high year) to £143 807 in 1932. The yearly average of new allowances granted since the inception of the Fund, excluding the two years just mentioned, is £15,058, and the comparison between this amount and the 1932 figures gives clear indication of the abnormal strain now on the Fund due to the compulsory retirement of members of the Service as a result of retrenchment. To permit of this being done a clause (No. 14) was inserted in the Finance Act, 1931 (No. 1), providing for a superannuation allowance to officers with thirty years' service or more who were compulsorily retired. This led to 132 members being granted annual allowances totalling £16,772 from the Fund. In addition to this the economic policy of the Government caused a total of 457 members with thirty-five years' service or over to be placed on the Fund before the date of their normal retirement: the annual allowance to this group of officers totalling £108,063. In short, a large annual liability (not a legitimate charge) has been placed on the Superannuation Fund which should have been borne by the Unemployment Fund. The Government's action in this respect is quite foreign to the normal purposes of the Superannuation Fund. The accumulated moneys belonging to contributors together with such Government subsidies as have been granted and interest now total, as previously stated, £1,454,173, and even allowing for a lengthy extension of the exceptional load the Fund is now carrying (in a large measure wrongly, we claim) this amount is sufficient to ensure its security for many years to come. From all authoritative quarters we are told that the country has now turned the corner, and that better clays are not far off. Why, then, we ask, select a time of desperate economic stress to adjust a fund which is in no immediate need of adjustment. Surely the wiser course is to refrain from action, for a reasonable period at least, in order that the full effect of the present undue impositions on the Fund can be fullv gauged, and when the return to more prosperous conditions will enable the Government to face up to the position in an atmosphere of normality, especially as the condition of the Fund is not a factor in the present budgetary position of the State. In our opinion the National Expenditure Commission has taken an unnecessarily extreme view of the condition of the Government Railways Superannuation Fund, and we regret that the Government has seen its way to adopt the Commission's views as a basis for legislation. Much has been said regarding the difficulties of the Government concerning the Fund, and the responsibilities of contributors may well be quoted here. The State has compelled participants in the scheme to honour their part of the contract to the full, indeed, their continued employment has been, and is, contingent on this being done. Superannuation contributions are the first charge on a State servant's salary, taking precedence over all other obligations, even to providing the necessaries of life, and in numerous cases involving real hardship. The ability of the contributor to pay has never been a matter of concern to the State, and we desire to emphasize our view that the State should not be less exacting to itself in honouring its part of a contract than it is to the other parties to the contract. Without prejudice to the observations already made in this statement, we now desire to comment briefly on the various provisions embodied in the amending Bill.

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Increased Rate of Contributions. This provision applies to original contributors, now contributing at the rate of 3 per cent, per annum of their annual salary. Our previous remarks relative to the contractual rights of contributors apply here in the strongest possible manner. Our objection to the proposal is also based on the fact that owing to salary reductions and the payment of heavy taxation the time is most inopportune to place a further drain on the resources of such members, who have entered into commitments on the justifiable assumption that their percentum rate of contribution is of a rigid nature. It is beyond dispute that any alteration in the direction proposed will entail very serious hardship. Variation of Benefits. In this connection we submit that the retention of officers until they have attained the age of sixty years, at least, will result in the impairment of the standard of efficiency in this important State Department. The railway man's life is onerous and exacting. Long and irregular hours are common, and the safety of the public is a factor at all times, causing anxious thought on the railwayman's mind. No doubt, as in the past, a number of officers will elect to remain in the Service after the completion of forty years, but to make such, a continuation of service compulsory would, we submit, be unfair, and would defeat the very objects for which the Superannuation Fund was created. We think it will be agreed that a member who has given at least, forty years of his life in faithful service to the State lias earned in full the benefits provided in existing superannuation legislation, and we urge, most strongly, that no alteration to the existing provisions regarding retirement should be made. In so far as the proposed alterations to the basis of computing superannuation allowances are concerned, these will have the effect of further reducing the allowance payable to a substantial majority of contributors. Under existing conditions most members retire on a comparatively low rate of pension. The average superannuation allowance is below £200 per annum, and we submit that any action having the effect of reducing this amount would deprive members of the reasonable standard of comfort they are entitled to in their retirement. These remarks apply, with extra force, to those members who may be unfortunate enough to be retired as medically unfit. Abolition of £300 Maximum in Retiring-allowance. The impropriety of the proposed alteration in this respect can be best judged when it is considered that the abolition of the £300 maximum places an additional burden on the Fund whilst the whole purpose of the proposed legislation is to strengthen that Fund. It appears strange that a proposal which must throw an additional liability on the Fund should be entertained when at the same time the question of the scheme's stability is raised and the proposals generally are in the direction of reducing benefits as well as increasing contributions to a substantial degree. Actuarial Retiring-allowances. The proposals in the Bill give very wide and far-reaching powers to the Government Actuary in this connection. An actuarial retiring-allowance should be clearly defined by statute, so that contributors would be aware of the amount to be received by them. To leave the fixing of the amount due to a contributor to one individual without any right of appeal, and with no information of the basis on which the computation is arrived at, does not appear to us to be a wise and just proposai. General. A superannuation scheme is of tremendous advantage to the State in that it tends to maintain a high degree of efficiency and also has a definite stabilizing affect on the staff and the Department generally. It is safe to say that had it not been for the Railways Superannuation Fund extreme difficulty would have been experienced by this Department during the war period in maintaining the staff at the required numerical strength and the essential standard of efficiency. During recent years, as a result of Government action to meet the prevailing depression, the Railways Department has been called upon to make exceptional economies, and since August, 1930, expenditure has been reduced by the substantial amount of £2,000,000. A very considerable portion of this heavy decrease has been at the expense of the staff, and, as previously pointed out, has relieved the State of heavy expenditure in other directions. As viewed by the staff, the position now is that after being called upon to make the severe sacrifices involved it is unjust that they should be now called upon to also sacrifice the rights and benefits which they have contributed for, to the Superannuation Fund. It is noted in the case of several of the economies recommended by the National Expenditure Commission that the Government does not propose to put them into effect, notwithstanding the fact that no moral obligation on the State's part is involved. This is in striking contrast to the proposals in the amending Bill which seeks to break the strongest moral contracts. For the information of the Committee we desire to state that some three years ago a special Committee comprising the Public Service Commissioner, the Financial Adviser to the Treasury, and one representative of each of the Superannuation Fund Boards, was set up to investigate and report on the Superannuation Funds in general, and this organization expressed a wish to be allowed to appear before that tribunal and was advised that the opportunity to do so would be afforded n. Notwithstanding this, no opportunity was afforded to various organizations, and Superannuation Boards to put forward their views.

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It has been said, relative to the proposed legislation, that " whatever adjustments are made should be final," and that " a second failure of the State to meet its obligations would shatter all faith in Government superannuation schemes." In our view, however, when once a precedent in the direction of varying conditions and obligations existing between the State and contributors to the Government Superannuation Fund is created, such maxims as those quoted cease to be of value. If the present Parliament prejudicially alters the existing legislation regarding the fund in so far as present contributors or annuitants are concerned, we cannot believe that future Parliaments will hesitate to make further amendments to meet passing circumstances. Permanency in the various provisions is an essential basis of any superannuation scheme just as it is where insurance policies and such-like are concerned ; indeed, with this vital factor absent, enrolment in any such scheme could not be deemed a prudent action. It is ovbious, therefore, that faith in the Railways Superannuation Fund will be ensured or destroyed by the action Parliament takes respecting the proposed Bill, and we urge our opinion that Parliament should resolutely set its face against any action involving the failure of the State in its part of an honourable contract. In conclusion, we desire to reaffirm and emphasize our opinion that any violation of existing contractual rights will create a most dangerous precedent, seriously impairing the prestige of the State, and we appeal with confidence to this Committee to avoid any recommendation which will lead to such an undesirable result. Mr. Stanley : Now I would like to read the circular which was sent out at the inauguration of the fund ; and then perhaps address you on general aspects, if I may. New Zealand Government Railways, Circular No. 02.54. Head Office, Wellington, 22nd November, 1902. (R. 02/3376.) Government Railways Superannuation Fund.—The Government Railways Superannuation Fund Bill, which establishes a Superannuation Fund for the benefit of the members of the staff of the New Zealand Government Railways, having been passed during the last session of Parliament, a copy of the Act is attached hereto for your information. The Act will come into operation on the Ist January next, and all person who are members of the Department on that date are given six months from the Ist January, 1903, within which to decide whether they will join the fund or not. The six months will expire on the 30th June, 1903, and it is most essential that all persons in the employ of the Department who desire to participate in the benefits accruing under the Act should fill in form at foot hereof and forward to me, through superior officer, not later than the 30th June, 1903. It cannot be too well understood by members that those who do not join the fund on or before the 30th June will not afterwards be permitted to do so, and cannot thereafter under any circumstances become participators in its benefits. The following are the principal benefits that will be secured to persons who become contributors to the fund:— (1) Provision against want in old age. (2) Provision against compulsory retirement in consequence of disablement by injury or sickness. (3) Provision for the widow and children where contributor dies from any cause before becoming entitled to a retiring-allowance. (4) Provision for payment to widow and children or legal representatives (in cases where a contributor has died after becoming entitled to a retiring-allowance) of the difference between the amount the deceased member has contributed to the fund by way of premium and that drawn from the fund as retiring-allowance. (5) Secures to contributor in the event of his leaving the service from any cause before becoming entitled to retiring-allowance a refund of the whole amount he has paid into the fund. (6) Secures to contributor on his voluntarily leaving the service, or on his being dispensed with for cause other than misconduct, any compensation to which he may be entitled under the Government Railways Act, 1887. (7) Secures payment to legal representatives, or to widow or children, of such compensation as a contributor may be entitled to under the Government Railways Act, 1887. (8) Combines all the advantages of insurance, savings-bank, and pension fund, and provides all the machinery for automatic collection of contributions, thus relieving contributors of the anxieties and loss of time incidental to the payment of premiums or savings-bank deposits, while absolutely insuring that a contributor saves a certain amount of money each four-weekly period and makes at the same time provision for old age, wife, and family. It is quite optional for members of the staff to join the fund or otherwise, as they think fit, and for those who do join to name any date not later than the 30th June, 1903, as the date from which their contributions shall begin. Intending contributors should, however, keep steadily in view the fact that all the benefits of the Act are secured «iter the payment of the first contribution, and that each day they put off joining the fund after the Act comes into operation they are taking serious risks which, as prudent men, it is inadvisable for them to run." [I desire here to repeat a most important claise in this Circular, Mr. Chairman: " Intending contributors should, however, keep steadily in view the fact that all the benefits of the Act " —that is the Act attached, not any future Act, Mr. Chairman, not, we hope, the Act of 1932—" are secured after the payment of the first contribution."] It will therefore be greatly to the advantage of the staff and the fund if members will join early. It will further simplify matters if the date of joining is made to correspond with the commencement of one or other of the four-weekly periods named hereunder : 4th January ; Ist February : Ist March ; Ist April; 26th April; 24th May ; 21st June. I desire to impress upon all members now in the service the fact that the fund is being established to enable them to voluntarily make proper provision for themselves against old age, infirmity, and accident, and that after the Ist April, 1903, no compassionate allowances of any kind will be paid to railway employees under any circumstances, as after that date the widow of a contributor would be entitled to a payment of £18 per annum for herself and ss. per week (£l3 per annum) for each child under fourteen years of age.

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It should be borne in mind that every member (or his representatives' in case of his death) will receive as payment from the fund a sum at least equal to the total amount contributed by him to the fund ; he cannot, therefore, lose anything by joining the fund. Members should not overlook the fact that in all cases their retiring-allowances will be computed on their continuous service with the Department since date of last joining the staff, although their contributions to the fund will only be payable as from the date of their actually joining the fund, and that they have the option of voluntarily retiring on superannuation allowance at any time after completing forty years' service, even although they may not then be sixty years of age." That is another very important provision which was definitely promised in this circular. The circular goes on to give certain examples. I will not go into the whole lot, but I will deal with the first, which applies to a clerk in the division which I am more particularly representing : " A clerk at £180 per annum, aged 50, with thirty years' service when joining the fund on the Ist January, 1903, would contribute 10 per cent, of his pay —£18 per annum for ten years, and at the age of sixty he would be entitled to retire on a yearly allowance of £120 for life." In that ten years he contributes £180, and in return for that he gets £120 for life at sixty years of age. Now, the point in connection with that is that the superannuation that he draws out undoubtedly will be much greater than the amount he has paid in, but there is this to be said for that —and this strikingly emphasizes the point that I want to make later on —that the compensation rights of that member became a liability really on the Superannuation Fund, and nothing was paid in to meet it—although at the moment I am not objecting in any way to that. There are a number of other examples, which Ido not propose to read to you unless you wish me to do so ; four are given altogether. I want to make a few observations in regard to the scheme proposed, and also in regard to the contractural rights of members under the original Bill. At the outset I would say that we appreciate the opportunity of giving evidence here to-day, and we also appreciate the view that has been expressed, I understand, by the Prime Minister, that we are not in the position really of a defendant in this particular matter at all. The atmosphere that was at first created was really that the State was saying, " Now, we cannot do our part towards your Superannuation Fund. Here are our views in regard to it, prove to us that they are wrong." We submit, of course, that that would be quite a wrong view to take up, and we appreciate the view which the Prime Minister is understood to have expressed —I have taken if from newspaper reports —that the Committee is really in an advisory capacity, and that we are not in the position of being defendants who have to prove that the Bill is wrong. Now, with regard to the general provisions of the Bill, I will leave those to the last. I would like to go ahead and point out that with regard to contractual rights we base our case on the fact that a bargain was made, that definite promises were given to the members as embodied in that circular, and also verbally by officers of the Department. Certain members expressed doubts, and attention was called not only to the circular, but also to that specific clause in the Act which has been carried on from time to time in various other Acts. If I might mention the fact, at the 1926 consolidation of the Act that contractural right was in it, and I think yourself, Mr. Savage, Mr. McCombs, and a number of other gentlemen on the Committee where members who actually passed that Act. So that if you decide, by your recommendation, that you agree to the amendments to the Bill, you are in effect going back on that very clause which you yourselves passed at the consolidation in 1926. That is absolutely definite. And, moreover, if the Committee decides to do that, we would like them to say what the clause did mean, because if the clause means what it says, we cannot understand your going back on it yourselves after you have passed it. Apart altogether from the members mentioned, I understand that the Right Hon. the Prime Minister was a member of the House in 1926, at the previous consolidation, and he no doubt will know what that clause in the Act means. I want to say also, with regard to the Bill, that I do not agree with some of the gentlemen who have preceded me before this inquiry. Ido not say that the State has repudiated its liability to the fund whatsoever. What I take it is this : all the State was called upon to do at the outset was to guarantee the solvency of the fund, and reference to the Act will show that all the State was called upon to do was to meet commitments when the fund cannot. Now that position has not arisen— we are nowhere near it. As a matter of fact, as has already been stated, the assets have steadily risen ; they have risen in the ten-year period from 1922 to 1932 by approximately a million pounds, and, taken on a basis of the outgoings as at last year, it would pan out something like this : members' contributions were £142,000, the subsidy was £170,000, taking the interest on the accumulated assets of £1,000,000-odd, at a very low rate of interest it works out at, say, £75,000, making a total income of £387,000. Now, as regards outgoings, you will notice from, table D.-5 that the annual liability as at the 31st March, 1932, was £431,129-odd, so that the deficiency is really £44,000. What my society says is this : that if, in the stress of the times, having due regard also to the fact that the fund has been used for something it was never intended to be used for —but giving all that in—we say that, even if the fund is, for a period of years, £44,000 short of its income, it has got accumulated assets, which have steadily risen to nearly £1,000,000 in ten years, to draw on, and therefore there is no necessity to break the contract with the members. It is from those accumulated assets that the amount should be drawn to meet any deficiency in income as against outgoings, and on the basis of £44,000 a year, or even a larger sum, you can see that it will be many many years yet before the fund can be termed to be insolvent. Our view is, therefore, that at present the State is not attempting to repudiate its liability ; although if it said that the State is father to this Bill—the Bill of 1932—then, of course, it can be said that the State is endeavouring to repudiate it. But Ido not put it that way, and, as I said in my opening remarks, I do not think we are in the position of defendant to-day. A number of speakers have dealt with various clauses in the Royal Commission's report. Ido not want to go over those again. I take it that they are sufficiently in the Committee's mind. There is one, however, clause 1397, which finishes up in this way : " There is not radical difference between the

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three funds " —e.g., the Teachers' Fund, the Public Service Fund, and our own. Now, I want to say quite definitely that that is not so. There is a radical difference, and a very radical difference for one thing, in contractual rights, in that definite clause in the Act; and there are also quite a number of other differences in the funds. Ido not want to-day to deal with the Public Service Fund or the Teachers' Fund—l am more particularly dealing with the particular members I represent, but I say quite definitely that that clause is not correct —there are radical differences between the three funds. I would like to emphasize also a point in connection with the conditions of work in the Railway differing from other classes of work, particularly probably in the Civil Service. In many ways it differs, owing to hours, and various other conditions, but the most vital part, so far as superannuation is concerned, is that we do not have officers coming in, say, at twenty-five up to thirty or thirty-five years of age. In the Railway service it is very very rare that we get men in at that stage of life in order to take up positions in the Service. A proof of that is in the fact that five or six years ago we had the Chief Mechanical Engineer, Mr. Lynde, imported from England on a five-years' contract without superannuation rights. The Chairman : I think that is generally recognized in your Department. Mr. Stanley : There are quite a number of gentlemen in the Public Service to whom the conditions proposed in this Bill will not mean a snap of the fingers —it does not affect them one iota. The ten years' average will not affect them, the retirement at sixty years of age will not affect them.; so that if the same conditions are to be imposed upon us simply because they are being imposed in the Public Service, then it is quite wrong. Our conditions do differ, and whatever you do to the Public Service portion of the Bill we think we are entitled to retain our own identity so far as we are concerned. I quite appreciate the view that it can be said that to-day we have certain things in our fund that the Public Service has not got. On the other hand, it can be said that there are quite a number of things the Public Service have got in their's that we have not got. lam not asking for those, but I am saying, " Do not take ours from us, and do not compare us for the sake of uniformity, when uniformity is not really a basis at all; do not endeavour to put something on to us simply because you want a thing for the sister organizations." The conditions are quite dissimilar, and you are going to get a very very serious sacrifice from a large number of Railway employees if the conditions of retirement as proposed come in, while, on the other hand, there are quite a number of members of the Public Service that it will not affect at all. So far as the new Bill is concerned, of course we oppose it; as I have already said, we do not want it. But there is one clause in connection with it which I want to deal with at the moment, and that is the clause in regard to the £300 retiring-limit. If members of the Committee will take I). 5 for 1932, they will see that on the front page there were 759 allowances granted during the year, and that the amount of such allowances was £346,527. In the report of the Commission when dealing with the question of the over £300 a year, clause 1473, the amount per cent, by which that would affect the Railway Fund for the particular year is 1-8 per cent. If members of the Committee will turn to D.-5, on pages 7, 8, 9, and 10, but particularly pages 7, 8, and 9, they will find the life allowances granted during the year ended 31st March, 1932. Those are the new allowances granted during that year —they are not the allowances that are in force, carried forward from the previous year. As I have said, there were 759 allowances granted. There are sixty members who are to draw over £300 per annum, and the amount they will draw in excess of the £300 per annum is £6,962, or an average of £115 6s. Bd. per member. If you take the total of new allowances in that particular group, this amount in excess equals 4-8 per cent. If you take the total payments for the year, £346,527, there would be, assuming that the allowances were restricted to £300 per annum, a saving of £26,000, which works out at 7-5 per cent. Ido not for a moment say that this should be done —that they should be restricted, but I simply point out the fact that those figures quoted by the Commission are well out of date, and that at a time when it is claimed that the State is in a bad way —I do not admit that —I say it is quite wrong to take on an additional liability. It is a liability of the future, but I say that is quite wrong. And, as a member of our organization said to me the other day, if the State takes that on, seeing that it is said to be bankrupt, there should be some clause —or is there not a clause ? —in the Bankruptcy Act with regard to taking on a new liability when they are bankrupt, and they should be dealt with under the Bankruptcy law. I put that forward for what it is worth, but I want you to consider that. There is another aspect of the £300 maximum, and that is that, so far as our Service is concerned, the £300 maximum for officers who joined in 1909 will not operate against them till 1949, so what in the name of goodness do you want, so far as the Railway service is concerned, to get into an argument as to whether it should be on or off, when the £300 restriction on a person who joined in 1909, and with the full forty years in, will not operate till 1949. There is a further aspect of it, and that is this, that when the fund was started there was no restriction. Then it was put on. Now, it is proposed to take it off. And I have no doubt that if it is taken off it will only be a matter of a few Parliaments when another will come along and put it on again. The Chairman : You do not want it ? Mr. Stanley : We say, " Preserve the contractual right." That is the position. I will go further and say that, as in all matters of this kind, insurance and so forth, certain members get better bargains than others. Now, the member who joined at the start got possibly a better bargain than the man who joined later on and was restricted to the £300 maixmum and to a minimum contribution of 5 per cent., but there is this to be said, that they both went into it with their eyes open —there is no question about it —and I most strongly object to a liability being placed on the one man or the breaking of the contract with one class to give a benefit to another when the benefit they seek is outside the agreement they had in the first place. There is no getting round that.

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There is also a paragraph in the report of the Economy Commission dealing with ambitious young men wanting to get on, and ambitious men being forced out of the Service. Ido not agree that there is anything in that at all. We have not found it so in our Service. The £300 superannuation limit has not been a vital factor so far as leaving the Service is concerned. We have had men who have resigned who have had no restriction, and others who have resigned who have had the restriction on them, but it cannot be said that that restriction is operating against the efficiency of the Service. If I am in office in the course of a few year's time, if the fund is still sound, I do not mind the restriction being lifted then, but it should not be lifted at the cost of the breaking of the contract with other contributors. Turning just at the moment to the question of actuarial investigation of the funds, when I dealt a minute ago with this £6,962 as being the additional amount paid to those sixty members, included in the number in D.-5, it occurred to me —how would the Government Actuary actuarially compute the capita] that would be required to provide that £6,962 ? If you take an amount at 5 per cent, that is necessary to produce that £6,962, you would find it is almost equal to the contributions of the members for the year —there is only a matter of a few hundred pounds in excess, so that if the actuarial basis is sound, then the interest on the amount that was paid in in contributions by members last year is required to meet the payment over £300 per annum to the sixty members on superannuation. I would, of course, make due apology to the Government Actuary if that is not what " actuarially sound " means. I understand —and this is a matter that can be easily refuted- —that the basis of actuarial soundness would be this. Let us presume for the moment that the whole of the contributors to the Superannuation Fund resign, and payments are returned of the amounts of money they have paid in. Having all gone out, and nobody taking their places at all, the question arises how to meet the payments to superannuitants that are already out, and that that is where you work to the basis of actuarial deficiency so far as the fund is concerned. That is how we understand it, and if we can be put right on it, if we can be informed just what actuarial soundness means, it might cause a good deal of misconception to be removed. A remark was passed yesterday with regard to those members getting a higher rate of salary being able to meet the additional 2 per cent, that would be required if the contributions were increased from 3to 5 per cent. But I want to say this to the Committee, that so far as the members of the Service are concerned they must plan ahead, and with the two 10-per-cent. cuts, and the 5-per-cent. wage-tax, if the superannuation is increased by another 2 per cent., it is following so closely on these other commitments, apart altogether from the contractual right, that it will simply mean that it will impose hardship. No member of the Railway service has money to juggle with, and following the cuts they are mostly hard up. If this increase is brought about it will mean that members will have to cancel present commitments —i.e., they will have to cancel their insurance premiums or make some other provision. That is quite definite, there is no way round that. The margin between salaries and necessary outgoings is now so small that with an additional 2 per cent., having made their arrangements beforehand, as one has to do, they will have to be cancelled. The difference between the member who pays the 3 per cent, and the member who pays the 5 per cent, is that both entered into their arrangements knowing their commitments —they must have definite commitments ahead. lam also certain that if this amending Bill goes through—and I forewarn you in regard to it—every Parliament for years and years to come is going to have a stream of petitions to be dealt with from people who are claiming hardship on the score of Parliament having passed this legislation, and claiming relief, and that is going to be a never-ending matter. It is a point that should weigh with the Committee in the matter of the right and wrong of the position. With regard to the exemption of members of the Service who joined prior to 192]., it should be remembered by the Committee that the exemption of those members would create anomalies in itself just the same as the Bill itself, while it seeks to remove an anomaly by the lifting of the bar at £300, creates also most serious anomalies. There are members on both sides of the barrier —before 1921 and since 1921—who were superannuated on the same basis, both with the same allowances so far as the consolidating of the war bonus, &c., is concerned. With one of these the Bill seeks to deal with the other it does not. The anomaly is this—and to any one who understands superannuation it cannot be understood how they (the Commission) fell in to make such a mistake. The man who joined the Service and was enabled to retire before 1921 is the man who had a long non-contributory period—those are the men who got the best of the bargain by far. But those are the men the Bill proposes to let off without any deduction at all, whereas with the man who paid in over a longer period and was retired later, and whose contributions are greater, they seek to take a reduction off him. Definite cases can be quoted where members who were retired during 1921, who come under this ban of actuarial investigation and. so forth, got no war bonus consolidated on their salaries ; they were retired on the pre-war standard of salaries, if I. may use the term, while there would be the others who did not pay in so much, or for as long. That is going to create one of the most serious anomalies, and it is going to be fruitful of dozens and hundreds of petitions to Parliament alone if you proceed on the lines of this Bill. A remark has already been, made in regard to the various societies and Superannuation Boards not being consulted before the Commission made its report. It is of course only fair to add that in clause 1478 they recommend that representatives of the contributors —e.g., the societies—and also the Superannuation Boards, be consulted. I think that strengthens the view that I have expressed, that we should not be put in the position of it being said, " There is the Bill; show us that it is wrong." That alone admits the right, although, unfortunately, the Commission did not take members into its confidence, to ask them their opinion before they reported. If they had done that they would not have fallen into some at least of the mistakes that they have made. 5—L 15,

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Now, I want to make it quite clear to the Committee that, since the commencement of the Superannuation Fund, it has been a condition of employment that a member must join the Fund. At the outset, as stated in the circular, they had the' option. Since then they have had no option whatsoever. Now, is it right or reasonable that the rate of contribution or the conditions should be altered without the member having some rights in the matter ? I put it quite seriously that they should have the right to withdraw from the bargain, with a reasonable amount of interest on what they have paid in. If this Committee decides to alter the conditions, then it establishes a precedent, and it only means that you are legislating, so far as the Fund is concerned, for the time you are in office. It is a remarkable thing—in connection with even the consolidation which I mentioned — that there were yesterday around this table 50 per cent, of new faces, members who have no knowledge of what was done. You will only be legislating for the three or four years that you are in office—until the next general election. That is quite a serious matter. Once the Committee recommends that legislation be introduced, you are going to then start tampering with something that should not be tampered with. No insurance fund could stand being tampered with, either at irregular periods or regular periods ; the one thing must be stability. Once you break it there is no guarantee that it is not going to be interfered with again, and the Commission in its own report dealt with that aspect of it, but if it had been true to what it set out to do, it would have said that the surest way to not have the Fund interfered with in future was, not to break the conditions now. I put it to the Committee that, if they want to ensure this contractual clause being maintained, the wisest thing they can do is to say, " Well, we will not recommend the breaking of it." You will then have established it quite definitely for all future Parliaments, and have given us something further to quote if we have to go before Parliaments in future, that at least the 1932 Select Committee recommended that the contractual right should not be altered. If there is any vital matter that occurs to us before the Committee definitely rises I it you will not object to our putting it forward. I had better stop now, I think, in order to leave time for questions to be asked. The Chairman: As far as we are concerned, if you want to go on we will carry on, and we will adjourn. Mr. Stanley : I think I have dealt with the points that are vital. The whole matter, of course, could have been simplified, from our point of view, if the Committee could have definitely dealt, for a start off, with the question of contractual right, and simply said, "We consider that the contractual right should not be broken." The Chairman : The Committee are not here for that; they are here to hear what you have to say. Mr. Stanley : But you could have stemmed my eloquence, by dealing with that section at the start. However, that is all I have to say. Mr. Savage :On page 7 you refer to the expenditure being reduced since August, 1930, by an amount of £2,000,000. Can you give an approximate estimate of the amount of that that was due to reductions in wages and salaries ? Mr. Stanley : No, I would not like to say just off hand. Apart from the salary cuts, various allowances have gone down. It is estimated that about 70 per cent, of the saving has come from the staff. , Mr. Savage : In reference to the alterations in the law, I take it from your remarks that you would say that it should not be made to apply to those who have already retired, nor to those who are in the Service now—if the State retain the right, as it must, to alter any law, it should be made to apply to future entrants only ? Mr. Stanley : That is so—that is our view. Of course we would reserve the right say a word on behalf of future entrants, in the event of legislation coming down ; but we cannot claim that any contract is broken if legislation is brought in which only applies to future entrants. Mr. Savage : Then I should say your plain statement is that, wherever State liabilities exist, they should be made the concern of all rather than of the Railway service or any other particular section ? Mr. Stanley : That is so. Mr. McCombs :In regard to the £44,000 deficiency—the difference between the annual liability and the annual funds available —when would the maximum liability on the Fund be reached, and what is likely to be the income then ? .... Mr. Stanley : It is rather hard to give you the maximum liability without knowing the future policy of the Government in respect of retirements. If we have the thirty-five-year retirements—this Bill gives power to retire after twenty-five years—under the old Bill there was power to retire from thirty years upwards, so that if that is continued it is very hard to say where the liability will actually come. Mr. McCombs : In the light of past experience can you make an estimate ? Mr. Stanley : I would say, conditions remaining as they are now, that five years will see the peak outgoing so far as superannuation is concerned. Mr. McCombs : What will be the peak, approximately, as regards the deficiency ? Mr. Stanley: The deficiency would probably be £10,000 more than it is now. Mr. McCombs : That would last for how long 1 Are you on the Superannuation Board, by the way ? Mr. Stanley : No, I am not a member. Mr. Wilkinson: On page 3it is stated, "... allowing for a lengthy extension of the exceptional load the Fund is now carrying (in a large measure wrongly, we claim)." What are the payments which you consider to be wrong ? Mr. Stanley: There are the thirty and thirty-five year retirements. Any member could retire with the permission of the Minister after thirty-five years' service. Members have been compelled to retire,

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and have gone out on superannuation. The procedure adopted is to inform the member that it is the policy of the Government to retire officers on attaining thirty-five years service, and they are asked therefore to submit an application to be retired. They do it, and have done in the past, knowing that if they did not the Department has power to dismiss them, so that rather than run that risk they have retired. We say to force men out after thirty-five years, and then place that liability on the Fund, is quite wrong—it was never intended when the Act was originally passed. For very many years I think I can say up to twenty-five years of the fund being in existence —not more than five men retired on the thirty-five-year basis ; but since that, of course, we have had four hundred of them. Mr. Wilkinson : You mention that the wiser course would be to refrain from action in regard to this Bill for a reasonable period. Do you raise that, very strongly ? Mr. Stanley : Yes. We think that, having regard to the altered conditions, and the fact that our accumulated assets are increasing and have increased so largely, that it is no more urgent to take action now, relatively anyhow, than it was in 1922, and we would prefer to see action stayed for, say, two or three years, till we get back to more normal conditions. Then, if it is found that the State has to make further contributions to the Fund, it should be in a better position to do so. That is one reason. Mr. W. Nash: You mention the question of the assets of the fund. Do you suggest that they might rise ? Mr. Stanley: Yes. Mr. W. Nash: The interest not paid this last year was £20,048. The general line of things throughout the Dominion is that interest will not be collected during the next twelve months as easily as in the past. Do you think the Railway Fund will be any different from other people in regard to the collecting of interest ? Mr. Stanley: If you look at page 3of D.-5 you will get the investments of the fund, and the rate of interest. The rate runs from 4-5 per cent, right up to 6 per cent., and the great bulk of the fund—that is, £889,650—is invested at 6 per cent. I computed the deficiency part at 5 per cent., leaving a little margin. I agree with you that indications are that the rate of interest will fall, but I do not think it will fall to the extent of putting the figures mentioned very much out of line. Mr. W. Nash : The point is that more than half the funds are invested to-day at 6 per cent., and if you are going to have sound security for the funds you will not in future get 6 per cent, on sound security. Mr. Stanley: Not on present indications, that is quite so. Mr. W. Nash : Then there is one submission with regard to the suggestion that the fund will be all right in five years. I do not know enough about the Actuary's work to determine whether he is right or not, but he suggests that a payment of over £300,000 in perpetuity is necessary to ensure the continuance of the existing benefits, into the fund from now on in addition to the contributions. Would you not prefer that the fund should be either made sound by that payment, or that the State should continue its guarantee that the money as due for annuities will be paid, rather than let it drift on the idea that in five years' time the fund will be in such a good condition that it will be able to meet commitments ? Assume for the moment that the Actuary is right, and that the £300,000 is necessary. If that sum is not paid, the statement of the Actuary is that the money will not be in the fund to enable the annuities to be paid. You cannot be right that it will be in a good position in five years if the Actuary is right—one or the other is obviously wrong. Mr. Stanley : That is so. Still, an Actuary previously said that the amount of subsidy required was £170,000. Now, of course, that is proved to be fallacious also. No doubt conditions have altered. Mr. W. Nash : The Actuary said that £170,000 would have been enough, but the whole amount has not been paid in, and extra liabilities have been put on the fund in connection with early retirements, and other factors have come in, and he says at this point that you want £306,000 ; if that sum is not paid, and the Government's guarantee is not maintained, the money that is necessary to pay the annuities will not be there. Mr. Stanley: That is so. Mr. W. Nash : Assuming that he is correct, would you suggest that the Government should adopt one of two courses—i.e., pay the £306,000 in at once—because it is obvious that that sum will increase if it is not paid in at once—or maintain the guarantee ? Mr. Stanley : If the State desires to pay the money in we would be only too glad to accept it, but so long as the guarantee is there we do not think the State has deserted us in any way. Mr. W. Nash: Then you are building on the guarantee ? Mr. Stanley : Largely. Mr. W. Nash : Even if your statement with regard to the five years were proved to be hopelessly incorrect, you would not worry about it—you are working on the guarantee ? Mr. Stanley : That is so. Or put it another way : I would sooner have the State guarantee behind me than I would have the Government Actuary. If we were given the option of the Government Actuary or the State guarantee, I would say, " Give us the State guarantee.' , Mr. W. Nash : Supposing we put it the other way. Assume that on the evidence that is available the liability on the fund will grow very much in ten years' time, and assume that we get the same type of conditions that we have had for the last two or three years, it would not at that point be possible to pay out. Would you not rather try and find a way to make the fund sound to-day, rather than waiting for five years and finding that the fund is not able to meet the annuities ? The Actuary suggests, in connection with this payment of £306,000 per annum, and also his report recommended, that there should be a guarantee of 5 per cent., and then he says that the fund would be in such a condition that all the benefits that have been contracted for would be paid out; that if that is not done, they cannot be paid out. Taking all those facts into consideration, you would sooner dismiss the 5*

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Actuary's figures and your own and everybody else's, and say, " We want the State guarantee as set out in the legislation, and that is all we are building on ? " Mr. Stanley: Yes, we are satisfied so long as the State gives the guarantee. The Hon. Sir Apirana Ngata : You do not agree entirely with Mr. Mcllvride, that if the rate of contribution of £170,000 is kept up for the next five years there will not be any necessity to anything into the fund ? Mr. Stanley : No, I do not agree with that, if Mr. Mcllvride did say that. The Hon. Sir Apirana Ngata: We have a table here showing what the Actuary recommended and what was actually paid into the fund. In 1913 the Actuary recommended a subsidy of £50,000. The amount paid in was £25,000 a year for seven years. In 1920 a subsidy of £170,000 was recommended. The rate was £170,000 a year up to 1927, but it was only in two years, in 1926 and 1927, that that amount was reached. From 1928 on the rate recommended was £340,000 —double. And you have never worried about the deficiency in the payments in ? Mr. Stanley : No, because the State never declared that it would pay a pound-for-pound subsidy ; it guaranteed the fund, and as the assets were increasing we saw no reason, and we see no reason now, to worry seriously about it. Probably it is not always a good principle to wait to cross your bridges until you come to them, but we say that the bridge is a good few years off yet. We do not see why the State should be called upon now, in a bad time like this —we do not think the conditions of the fund warrant it. Of course, money is always acceptable ; if the State would pay in that £300,000 it would be quite all right, but we do not see, on the figures shown, that it is a burning question, anyhow. The Chairman: On page 7 you refer to economies. Is it not a fact that considerable staff was added to the Railway Department in the year, say, 1929-1930 ? Mr. Stanley : Yes. The Chairman : Overstaffed ? Mr. Stanley : I would not say, " overstaffed." The Chairman : But you had a large number put on ? Mr. Stanley : Yes, I quite agree. The peak of the staff would be even after that. A fair indication, of course, is got by the actual contributions to the fund. The Chairman: A large number were added to the staff because work was wanted for them ? Mr. Stanley : That is so, work was found for them. The Chairman: You refer to the " substantial reductions of £2,000,000." That includes, to a very large extent, does it not, quite a large number of these men who were put on there because work was wanted for them —they have had to go since ? Is not that so ? Mr. Stanley : It would include a proportion of the casual staff. The Chairman : You refer a little later on to the fact that no opportunity was afforded the various organizations and Superannuation Boards of putting forward their views ; but in the earlier part of that paragraph you say that there was one representative of each Superannuation Fund Board on the Committee that was set up ! Mr. Stanley: That particular Committee never functioned. We made a request through the Minister, and were assured that we would be given the opportunity. Mr. W. Nash: In connection with the soundness of this fund, has Mr. Stanley taken into consideration the fact that last year the retiring-allowances increased by £76,925, that the payments into the fund decreased by £25,000, and that this year there should be another increase of £84,000 in the retiring-allowances, while the chances are that the contributions will be again lower than the presentyear, so that if there is a deficiency of £4,000 at that point, is it not likely the deficiency next year will be £100,000 instead of £4,000 ? Mr. Stanley : I would not go so far as you mention. Mr. W. Nash: It is definite that the allowances will be £84,602 more than this year ; the payments into the fund will obviously be less. If there was a deficiency of £4,000 last year, and there is £86,000 more to be paid out, will the deficiency not be something in excess of £90,000 next year ? Mr. Stanley : You do not yet know the deaths, and so forth. Mr. W. Nash : That might be a minor matter ; allow £10,000 or £20,000 for that. Mr. Stanley : The tendency will be for the deficiency to increase slightly and then a decrease will commence and continue for some time. Mr. W. Nash : Cumulatively, greater all the time. Mr. Stanley : I would not go so far as to say that. In saying what I do, I realize that there are a certain number of officers who were compulsorily retired, and who were on their retiring-leave at the end of March last, so that they have not actually come on the fund. There are a number who have been compulsorily retired since then. So that there are those factors to be taken into consideration as well. I think the liability of the fund —the amount of superannuation paid out —will increase, and the amount of members' contributions will slightly decrease. Mr. W. Nash: Then we have this —Mr. Stanley suggests that there will be a number not on the fund on 31st March, 1932, still coming on to the fund ? Mr. Stanley: That is so. Mr. W. Nash : That will make it infinitely worse than I suggested, because the liability at the 31st March was £84,000 in excess of the previous year. If your statement is right, the deficiency will be even greater than what I suggest. There are more to come on to the Fund. Mr. Stanley: Yes. Mr. W. Nash: Why lam asking these questions is that I want to get definitely and clearly that Mr. Stanley is not challenging figures —he is not building his case on figures; he is building his case al] the time on a guarantee,

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Mr. Stanley : I consider that it is definitely stated in the Act that the State guarantees the fund. Knowing that, we are not particularly concerned—although we do take notice of the balance-sheets as they come out. But we cannot see anything indicating alarm in the last balance-sheet, by any means. We think the safety margin is still there. Mr. W. Nash : £25,000 less income from contribution payments, and £74,000 more outgoings, and this year that income will decline still further, and the payments out will go up another £84,000. If I were a member of the association I would be alarmed. William Joseph Leitch, President, New Zealand Railway Tradesmen's Association. (No. 8.) Mr. Chairman and Gentlemen, On behalf of the New Zealand Railway Tradesmen's Association we wish to express our appreciation for being permitted to come along this morning and place our evidence before the Committee. We have endeavoured, in the evidence we propose to submit, to outline the effect of the Bill as far as our members are concerned. It might be stated that we have based our case on the honouring of contracts ; and although numerous quotations could be given from eminent statesmen, we are more concerned at the present time as to what the Right Hon. the Prime Minister says in 1932, and we trust that the evidence that we propose to submit will convince you that there is no justification for continuing with the Bill in its present form. I will ask Mr. Ingram, our General Secretary, to submit the evidence that we have prepared. Samuel Ingram, General Secretary, New Zealand Railway Tradesmen's Association. (No. 9.) Mr. Chairman and Gentlemen, In submitting evidence on behalf of the Railway Tradesmen's Association this morning I want to say, first of all, that I regret we have not got a larger attendance of members of the Committee, because we look upon this question as one of the most serious and one of the most important questions that any special Committee of the House has had to deal with for some time past. However, I hope that some more of the members will be here before very long. The statement prepared by our association is quite brief, and 1 think touches upon some of the major points as affecting our members. It is as follows : — The financial position of the New Zealand Railways Superannuation Fund has long been a matter of concern to the members of our Association, and this concern has been increased of late years in view of the departmental policy of retiring contributors before their automatic pension rights accrued. Through this policy the Superannuation Fund has been asked to carry burdens which would not be its lot for one, two, or more years, and to lose contributions over the same periods. In other words, to relieve the Working Railways Account the Superannuation Fund has been burdened without its stability being considered. The Superannuation Board's report for the year ended 31st March last shows this most clearly. During the twelve months reported on, nearly eight hundred contributors were retired on superannuation, and the added burden to the fund was some £140,000, or £100,000 more than any previous annual charge laid upon it. This extra burden is not, in our judgment, a fair one, and to require contributors who remain to pay higher contributions or to forgo certain definite contractual rights or both, is, to our mind, most unjust. We therefore exercise the Britisher's right to withstand injustice and enter our very positive protest against the proposals. We do so with added force, if that is possible, for the added reason that the proposals are being made by the party which failed to keep its contract, and that without the consent of the injured parties being first obtained. This seems to us so complete a reversal of the principles of British justice that we are astounded to find them accepted with complaisance by people who are not directly affected.' We submit that the breaking of its contract by the State and its evident intention of making the breach permanent should automatically give the other parties —the contributors —the right to review their side of the bargain. While we do not question the State's right to make a different bargain with new entrants to the Service, we do seriously submit that acceptance of material alterations to existing rights should be optional; if, therefore, the State cannot continue existing rights the contributors should have the right to withdraw their contributions and invest them in some scheme to their liking. Alternatively, they might be given the right to — (1) Transfer their accumulated contributions, and paying future contributions to a scheme of life insurance ; or (2) Transfer to the National Provident Fund ; or (3) Transfer to a compulsory savings scheme with compound interest rights. In putting these alternatives forward we claim we are considering first and last the best interests of the rank and file of the Railway service, who now find the bulk of the contributed income of the Railways Superannuation Fund, and who, none of them, have a pension right as the fund now stands in excess of £4 per week. (Note. —The Actuary's report on the fund as at 31st March, 1927, shows the contributions of the First Division (partly rank and file) to be £35,492 for 1927, and £121,078 for the Second Division (all rank and file).) We wish to point out that a large percentage of the men we represent join the Service after several years spent at their trades in private employ. Yery few join before they are twenty and, therefore, very few have a pension right other than through bad health at an earlier age than sixty. Based on present day wages, and assuming a full forty years of service, at sixty-five years of age the best possible pension is only £2 16s. per week. At sixty years of age the wife becomes entitled to her old-age pension, and at sixty-five years of age the contributor becomes entitled to his. We submit that under the proposed altered conditions a rank and file superannuation contributor is paying for the difference between his old-age-pension rights and his superannuation pension rights.

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Take the ease of a tradesman contributor who is paying seven per cent, of his wages to the Superannuation Fund. At the age of sixty-five he becomes entitled to his superannuation pension and, as he will then have completed but thirty years service, his pension will be about £110 per annum, while the combined old-age pension for his wife and himself would be in the vicinity of £90 per annum. His total contributions for the thirty years will amount to £450-odd, and for the sacrifices entailed in setting aside that sum his wife and himself will be entitled to an income of only £20 more per annum than they would if they had never saved a penny. They would be far better off if their contributions were diverted to the National Provident Fund, for pension income from that Fund does not affect old-age-pension rights. If, as an alternative, he was allowed to place his contributions in a fund returning compound interest at 5 per cent, his total savings at sixty-five would amount to approximately £1,000. Too much importance appears to be extended regarding making the Superannuation Fund actuarially sound; the question therefore arises as to whether this is necessary or desirable. To do so would require from present contributors and superannuitants unjust sacrifices, the nature of which have been never asked of any other section of the community. Before adopting such drastic action it is the bounden duty of this special Committee to very carefully investigate this most important aspect of the Commission's report. This Association does not agree that it should be made actuarially sound, being of the opinion that the Government guarantee is all that is required ; provided always that the Government honours its obligations, as called upon to do under section 119 of the Act of 1926, which states, inter alia, in the event of the fund at any time being unable to meet the charges upon it, and as often as such occurs, the following special provision shall apply : — (a) The Board shall forthwith report the fact to the Minister of Finance, setting forth the amount of deficiency and the causes thereof. (b) The Minister of Finance, upon being satisfied that the deficiency exists, and that provision is necessary therefore, shall, without further appropriation than this Act, pay into the fund out of the Consolidated Fund a sum sufficient to meet the deficiency. (c) The Board's report, together with the statement by the Minister of Finance of his actions thereon, shall be laid before Parliament within ten days after the receipt of the report if Parliament is then sitting, or if not, then within ten days after the commencement of the next ensuing session thereof. The sponsor of the superannuation scheme in this Dominion, the late Right Hon. Sir Joseph Ward, most definitely stated at the inception of the Railways Superannuation Fund that it was quite unnecessary for such a fund to be placed on an actuarial basis. Further, during the long period of the political activity of this able statesman, he consistently maintained that the Superannuation Funds were a practical success, and there appears to be no logical reason why the fund cannot continue to function successfully without adopting the drastic alterations embodied in the present Bill. The Actuary appears to be more or less a machine whose requirements demand that the manufacturer should always allow for a safety margin of approximately 25 per cent, over and above the maximum the machine will be required to do. It appears to us that the Actuary also works on a similar margin. As stated by the Prime Minister at our interview with him on the 11th October, 1932, the Actuary computes his figures on the assumption that the average age of superannuitants is seventy-five years. This is obviously too high, as even a table taken out recently concerning the railway superannuitants clearly proves that the average age is below seventy-five years. However, even this table does not show the true position, as only the life of superannuitants was considered,-and not that of contributors remaining in the Service. We submit that the average age of all concerned should be considered in arriving at what is and will be the expected pensionable life of all concerned. We understand that the average expectation of life is 62§ years; consequently, if our men have to stay in the Service until they are sixty-five years of age, the majority of them will die in harness. Before the proposals of the present Bill are finally submitted to the House, very careful investigations should be instituted with a view of ascertaining if it is necessary to consider the question of placing the Superannuation Funds on any more of an actuarial soundness than has been the position regarding friendly societies, of whom it is common knowledge that the Actuary has on numerous occasions reported adversely regarding their funds, yet in practice friendly societies have undoubtedly been a success and rendered invaluable service to the Dominion. Increased Rate of Contributions. Clause 29 of the Bill provides for increasing the rates of contributions of members still remaining in the Service and who joined the fund prior to the Ist January, 1908. In effect, this mainly comprises those members who are paying 3 per cent, of their salaries as contributions to the Superannuation Fund. As this proposal is a breach of contract with these contributors, we are opposed to this section of the Bill. We can see no justification for imposing such a penalty on these members, and it has apparently always been recognized when amendments from time to time have been adopted, because on all occasions when alterations have been made they have only applied to future contributors. It must be borne in mind that these men have entered into various commitments in the belief that there was no possibility of the Government dishonouring its obligations, as is suggested it should do, in regard to the Superannuation Fund. Almost without exception these members chose to pay on the high rate of pay prior to the first cut in wages which were given effect to in 1922, and are still continuing to do so, in the firm belief that they would eventually reap the benefits honourably contracted for between them and the Government.

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The further cuts in wages in 1931-32 have placed a further severe strain on all members, and any further burden placed on them will undoubtedly compel many members to discontinue paying on the higher rate of wages. This will entail a considerable sacrifice by very materially i educing the pensions they are justly entitled to receive in accordance with the original contracts entered into when they joined the Service, and which they have always honourably abided by. We sincerely trust the Government will not adopt any legislation that will force any such contributors to make such a sacrifice. However, if such is contemplated, provision should be made for surplus contributions being credited' against immediate future contributions of all members who through force of circumstances may be compelled to reduce their present contributions to the fund to the percentage on their present wages, instead of continuing paying on the percentage of their wages as they were prior to the various cuts that have been made. Age Limit. This Association desires to protest in the strongest possible terms against the proposals contained in clause 30, paragraph (1a), wherein it is proposed to raise the age of retirement to sixty-five years or fortv years' service at sixty years of age. This will, if given effect to, operate on members in advanced years being reported on by some officers as failing to reach the standard required by the Department from tradesmen. Any man so reported on would be retired, either receiving an actuarial computed allowance or their money back in a lump sum without interest. _ Another aspect of this question from the point of view of our Association is that modern production methods demand a greater mental and physical strain than was previously required. We are of the opinion that if put into operation the effect of the clause mentioned would have a far-reaching effect on the Department in so far as compensation is concerned. If men are required to remain in the Service to the mature age of sixty-five years, the number of accidents will increase and compensation claims will increase accordingly. It must also be admitted that the increasing of the age qualifications will act detrimentally to returned soldiers who, after the hardships they have been required to undergo, coupled with their industrial strain, will be showing signs of deteriorating at a much earlier age than their more fortunate workmates. _ Dealing with the requirements whereby a contributor is required to attain the age ot sixty years before bein°- permitted to retire, while agreeing that this would be a great assistance to the fund, we consider that it operates very unfairly against the contributors—e.g., a boy starting his career m the Service according to the original Act would retire at the age of fifty-six with forty years service, but the proposed legislation requires him to continue till sixty years of age or forty-four years service. During this four years he would be required to contribute to the fund, with no accruing benefits, paying approximately £40. At the same time, computing his annuity at £133 per annum, he would lose £532 according to the original contract he had entered into'. This, m conjunction with the £40 contributed without interest, would benefit the fund to the extent of £572, at the expense of the mdl^rhis al illustration should be a fair example of the imposition that the proposed Bill would inflict, as far as the men we represent are concerned. Further, we are unable to agree with the Commission regarding tlieir computation of the two different qualifying pensionable ages of contributors—namely, sixty years and sixty-five years. This appears to us to be inconsistent with the Government Actuary s report which we understand is calculated on the expectant pensionable life of superannuitants. In arriving at this we assume that some definite age is fixed as fhe average, and therefore, if our assumption is correct, we cannot see any justification for making some contributors work to an age five years in excess of other contributors before qualifying for retirement, which we maintain should be retained as at sixty years of age or forty years' service, as provided for m the original Act An important aspect is that we would recommend the Committee to take into consideration the bearing that this clause will have on the future employment of youths of this country. With unemployment rampant it is seriously recommended by the Commission to raise the age limit tor retirement, and this, followed to its logical conclusion, will mean that the services wil not be required, for the next ten years at least, of any additional staff to offset those members who would under ordinary circumstances have been placed on the fund. ~11.1 r.i • a i „ We contend that this is a very serious matter, and one that should be thoroughly examined by the Select Committee when reviewing this clause. Proposed removal of £300 Limit. Our Association is most definitely opposed to clause 33 of the Bill, which provides for the repeal of section 103 of the principal Act, which states, notwithstanding anything^in the preceding section, no person who has become a contributor to the fund after the Public S ej j v . ic e Classification and Amendment Act, 1909, or becomes a contributor to the fund after the passing of this Act, shall be entitled on his retirement from the service of the Department to an annual allowance exceeding £300. We need hardly stress to you how inconsistent the present proposals are. Ihe suggestion that the £300 pension barrier be done away with is the most palpable one. On the one hand, conditions must be hardened and contributions increased in order that the fund may survive ; on the other, benefits must be extended to a very limited few because the expense entailed is not (allegedly) very (Note.—We have calculated that the existing pensions in excess of £300 amount to an annual charge of £26,000 so far as this excess alone is concerned, taking the interest earnings at 5 per cent, of a capital sum of £520,000 to provide.) Further, contributors who joined the Service since the introduction of this Act did so witli the full knowledge of the conditions then pertaining, and generally will suffer no loss or hardship under

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this restriction, as an extremely small proportion of them can logically claim that they are entitled to a higher allowance calculated on an actuarial basis in relation to their contributions. Reference No. 1414 of the Commission's recommendations states that salaries averaging £450 per annum for three years immediately preceding retirement will produce the maximum allowance of £300 per annum after forty years service, whilst an average of £750 over the whole period of service will produce only the same result, although the latter salary may be three times greater than the former. This example is of no practical value, as the latter quotation of a salary of £750 over the full period of forty years is purely a fictitious one, and has not been nor is likely to be paid in any of our services. A much fairer illustration would be to take a member whose average salary over his full forty years was £450. On the present rate of contributions, with a 5-per-cent. minimum, such a member would contribute £900 and retire on a, pension of £300. We feel confident that if this Committee obtain a return showing the numbers who contribute in excess of this amount, that such will convince them how unnecessary it is to consider the removal of the £300 limit. General. Our association is opposed to the proposals contained in the present Bill, mainly on the grounds of the breach of contracts involved, which in our opinion are as sacred as contracts which have involved our great British nation in wars. We submit that any alterations that may be deemed necessary should only apply to future contributors, similar to all amendments that have from time to time been adopted. Some three or four years ago a Committee was appointed to investigate the Superannuation Funds in general; along with other societies we asked for, and received an assurance that we would be given an opportunity of giving evidence before this Committee. It did not function. No reasons have been given why this was so, and a reasonable conclusion to draw from this fact is that the matter was of such magnitude that the officers appointed to make the investigations could not find sufficient time to do justice to such an important and involved question. With all due respect to the members of this Select Committee, we respectfully suggest that it is absolutely impossible for you to do reasonable justice to all concerned in connection with the proposals contained in the present Bill in the short time at your disposal during the present session of Parliament. The suggested alterations are so drastic, and involve principles of the greatest possible importance— the subject is extremely complicated, and it is essential that the most searching and careful investigations. should be made before any decision involving alterations to the existing Act is decided upon. We respectfully suggest that this Select Committee should urge upon the Government the necessity to postpone any such contemplated alterations until at least next year. We believe that the Commission made what they believed to be an honest report. However, there are so many inaccuracies contained therein that it is quite obvious that these were made owing to the lack of knowledge of the important matters they were called upon to investigate in such a limited time. How much more so is it essential that this Committee should have ample time to investigate this very important question, as their report will have a very material bearing as to what amendments, if any, in the proposed Bill should be given effect to. We are therefore of opinion that the suggested short delay will result in permitting the Government to retain its prestige regarding preservation of existing contracts ; this will, also allow ample opportunity of making the necessary investigations, which we feel confident, if carried out thoroughly, will convince them that we are right in our contention that the present proposed legislation 5 is quite unnecessary. lhere are one or two points that I desire, on behalf of our association, to elaborate, and I will endeavour to meet your request to be as brief as possible in regard to them. At the outset I want to say that we could have put into writing in our report quite a lot concerning the breach of contract, and the integrity of the Government, and one thing and another; but in view of the fact that the Prime Minister has frankly admitted that the funds are in their present state owing to the failure of past Governments in keeping up with the payment of subsidy, I do not think it necessary to elaborate that particular aspect of it at the present time. Ido want, however, to draw your attention most seriously to the question, particularly in regard to the effect it will have upon our members—and we represent some of the lower-paid members ; the great bulk of the contributors are what would be termed General Division men, on a standard rate of pay, who pay in on a steady rate of contribution for the greater part of their service. Taking the men we represent, the skilled men, they attain their maximum rate of pay, after passing through an apprenticeship, after about seven years' service ; then for the next thirty-three years, before qualifying for forty years' retirement, they are paying on' a flat rate of contribution. The Chairman.] What do they pay during their apprenticeship ?—They still pay 5 per cent. I think that the Right Hon. the Prime Minister stated the matter correctly at our interview with him last month, a copy of which 1 have in my hand, when he said, " The men who really carried the load were the lower-paid men, who made their contribution year after year. It had been said that it was a. wonder that their organizations had stood it as they had." I want to put this to you seriously, and I want you to give this matter very serious consideration: I have a pamphlet here from' the Rational Provident Fund, which is fostered and protected by the Government of this country, and 1 am going to ask you, Are you going to call upon your employees in your own Service to pay something in excess for a lesser benefit than what they can obtain through the National Provident Fund i I have gone into the matter regarding quite a number of our members, and that is the actual position that they will be mif this Bill m its present form is passed by the House. You will find that a number of our members are going to get less benefit out of it than what they could get by going into the National Provident Fund. I have every confidence that this Government is not going to impose

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those conditions on the great bulk of the contributors to this fund. In connection with this also, we find that last year the Government found it necessary to introduce certain amendments regarding the National Provident Fund ; but we find that, while it proposes to do the same regarding our fund at the present time, the proposals are to apply to present contributors and present superannuitants —an unheard-of thing in the country as far as the National Provident Fund is concerned ; and I seriously put it to you, with any amendment that may be finally adopted, while we do not agree that the amendments are necessary, that this Committee should stand firm that they should only apply to future contributors to the fund —future entrants into the Service. Now, a very important aspect of the matter as affecting our members, as referred to briefly in our report, is regarding the effect upon our men of the new systems operating in the workshops. I can assure you that if you investigate this aspect of it you will find that our contention in this direction is correct —that is, that under the present system the expected life of the men in the workshops cannot be so great as what it was under the old system. We have newly reorganized workshops, equipped to a very large extent on American lines. They are introducing production systems out there —and have introduced them for the last three or four years. As a matter of fact, the latest addition is what is called "production time study method," and I am going to briefly outline just what that means. What actually happens is that some offic.ers are appointed as production time study clerks, whose duty it is to go round with a watch in their hand and stand, from 8 o'clock in the morning until the men finish work at night, at the back of the machines and record on a chart the time taken for every operation that is performed on the machines, including any time that a man is off in response to nature, or any other thing for which he may be taken off his job. You can imagine what an absurd system it is, and what a strain it must be upon a man to have somebody over the top of him all the time like that. It appears to us that they are fast getting on to what has been suggested would be quite a good record to keep, and that is to engage a few photographers, who would be taking a continuous photograph of the whole of the operations—that would do away with the necessity for the time-recording charts ; they would then have a photograph or a moving picture of the whole outfit. Most of you will recollect that a few years ago the Australian Government arranged for a delegation to go to America and investigate the systems operating there at that particular time. It is not my intention to labour the matter —I have no doubt most of you have read some of the books that have been written in connection with it. The book I have in my hand was written by Hugh Grant Adam (" An Australian Looks at America "), who was chosen as the editor to go over representing this delegation that went ot America at that particular time. I propose just at the moment to quote only one clause, which I think goes a long way towards showing what an effect these production systems are having upon the workers at the present time : "On the one side I was given the vague guess that the monotony of fast repetition work has no ill effect; on the other, I got the information, founded on just as careless data, that these massproduction factories recruit fresh, rosy-cheeked boys from the country, and in four years turn them into haggard, dull-minded human machines." One could go on in this way for a long, long time, but I have sufficient confidence in the intelligence of this Committee that they appreciate to a very large extent the effect that these modern methods have upon the men working in these shops, and I think you will agree to a very large extent with our contention that the prospects of life of the men under present conditions are not so great as what they were under former conditions. Another important point that I would like to draw your attention to is in regard to returned soldiers. I had the opportunity, during the introduction of the Bill in the House, of being present, and noticed that one honourable member of the House raised the question regarding returned soldiers. I think it is a question that you gentlemen could very well take into consideration. It may be a coincidence, but I have here a letter that arrived only yesterday from a returned soldier ; it is quite short, and I propose with your permission to read it:— Deak Mb. Ingram,— I notice tliat you are to appear before the Select Committee of the House on the Superannuation Bill on Tuesday, and would like you to put a word in for the returned soldiers. If the Government intend to force this measure through without much material amendment (which might easily be the case), then some concession as to service ought to be given to returned soldiers if they are ever going to receive any benefit. I will quote my own ease. When I came back and decided to marry I took a pure life policy in the Government Life Insurance Department, and after being examined by their doctor they demanded a£l a £100 loading, as they considered I was anything but a good risk. I was going to drop it, but was advised to apply to the Pensions Department to pay the loading, which they did, and they also have done ever since. Now if their doctor was right I will have no prospect of enjoying a retirement, and my case will be just typical of many others. In the Public Service and Teachers' Funds they count each year in the tropics (Cook Island Group and Samoa) as a year and a half for superannuation purposes, so surely the " Diggers " ought to have time overseas counted at double time, or some similar concession. I submit that this is a very serious matter regarding these men, and that if any amendment to the Superannuation Fund is made at the present time it should be on the lines suggested in that letter, of granting some concession further than what is at present provided, under the present Act, owing to the fact, as a result of their service to the country, that their expected life must be considerably shorter than what it would have been under normal circumstances. There is one further point in connection with the workshops that I omitted to mention —I thought it would be interesting to give you the figures of accidents out at the Hutt workshops, which is the local workshop, during the past four years. The figures, which I think are interesting, to a large extent substantiate our claims that the present conditions are much more trying than what they were formerly. In 1928 our ambulance brigade attended to 2,086 cases ; in 1929, 5,334 cases ; in 1930, 7,192 cases ; in 1931, 7,149 cases. Of that number, in 1929, 196 cases were serious enough to require the ambulance to take them to the hospital. In 1930, 211 such cases were taken to the hospital. In 1931, 111 such cases were taken to the hospital. The next point I want to emphasize is regarding the Commission's recommendation that the qualifying age limit should vary. I have tried to understand how they arrive at that. I have always been under the impression—and I think I am right—that the main controlling factor in the Government Actuary's calculations regarding superannuitants is the expected pensionable life of these men. That being the case, then why should there be a difference of five years between one group and

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another ? The proposals under the present Bill provide that some men may retire at sixty years of age and others at sixty-five. We cannot understand that, and we fail to see any justification for the inclusion of a clause of that nature. We look at it this way : that even if a man at sixty years of age has not got forty years' service, he does not get forty-sixtieths—i.e., two-thirds of his salary as retiring allowance —he only gets one-sixtieth for each year of service ; consequently the proposal that he should, because he has not got forty years' service, go on to sixty-five years of age is in our opinion doubly penalizing him, inasmuch as he does not get as big a pension as the other man owing to his shorter service and he has to work 011 for a further period. The matter of the £300 limit has been exercising our minds for some considerable time. We have been endeavouring to find how they arrived at the recommendation that they made. Paragraph 1473 of the Commission's report reads,— " An even more striking example of the relatively little saving to the three funds is contained in a report of the Government Actuary in 1920. He pointed out that had a limit of £300 been in force from the inception of the respective funds the saving would have been only 4-7 per centum in the Public Service Bund, 0-7 per centum in the Teachers' Fund, and 1-8 per centum in the Railways Fund. The disadvantages and anomalies created by the arbitrary limit therefore outweigh the small monetary saving to the funds." Then we have paragraph 1480, which is the final clause in connection with superannuation, where the Commission state — " Finally, we wish to place on record our indebtedness to the Secretary to the Treasury, the Public Service Commissioner, and the Government Actuary for their valuable assistance in dealing with this highly technical and difficult subject." We assume that this report has been brought about by the Commission principally as the result of the assistance rendered and the reports given by these three officers mentioned. That being the case, we put it to you most seriously that only one aspect of the matter has been considered, and that is the aspect of the matter as represented by these three individuals. When we look at these three individuals we wonder how it is going to affect them, and we find that if this Bill is passed in its present form it does not affect them at all, but that in some instances they are going to benefit. Or, putting it in plain language, some of them have something to gain and nothing to lose, and the others have nothing to lose in connection with it. I think the Commission, if they were going to deal with this important question, should have heard representations from all sections concerned, and particularly from that great section, the bulk of the contributors, the lower-paid men. In conclusion, I do make an earnest appeal that you will seriously consider this question of superannuation. I believe that you have heard sufficient, from the evidence that has been given to you this last week and to-day, to convince you that you have only touched upon the fringe of this very important question. We, as citizens of this country as well as contributors to the Superannuation Fund, are anxious that the Government should preserve the sanctity of contract, and we do plead with you not to hasten any legislation regarding this particular Act at the present time—it warrants very careful consideration. A short delay until next session will do no harm. I respectfully put it to you that, in the short time at your disposal, you have not the time to deal with such an important question as is involved in this present legislation, and we most earnestly trust that you will strongly recommend postponement, and that during the recess between now and next session of Parliament you will go very thoroughly into the whole question. And if you do, we have enough confidence in you as politicians representing us in this honourable House that you will do justice to the men we represent. Mr. Dickie.] You state that a large percentage of the men you represent join the Service after several years spent at their trades in private employ. Is that because the Government Service is more attractive «—They actually learn their trade outside ; and owing to the requirements of the Government from time to time in the building of carriages and rolling-stock it is necessary from time to time to take on a number of skilled men. That varies, as a matter of actual fact, according to the allocations that are made by respective Parliaments from time to time. The result is that a very large percentage of our skilled men do not join the Service until they are over twenty years of age ; and as a matter of fact we have a very large number of them who do not join until they are well on to thirty years of age. . . Then at sixty years of age, very few would have had forty years' service—That is so. In Australia they go on to sixty-five. You would not suggest that a man in Australia could go on for a longer time than in New Zealand, would you ?—No, lam not going to suggest that. What is the objection to men sixty years of age who have not had forty years' service going on to sixty-five years of age ? —The objection, as far as we are concerned, is that the contract that has been entered into is for forty years' service or sixty years of age, and we maintain that you should abide by that contract. . But you realize, I suppose, that you are not the only people who are suffering from breach of contract. Other people who have had their savings in Government bonds, or in mortgages, or something of that sort, have been cut twenty, ten, and fifteen per cent. —Only of a temporary nature, is it not ? It looks as if it is going to be worse in the future.—There is a big difference as applied to our men, in that their pensions are so low that it means that it is absolutely their living that you are taking away from them. None of them are getting in excess of £4 a week. That of course refers to a great many people with their savings in Government bonds, and so 011, who have had them cut ten, or fifteen, or twenty per cent. They are small savings in a great many instances. Now you know that a great number of people under sixty years of age when they retire go out into private employ and compete with the people already in.—That does not apply as far as manual workers are concerned. We do not have many who retire under sixty years of age. Men who go in as apprentices must go out under sixty years of age. That is true regarding apprentices.

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You state that some three or four years ago a Committee was appointed to investigate the Superannuation Funds. Who set up that Committee ?—I think the Right Hon. Sir Joseph Ward set up that Committee. He was the originator of the scheme. And he deemed it advisable to set up a Committee to inquire into it ?—Yes. As a matter of actual fact there were some alterations that we would have desired as far as our fund was concerned. Mr. Savage.] Is it not a fact that the Superannuation Funds have never been on an actuarial basis ? —That is so. _ From the very beginning it was definitely stated by Sir Joseph Ward, the sponsor for the Bill, that it could only fail when the State failed to make good its guarantee I—That is quite correct. The question has been frequently put in reference to why men are anxious to join the Railway service. Is it not a fact that continuity of employment, plus superannuation rights that they thought they enjoyed, was largely responsible for men wanting to join ? —There is no doubt about that. For many years, skilled men in particular, have had very tempting offers outside at much higher rate of pay than they were being paid in our Service to go out, and it was only on account of their superannuation rights and their permanent job in the Service that they remained there. I wonder if you could give a rough idea of the amount of money in the aggregate loss to the railway servants by the passing of section 14 of the Finance Act, 1931. That was the first appearance that I know of of the actuarial basis, and considerable reductions were made in the retiring-allowances of men oompulsorily retired. —No, I cannot, in connection with that. But I want to say this, now that you have raised the question regarding them, that they were most unjustly treated, for this reason : that it had been the practice, with the consent of the Minister, to retire men at thirty-five years' service, and I think in justice to those men, seeing that it had been the practice to do so, the least they were entitled to was to have their allowances calculated on the assumption that they would be entitled to retire on thirty-five years' service and not on forty years' service, as was done. We have had individual cases quoted; men, for instance, who were entitled under ordinary conditions to receive somewhere about £134 and who would get about £78. —There were 158 retired at the time, and the average paid to them was £102 ; the bulk of them were just under £100. Some were as low as £70. This Bill is not the first attack made upon the superannuation rights of members -No. As a matter of fact, our experience regarding amendments to the Bill has always been in the direction of taking something away from contributors, and not benefiting them. Regarding the control of the Railway Superannuation Fund, I think it is correct to say that the men ix., the rank and file —are not in a position to control the fund. I have the names of the Secretary'to the Treasury, the Public Trustee, the Solicitor-General, the Chairman of the Railways Board, the General Manager of Railways ; then two representatives representing the First Division, and three representing the Second Division. There is fifty-fifty there, with the Chairman of the Railways Board in the chair. I think it will be correct to suggest to you that the men have not got the control of the fund.—ln no way whatsoever. I would say, regarding our representatives on the Board, that all they do is merely to go there and pass accounts. They have really no powers at all. There is one other thing that seems to me to be important. You say, "We have calculated the existing pensions in excess of £300 amount to an annual charge of £26,000, so far as this excess alone is concerned, taking the interest earnings at 5 per cent, of a capital sum of £520,000 to provide.'' —That is so. •••iv. Mr. W. Nash.] Your Society is relying upon guarantee of the payments in connection with the fund, and not on the fund I—That1 —That is so. Working on that all the time % —That is so. Assume that some of the members joined the National Provident Fund at its inception instead of remaining as superannuitants in the Railway Department, do you think they would have been better off A boy has greater insurable benefits to derive from that fund, with a pension rate of £2 a week at age sixty if he pays in, I think, about 2s. 3d. a week. The important point regarding that is that it has no effect whatsoever upon the old-age pension or on any other income that he may be earning ;he can earn any other income—it has no effect at all. Mr. Dickie.] You rest on the old-age pension there ? —That is one feature of it, and an important one, too, I think, that should be considered. Mr. W. Nash.] In connection with old-age pensions, the suggestion in the second paragraph of page 2 that a superannuitant would not get a pension for himself and his wife is not quite correct. If he were getting superannuation of £110 a year, and both he and his wife were over sixty-five years of age, he would get another £11 by way of pension I—That1 —That is so. If each member of your organization invested so-much money, a weekly or a fortnightly payment —whatever it was —and Government agreed, in consideration of their doing it, to add so-much a year to it, would the members of your organization be content to take out the money they put in, plus the subsidy of the Government, plus interest, and let superannuation go ?—I think a very large percentage of them would. You mention that reports by the Actuary were made to show whether the fund was sound or not. The difficulty is that the money was not paid in ? —That is the whole difficulty. I think that is acknowledged by all parties. Would you be content if the existing benefits were maintained for existing subscribers, and a new fund started entirely for future contributors ?—We would be content as far as present contributors are concerned. The evidence you have given with regard to accidents shows that a large number have taken place. Can you give figures for men over the age of fifty-five years I—We1 —We have not taken that information out ; but our experience has been in that direction. You gave some astounding figures with regard to 1929 and 1931. Was there any special reason for the big number of accidents at the Hutt Workshops ? —No, only this, that that was since the introduction of the present system now operating —i.e., the mass production introduced at that particular time.

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The last paragraph refers to Government maintaining its prestige. That reference is entirely associated with the preservation of existing contracts ?—That is so. Our experience is that any amendment that has been introduced has never been retrospective, and we are hoping, if there are any amendments, that they also will not be retrospective. And that this Bill is of such importance to every one concerned that it is not possible to get it properly through, with full consideration, during the present session of Parliament ? —We are most definite as regards that particular aspect. We feel, with all due respect to you gentlemen on the Committee, that you have only touched the fringe of the question up to the present moment; and I think you will be convinced, within the next few days, that the question is of such magnitude that you cannot do justice to it in the short time at your disposal during the present session of Parliament. The Chairman.] You refer to statements made by Sir Joseph Ward, who was the sponsor of the superannuation scheme. Where did he make those statements —in the House ?■ —In the House. They are on record ? —Yes. Of course, it is a long way back ?—As a matter of fact, you could find, some of them of quite recent date. I can myself recollect some of recent years. In discussing superannuation he has always maintained that idea —of not necessarily putting them on an actuarial basis at all. Are you satisfied, the same as one of the other organizations, to allow the funds to go on as they are so long as the Government guarantee is behind them ? —We think that is all that is required, and we would be quite satisfied with that. You speak of mass production, and you say that, owing to the introduction by the Government of new systems at the Hutt Workshops and at other places, the men are unfitted to work on to sixty-five years of age. Is that brought about through the new line of action with regard to the work ? —Undoubtedly. It is a copy of the American system, and we think you will find in America the young men become very old at a very early age. Does it mean that more work and greater results are being got now ? —We do not think so, from a skilled point of view. We say, as far as skilled men are concerned, give them facilities to do the work, the opportunity to do it, and they will do it with less supervision than any other class of worker. A man is anxious to make a good job of his work, and we do not think the present system tends to greater returns. Henry Valentine, Chief Account-ant, New Zealand Government Railways (No. 10). Mr. Valentine : As Chief Accountant in the Railway Department I am responsible for the keeping of the accounts and records of the Superannuation Fund, and I have here a statement with regard to the finances and methods of dealing with investments of the Superannuation Fund. The Government Railways Superannuation Fund was established by authority of the Government Railways Superannuation Fund Act, 1902, on the Ist January, 1903. At the 31st March, 1932, when the fund had been in existence for twenty-nine years and three months, the accumulated funds amounted to £1,454,173. The funds are held in the custody of the Public Trustee, and are invested in accordance with regulations made by Order in Council dated the 17th April, 1924, under authority of section 18 of the Finance Act, 1923, partly in the Government Railways Superannuation Fund Investment Account and partly in the Government Railways Superannuation Fund Current Account. Moneys in the Current Account form part of the Common Fund of the Public Trust Office, and are credited with interest at the rate of 3 per cent, on the minimum monthly credit balance. Moneys not required for the purposes of the Current Account are paid into the Investment Account. In respect of moneys credited to the Investment Account, the Public Trustee is required at the beginning of each month to allocate securities held by him on behalf of the Common Fund to the Investment Account. The regulations require that where the securities available in the Common Fund bear varying rates of interest a fro rata allocation is to be made so that the Superannuation Fund may receive a fair average rate of return on investments. It should be noted, however, that for some years past investments of surplus moneys have been practically confined to Treasury securities or Rural Advances bonds, by direction of the Minister of Finance. At the 31st- March, 1932, the accumulated fund was invested as follows : —

Class of Security. Interest Amount. j Total. Per Cent. £ £ Flat mortgages .. .. .. 6 451,379 6£ 6,500 457,879 Instalment mortgages .. .. 6 .. 406,597 Local-body debentures .. .. 4§ 5,500 5 15,835 5| 127,025 51 35,130 5| 250 6 31,675 215,415 Government securities .. .. 5 J 68,700 5| 85,000 51 160,000 1 313,700 Rural Advances Bonds (issued at 94-|) 5 j .. 67,000 I 1,460,591

I—ls.

Rates of interest on mortgages are subject to reduction in accordance with the National Expenditure Adjustment Act, 1932. The average annual rate of interest on securities held at the 31st March, 1930, 1931, and 1932, respectively was as follows : — Per Cent--1930 .. .. .. .. 5-780 1931 .. .. .. .. 5-744 1932 .. .. .. .. 5-736 Average for three years .. . . 5*753 The income and outgo of the fund since its inception have been as follows :— Income. £ £ £ Members' contributions .. .. .. .. .. 2,885,250 Fines .. .. .. .. .. .. .. 9,164 2,894,414 Less contributions refunded and compensation paid .. .. 528,655 Contributions transferred to other funds .. .. .. 3,954 Fines remitted .. .. .. .. .. .. 76 532,685 Net contributions .. .. .. .. .. .. .. .. 2,361,729 Government subsidies .. .. .. .. .. 1,970,000 Government subsidies to supplement allowances to widows and children .. 86,061 Total Government subsidies .. .. .. .. .. .. .. 2,056,061 (They were made at the initiation of the scheme.) Interest earned .. .. .. .. .. .. .. .. 757,591 Miscellaneous income— Transfers from Railway Servants Fund .. .. .. .. 3,606 Contribution by Wellington-Manawatu Railway Co. .. .. .. 5,000 Contributions by Amalgamated Society of Railway Servants — In respect of broken service (1890 strike) .. .. .. 1,500 In respect of M. J. Mack .. .. .. .. .. 215 Contributions by Locomotive Engine-drivers, Firemens, and Cleaners' Association .. .. .. .. .. .. .. 139 Contributions by New Zealand Railway Officers' Institute .. .. 21 New Zealand Railways Transvaal War Relief Fund .. .. .. 317 Miscellaneous donations .. .. .. .. .. .. 103 Commission earned on insurance collections .. .. .. .. 118 Total miscellaneous income .. .. .. .. .. .. 11,019 Total income .. .. .. .. .. .. £5,186,400 Outgo. £ Life allowances paid or accrued .. .. .. .. .. .. .. 3,334,114 Widows' and children's allowances .. .. .. .. .. .. 362,773 Administration expenses .. .. .. .. .. .. .. 35 ; 340 Accumulated fund, 31st March, 1932 .. .. .. .. .. .. 1,454,173 £5,186,400 It is estimated that at the 31st March, 1933, the accumulated funds will be reduced to approximately £1,320,000, as compared with £1,488,566 at the 31st March, 1931. The reduction of about £168,566 in the two years 1931-33 is attributable mainly to the following causes : — (1) The abnormal number of new pensions granted owing to the retirement of practically the whole of the contributors with service amounting to thirty-five years or upwards, together with a considerable number of contributors with service of from thirty to thirty-five years. (2) The adjustment of contributions of members who did not elect to continue to contribute to the fund on the basis of the unreduced rates of salary or wages operative prior to the Ist April, 1931. With respect to (1), the number of superannuitants (exclusive of widows and children) and the annual liability in respect of life allowances payable increased as follows between 31st March, 1930, and 31st March, 1932 :—- Life Allowances current at 31st March. Annual Liability. No. £ 1930 .. .. 1,514 257,996 1932 .. .. 2,296 415,954 Increase .. 782 £157,958 Increase .. 52 per cent. 61 per ceat.

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Owing to the reduction in the number of contributors the income from members' contributions decreased from £175,872 in 1930 to £142,239 in 1932, or by £33,633. The additional burden thrown on the fund in two years by decreased contributions and increased pensions was thus £191,591 per annum. Allowances of all kinds granted in 1931 amounted to £40,574, and in 1932 to £143,808, whereas the annual average for the five years ended 1930 was £24,781. With respect to (2) —that is, re contributions —the position is that contributors were given the option of continuing to contribute to the Superannuation Fund on the basis of the salaries or wages received by them prior to the Ist April, 1931, or of receiving a refund of contributions paid on the difference between the reduced and the unreduced rates of pay. The amount refunded to contributors who elected to contribute on the reduced rates of pay amounted to £40,035 for the year ended 31st March, 1932, and the estimated liability to be provided for in the current year is approximately £55,000. The conditions which have recently operated to so radically affect the relationship of income and outgo as above set out may be regarded as transient in their nature. The refund made to those contributors who elected to contribute in the future on their reduced rates of pay is over and done with, while the effect of retrenchment on the fund is as transient as the depression which gave rise to the necessity for retrenchment. Indeed, by reason of the heavy retirements that have taken place during the retrenchment period, and the certainty that the depression will pass, it may be' definitely concluded that the load which will be cast on the fund in the future will be rather below the standard of what might have been regarded as normal in the years past. The progress of the fund is shown by the following table : —

When the fund was established in 1903 it was expressly stated that actuarial soundness had not been taken into account, and it was provided in the original Act and in all subsequent re-enactments that any deficiency in the fund should be met without further appropriation than the Act by the payment out of the Consolidated Fund of a sum sufficient to meet the deficiency. No subsidy was paid in the earlier years, with the result that the annual excess of income over outgo was gradually reduced, until in 1911 it was necessary to supplement the income by an annual subsidy of £25,000. In 1918 and 1919 the outgo exceeded the income, and the subsidy was accordingly

Accumulated Funds. Annual As at 31st March. " ~ A per2tf Remarks " Amount. Accretion. P ayable ' £ £ £ 1903 (3 months) .. 7,057 7,057 1904 .. .. 40,358 33,301 11,677 1905 .. .. 68,670 28,312 19,113 1906 .. .. 90,985 22,315 25,462 1907 .. .. 110,737 19,752 27,182 1908 .. .. 126,643 15,906 33,226 1909 .. .. 157,152 30,509 37,602 Arrears of contributions and subsidy in respect of WellingtonManawatu Company's employees paid. 1910 .. .. 173,876 16,724 48,468 1911 .. .. 207,242 33,366 54,144 Subsidy £25,000. 1912 .. .. 233,457 26,215 59,032 „ £25,000. 1913 .. .. 264,455 30,998 63,803 „ £25,000. 1914 .. .. 295,470 31,015 71,012 „ £25,000. 1915 .. .. 346,156 50,686 79,936 „ £50,000. 1916 .. .. 362,810 16,654 86,340 „ £25,000. 1917 .. .. 377,585 14,775 93,853 „ £25,000. 1918 .. .. 373,098 4,487 Dr. 98,325 „ £25,000. 1919 .. .. 363,804 9,294 Dr. 101,864 „ £25,000. 1920 .. .. 408,233 44,429 115,808 „ £75,000. 1921 .. .. 464,491 56,258 130,000 „ £75,000. 1922 .. .. 543,532 79,041 148,092 „ £75,000. J 923 .. .. 584,219 40,687 163,387 „ £75,000. 1924 .. .. 671,827 87,608 177,689 „ £125,000. 1925 .. .. 734,112 62,285 205,579 „ £105,000. 1926 .. .. 862,139 128,027 220,093 „ £170,000. 1927 .. .. 985,828 123,689 237,084 „ £170,000. 1928 .. .. 1,111,200 125,372 247,442 „ £170,000. 1929 .. .. 1,238,674 127,474 258,632 „ £170,000. 1930 .. .. 1,371,919 133,245 272,505 „ £170,000. 1931 .. .. 1,488,566 116,647 299,489 „ £170,000. 1932 .. .. 1,454,173 34,393 Dr. 431,130 „ £170,000.

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increased to £75,000 per annum, with further increases to £125,000 in 1924, £105,000 in 1925, and £170,000 in 1926. The subsidy of £170,000 was sufficient to maintain a substantial balance of income over outgo until 1932, when the abnormal circumstances referred to above again resulted in a deficiency in the annual income, and it will again be necessary to increase the amount of subsidy if the terms of the contract as laid down in the original Act are to be maintained. The Chairman : Are there any questions ? Mr. Dickie.] The statement on page 1 shows how the funds are invested. It does not show the statutory reduction of interest on flat mortgages, does it ? —No. At the moment we have not got that About two-thirds of your funds are invested on flat mortgages and instalment mortgages ? The greater part. Substantially there would be 20 per cent, off the rates of interest. They will be considerably less ?—There will be a reduction in interest income. In all investments of that nature ? —Yes. Mr. Savage.] On page 3of the statement you say, " Owing to the reduction in the number of contributors the income from members' contributions decreased from £175,872 in 1900 to £142,239 in 1932, or by £33,633. The additional burden thrown on the fund in two years by decreased contributions and increased pensions was thus £191,591 per annum.'' What were the main circumstances contributing to that ? What part did the compulsory retirements play ?—I have set that out in my statement which refers to the retirement of members with thirty-five years' service and the refunds of contributions. If things had been allowed to go on in a normal way this state of affairs, as applied to that theory, would not have taken place ? —No, the balance would have remained about as it was for four or five years. About the actuarial soundness of the fund, you definitely state on page 5 that when the fund was established in 1903 it was expressly stated that actuarial soundness had not been taken into account. I think that has been generally understood right through the piece ; that it was not a question of actuarial soundess but a question of the soundness of the fund ? —That is so. Sir Joseph Ward stated when the fund was started that no attempt had been made to put the fund on an actuarial basis ; it was on a contributing basis with a State guarantee. •I think that evidence can be found in some of the Appendices for 1902 I—l have a copy of that evidence. Mr. Ansell.] On the first page of your statement you state, " It should be noted, however, that for some years past investments of surplus moneys have been practically confined to Treasury securities or Rural Advances bonds, by direction of the Minister of Finance." Has that, been detrimental to the interest-earning capacity of the fund ? —Normally the fund would have received, in accordance with the regulations, a selection of the investments which the Public Trust Office was making. This had the effect of confining the investments wholly to certain Government securities. It would not have a very great influence on the income of the fund now, but it did reduce it in the past. Most of the investments are at 5| per cent., and the ruling rate at the time on mortgages would probably be 6 per cent. Of course, the position now is that they are practically the same; there is little difference between the two. The point I want to get at is whether, by direction of the Minister, your funds were invested m securities which produced a lower rate of interest than you otherwise could have secured «—They produced a lower rate of interest for the time being, but on the other hand they are very much better investments to-day. Mr. Dickie.] They are not subject to the 10-per-cent. reduction ?—No. We get the gross income without reduction. Mr. Ansell.] With reference to the compulsory retirements and the responsibility that has been thrown on the funds by direction of the Minister, has it ever crossed your mind that it might be advantageous to have a Superannuation Doa.rd that is free from political control that could refuse to accept the responsibility ?—This is only an expression of my opinion, but with a fund financed as this fund has been financed up to the present, I think the present system of control is quite all right. On the other hand, if it were a fund on an actuarial basis, like a life-insurance fund, for instance, I do not think the present form of control would be satisfactory. That is to say, the Minister in directing and permitting members to go out on superannuation with less than forty years service is aware of the fact that the fund has to carry a heavier load. He is also aware of the fact that the Consolidated Fund will have to carry any deficiency, and he has full knowledge of the circumstances. That, being so, I think the present form of control quite satisfactory, but if the fund were on the same basis as a life insurance fund, a different set of circumstances would, of course, prevail, and I think some alteration would be necessary in the form of control. Mr. W. Nash.] Why were the thirty-five-year men put off ?—Primarily, because owing to the falling-off in business on account of the depression there was a very great surplus of staff. Where normallv the procedure would have been to dismiss the latest-joined men, because of the fact that the older men were entitled to a pension, the older men were retired, as they would have a certain income coming in from the fund. The thirty-five-year men would be aged approximately from fifty to fifty-five ? Yes, as a rule ; but of course it varies. In the First Division they would be about fifty-one, but in the Second Division the average would be higher. Was their competency taken into account ? —ln retiring them ? Y es ?—There are practically no men left with more than thirty-five years' service. I only know of about half a dozen exceptions.

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What would your opinion be in regard to a proposal to extend the term by ten years. Taking into account your experience of retiring men after thirty-five years' service, what would your opinion be on making the retirements after forty-five years' service ?—You mean increasing the period after which they can be retired to forty-five years ? Yes. What lam getting at is that the Railway Department thought it the wisest and the most economical method to put men ofi after thirty-five years' service. How would you view it if they proposed now, for the same reason, to keep the men on for another ten years and make them serve forty-five years instead of thirty-five ? —From now onwards ? Yes ? —Of course the proposed alteration to the Act will have that effect. If it is right in the interests of the Railway Department to put the men off after thirty-five years' service, it would not be in the interests of the Railway Department to keep them another ten years ? — 1 can hardly agree with that. The principal reason for retiring the men at thirty-five years' service was the fact that they would get a pension. Solely from the point of view of efficiency, it was questionable whether the right step was taken. Many of the men who were retired were most valuable officers of the Department. I could not say that you would get better results by increasing the period to forty-five years. You cannot make any general statement in that regard. The men may or may not be more efficient up to forty-five years' service. Taking into account the Traffic Branch of the Railway Department, would you suggest that there would be a danger in every respect if the men were continued in the Service till sixty-five years of age ? —I certainly think, in regard to the Second Division employees, outdoor men, that you would have to be careful in retaining them to forty-five years' service. The arduous nature of their duties is such that in some cases it would be asking too much of a man to carry on efficiently in the same grade after sixty years of age. Have you any information about the expectancy of life in the Railway service as compared with outside the Railway service ? —No, but I have prepared recently some figures (unfortunately I have not brought them with me to-day) in regard to men who have retired. We selected four hundred men at random throughout the branches of the Service, and the average age at retirement was about sixty-one, and the expectancy of life about eleven years. What the ordinary expectation of life outside is I cannot say. Could you give the Committee those figures you refer to ? —Yes, but you will understand that they were only a test. They were only one hundred men taken from each branch of the Service, and they do not profess to be entirely correct. With that information, assuming a man was continued in the Service from sixty to sixty-five years—say a man under the Engine-drivers, Firemen, and Cleaners' Association —would his expectancy of life be reduced by those extra years in the Service ? —The men in the Locomotive Branch retire about sixty-one or sixty-two years of age, and they have a life expectation of rather less than the men in the other branches. They are a little less than the average of the Maintenance or Traffic Department. The office men have the lowest life expectation of all. On page sof your statement you say that the pensions now payable amount to £431,131. Does that include the £40,000 refunds or is it just a pension figure ?—That has no connection with refunds. That figure will have a tendency to remain at that amount for many years ? —Yes, but it all depends on the policy adopted regarding the thirty-five-year retirements. If they were to cease there would be little or no difference in that amount for the next five years. We have, in one or two years, put upon the funds all the retirements of five years. That £431,130 is likely to be the permanent liability even though there are a few coming on ?— Subject to the qualifications I have made, it is likely to remain at that for the next five years, if the policy of retiring men at thirty-five years' service is discontinued. Indeed, it should have a tendency to fall. Then you would have to get a larger subsidy from the State than the £170,000 to make the fund financially sound ? —Yes, so that the actual outgo will not exceed the income. At the present time the position is that we have to trench on the accumulated funds. Where did you get the £34,393 from ? How did you raise it ? —By realizing on the investments of the accumulated funds. Did you lose any money in the realization ?—Up to the present I have taken up the superannuation investments as investments of the Working Railways Account. We are transferring them at par. Have you money in the Railways Account to invest ?—We have our Reserves Fund for renewal of assets. That is always accumulating. Are you the Accountant for the fund ? —I am not called the Accountant, but as Chief Accountant of the Department it is my duty to keep the accounts. Have you any idea what the deficit for the current year is likely to be ? —Yes, I have mentioned that in my statement. I estimate that by the end of the year the accumulated funds will be reduced to £1,320,000. The deficiency this yea.r will be about £135,000 — that is, the excess of outgo over income. It is purely an accounting statement, not an actuarial statement. I cannot discuss it on actuarial lines and, of course, our view is that it is not necessary to do so, because it is not an actuarial fund and never has been. The deficiency is guaranteed by the State, and as Accountant all lam concerned with is ascertaining the actual deficiency and advising what amount it is necessary to have paid in by the Government. You do not associate it with a life insurance or provident fund ? You state that it is a fund to which certain payments are made by the employees, and the State to enable that fund to pay the pensions to the employees has to supplement the amount paid in ? —That was the contract as made between the employees and the State. And the fund is doing the subsidizing and not the State in a legal sense ?■—ln the initial stages of the fund a great many men who retired had only contributed to the fund for a short period, and

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their pensions were taken entirely from the current contributions of contributors still in the fund, and that, of course, from an actuarial point of view, is unsound. No fund could stand up to that. How will you get your money this year ? —By realization of the securities of the accumulated fund. What are they ? —We are taking over Superannuation Fund investments as investments of the Working Railways Account. We are limited under our authority to Government securities. Were you in the Service in 1918 and 1919 ? —Yes. How did they get over the difficulty of the debit at that time: just increasing the subsidy ? There was a debit in those two years of £13,700? —In 1920 the subsidy was increased to £75,000 in order to overtake the £13,000 loss in the previous two years. At that time it would no doubt have been necessary to realize on a certain amount of investments to cover the deficiency. You contend that the way to get over the existing difficulty of shortages in the fund is to increase the subsidy ? —The alternative is to pay out of the accumulated funds, and that would be most unwise. You think the subsidy should be increased to keep the fund sound, but not actuarially sound ? — The Act provides certain things, and those things should be done. Hon. Sir Apirana Ngata.] Who advises Treasury what the amount of the subsidy should be to keep the fund right ? —The subsidies in the past have been fixed on the advice of the Government Actuary. For instance, the £170,000 which has been paid since 1926 was fixed in accordance with the Actuary's report on the fund as at 31st March, 1920.. The Actuary recommended double that amount ?—ln a later investigation in 1927 he recommended double that amount. £170,000 was fixed after the 1920 valuation. That was the amount which at that time was required to put the fund on an actuarial basis. For next year in estimating the amount that would be required to keep this fund sound on the present contribution basis, plus the State guarantee, when would the data be available to enable that advice to be given ?—lt will be possible for me to make an estimate, as I have to do with the annual estimates of the Railway expenditure and revenue. I can estimate it within a few thousand pounds, and make sufficient provision to meet the position. Have you any comments to make regarding the pound-for-pound provision as recommended by the National Expenditure Commission ? —The pound-for-pound subsidy is an actuarial subsidy. The Railways subsidy is governed by the deficiency or the excess of outgo over income. That is the amount which, in accordance with our present Act, will have to be estimated each year if the accumulated fund is to be kept intact. You are hopeful that the loading on the fund will be reduced as the result of the retrenchments of the thirty-five-year men? —Eventually I hope that the present load on the fund will be somewhat decreased—by deaths and widows and children going off the fund. If the thirty-five-year retirements cease, in the normal course of events there will be very little in the way of additions to the pensions, and the amount will remain at £431,000 for a period of years. In the meantime the income of the fund is suffering, because we have hardly taken a man on in the Railway Department during the last two years. There are no new contributors, but if the depression turns, as we all hope it will, we will be taking on additional men and additional contributions will come into the fund. One infers that you estimate that in the next year to keep the fund right the State has to increase its subsidy ?—-Yes.

Alexandeb Cruickshank, Retired Police Officer. (No. 11.) Mr. Cruickshank : I am a retired policeman, and I only wish to lay before you one or two matters in reference to that Department. I served for 42J years in the New Zealand Police Force, and five years in other Police Forces, making forty-eight years altogether, so that I am well acquainted with the Police Department. In 1899 the Police Provident Fund Act was passed. It was the first of any Government Departments, as far as I know, to have a pension scheme. We stood alone, and, in my opinion and the opinion of many others in the Police Force, we should have remained alone and not have been joined with the Public Service Superannuation Act of 1909. For this reason : that the training and occupation of the Police Department is absolutely different from any other Department of the Government Service. For instance, we cannot join the Police Force until we are twenty-one years of age. There is always a waiting-list, and I think the average age now is twentyfive years, so that we can only reach forty years' service at sixty-five years of age. Other Departments enrol cadets of fifteen and sixteen years of age, and they can retire after forty years' service, when they are practically in the prime of life. We, on account of our occupation, do many years of night and day duty every alternate fortnight, which seriously affects our digestive system. Many of our men suffer through that. We cannot expect the longer day of the average general public. You see a number of our men cannot get forty years' service in. There are not a great many at the head and holding high positions, and the rank and file do not draw big pensions, because most of them do not go beyond the rank of Inspector. A policeman when he is retired is, on account of his hard work and training, unfit for other employment, and the only place he can occupy is on the scrap-heap. In 1908 we were allowed to ballot as to whether we would join the Public Service Superannuation Fund or not. The Public Service Superannuation Fund was then being built. We voted strongly against joining that fund. Our vote was declared informal. How and by what means we never could ascertain, and we were promised that we would be given another opportunity of voting the next year, but the next year the Public Service Superannuation Bill was passed, and our accumulated £32,000 was put as the foundation-stone for the fund. We could see that as far as we were concerned we were at a great disadvantage, as I have pointed out. A pension, in our opinion, is this : that

6—l. 15.

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those who serve the public for a lifetime will not have to depend on charity after they have passed the years when they are able to work, and the pension should be sufficient to keep them, but not to such large amounts as we find some of the pensions are to-day in certain instances. . The Chairman.] You really are concerned about your own case. You are not speaking for the Police service ? We will be taking the Service later ?—I am speaking of the Service so far as it concerns the Police having a separate fund when they started, and if the superannuation scheme is reorganized, the Police, in my opinion and the opinion of other retired men, should have a separate fund. So far as lam concerned, I will put my cards on the table ; I have nothing to hide. According to the new Act all those retired after the 31st March, 1921, will be subject to the Act. 1 just get caught in the noose. lam about fourteen days within that provision, so that I will be affected by it. As far as the Department is concerned we will no doubt be taking evidence from them. I hey will put their case forward. It is now a question of anything you want to say to the Committee respecting yourself. —As I said before, I just scoop into the net by about fourteen days m regard to the provision regarding those retired after the 31st March, 1931. . Mr. Dickie.'] You are objecting to the 1921 provision in the Act Yes. A man who retired m the same position and on the same amount as I did, if he retired on the 31st March and I retired on the 30th April, there would be a difference. The Chairman.] And if the period was limited to five or three years, you would not be concerned . No. lam not putting that strongly. lam prepared to take my share in the sacrifices that have to be made, just like every one else, because I realize things are bad, but I do consider that there would be a tremendous unfairness if that 1921 provision went through. I would have to go right back tor ten years, and my pension is not very large.

Frank Winfird Millar, General Secretary, New Zealand Public Service Association (Incorporated). (No. 12.) Mr Millar: Mr. Chairman and Gentlemen, even though I have been asked to present the position on behalf of the Public Service Association solely, at the same time we feel that_ unless we cover the whole ground, just as the Bill does, of the three superannuation schemes, bringing all the varying points together under the one head, that you cannot get a full grip of the superannuation position as it stands at the moment. If you will turn to the synopsis of our statement jou will see that we have divided it into certain groups —first, " The Principles of Superannuation, from that to the " History of the Public Service Superannuation Funds," then we follow on with Burdens placed on the Fund by the State," " The Financial Aspect of Added Burdens," " Payment of State Subsidies—Financial Neglect," "Present Financial Position of Funds," and conclude with the " Association's Views on the Bill." i , . No statement of the position in regard to the Superannuation Funds and, m particular, the development of the present financial crisis in connection therewith, can be clear without a shoit reference to the history of Public Service Superannuation Funds in general in the Dominion. Some of the ground has been traversed in evidence already produced to the Select Committee, but, nevertheless, it is essential at the outset to record some of the principles underlying superannuation benefits, and an outline of the birth and development of the Public Service schemes m particular. _ As a preliminary, may we acknowledge that the Public Service appreciates the fact that the National Expenditure Commission so starkly presented to the Government and the general public some indication of the financial position to which the Superannuation Funds have been permitted to drift. When it came to a question of suggesting remedies, however, with all due respect to the Commission, the Public Service has been placed at a considerable disadvantage, because it had no opportunity to present to the Commission the voluminous evidence which in our view would have made quite clear that no share of the responsibility rested upon the shoulders either of the public servant himself, 01 the Public Service organizations, and, most important of all, that any proposal to divide the burden was not only unsound and unfair, but also involved a definite breach of faith with the contributors to the Public Service Superannuation Fund. This disadvantage is intensified when the Government makes the Commission's suggested remedies in this Bill the subject of proposed legislation. Nevertheless, we acknowledge the fact that the present Government, by its very introduction of this Bill, is, at possibly the most awkward moment in the Dominion's economic history, attempting to a greater extent than has been done by past Administrations to face the financial position, in so far as its suggested undertaking to pay a pound-for-pound subsidy m the future is concerned. The proposals in the Bill, however, to expect the public servants to meet the mam share of the existing liabilities by an arbitrary alteration of our contract relating to conditions of retirement is a course which no public servant could do other than oppose to the uttermost extent. The Princi-ples of Superannuation for Government Employees. Undoubtedly there is an extraordinary lack of knowledge on this subject, extending even to contributors and participants —i.e., annuitants themselves. The United Kingdom, with over a century's experience of superannuation in all its aspects, is the source of the most reliable information, and from British parliamentary reports and technical papers, as well as from such well-known authorities as Henry W. Manly, Archibald Hewat, Burn and Svmmons, Lewis Meriam, and F. L. Hoffman, the following outline is compiled.— [In the last few weeks in particular the Association has made an intensive study of the whole superannuation position as it is recognized by world authorities. The extracts that we come to now have a climax, as you will see later on, and I think they will clarify the position, even though we must admit that possibly some of the English of our actuarial friends is as involved as some of their mathematical calculations.]

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The Parties to the Scheme : — There are three parties to any State retirement scheme—the Government, the State servants, and the general public—and in the conduct of any such scheme their respective desires are — (а) The Government, as an employer, seeks only the improvement of its working force. (б) The employees seek a sound, adequate, and equitable financial institution, through which at minimum cost they may be protected in the event of the happening of certain of the principal dangers of life. (c) The general public seeks that each of these two objects be realized, so that it may be protected on the one hand from those losses resulting from inefficiency in Government service that are inevitable in the absence of such a system, and on the other hand from the expense of supporting through public or private charity those who are forced to leave the Service because of inefficiency due to old age, accident, or disease. These three groups are interrelated, as the individuals forming the employing Government and the employed service are drawn from the general public, and the State servants form a not inconsiderable part of that general public. Basis of Funds :— They may be either contributory or non-contributory, the first group requiring a regular cash payment by the employees, and the second basing the whole apparent burden upon the Government, the employees realizing, however, that this is taken into account when assessing their salary scales. The scheme most generally favoured is one based upon salaries—that is, the employee contributing a percentage of his salary, and the Government paying an equal percentage of its pay roll. The half-and-half division with the employee has the merit of fairness and simplicity. Benefits in event of service accidents or disease should be borne entirely by the Government, whereas optional benefits should be paid for wholly by the employee. That is an important point. A fundamental requirement is that any fund should be floated only upon the recommendations and conditions laid down by an actuary. The establishment of a retirement system seems to be the only remedy for that situation which naturally exists in the Public Service in its absence, because it alone preserves permanency of tenure, and recognizes that administrators in governmental offices have no inducement to deal harshly with the disabled and the superannuated, but, on the other hand, have natural inclinations to keep them on the active roll as long as possible unless other provision is made for them. If a retirement system is adopted which must operate in all its details in the full light of publicity, so that the danger of organized effort to secure improper retirement allowances is largely eliminated, it may be an instrument of great social value to the public. Not only will it improve the character of the Public Service, but it will be a valuable agency of social insurance, providing systematically for the care of the old and disabled eliminated from the Public Service, and possibly to a limited extent for the care of the dependants of deceased public employees. The actuarial conditions regarding rates of contribution, age, or length of service for retirement, disability allowances, &c., having been agreed to, are usually crystallized in the form of a trust deed, or, in the case of Government funds, in a special statute to the terms of which the contracting parties are thenceforth bound. Costs of Benefits :— So far as the cost of benefits is concerned, as between contributory and non-contributory systems, the question is practically of no importance from the point of view of the actuary. The matter of who pays for the benefits is of consequence only in so far as payment by the Government might cause some employees, in the absence of compulsion, 'to take advantage of the system which they would not take if the money to pay for it had to come out of their own pockets or the pockets of their fellow-emplovees, and the cost should be divided on the selected basis—i.e., half and half. Essentials of a Fund—on the Employees' Side : — Membership for future entrants must be compulsory, and participation in the benefits should operate only upon fulfilment of the conditions operating at the time the individual joined the fund. As a class the employees are inclined to accept tacitly that an adequate and equitable retirement system is for their best interest as a body, when balanced against the fact that such a system, of necessity, means that the Government is able to pay rates of salaries lower than would be the case in the absence of a fund. Government employees are not members of a specially privileged class. They are no more entitled to public charity and benevolence than men who have grown grey in serving the public in some private capacity. Public contributions to a retirement system are to be justified not on any ground of benevolence or phinanthropy, but on the ground that they are payments to improve the character of the Service. The rights arising under the system are part of the compensation paid in that form, because experience has demonstrated that such a method of payment facilitates maintaining the Service in a state of efficiency. The employees will find that an equitable system established with due respect to their rights, furnishes them at cost protection which they could secure only with great difficulty, if at all, through private arrangements. It will also tend to improve the working conditions in the Government by opening the avenues of advancement, Public servants will not hang on to their positions to the last moment.

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Essentials of a Fund —on the Government's Side In so far as the Government consults its own interests alone, it establishes a retirement system purely as a business expedient to get better service. When the Government establishes a retirement system, two of its principal objects are to induce men to enter its service who might not otherwise enter, and to induce men to remain who might otherwise resign to accept more attractive positions. The benefits under the system, "therefore, are part of the inducement —part of the consideration, or, in other words, part of the salary. Every reason for establishing a retirement system can be summarized under the single broad heading of the improvement of the Pubiic Service, and, in fact, that is the oniy reason why the Government should establish one in its own interests. The Government ought to make the following indirect contributions : — The expenses of management; Such sums as may be necessary to bring the earnings of the fund up to the rate of interest used in making the computations to fix contributions ; and The Government should guarantee the solvency of the system, making good such deficiencies as may arise from mistakes which it made in establishing the system or in carrying it out. The consideration which the Government offers for services is based on two principal parts — (1) Immediate wages ; (2) benefits under the retirement system. In the absence of a governmental guarantee, the damage sustained by the employee through an error in calculations may be irreparable. The doctrine of caveat emptor can scarcely be applied to employees purchasing retirement benefits by their services ; it cannot fairly be said to the employee connected with a bankrupt compulsory fund, " You knew the terms of the retirement law ; you should have known that the assets provided were insufficient to meet liabilities." The Actuarial Deficit on creating a System: — When a retirement system is created to pay benefits to present employees in respect to past services it obviously starts with a large deficit, because neither the Government nor the employees have been paying the premiums that would have been necessary to accumulate an actuarial reserve sufficient to meet the prospective retirement claims. Two possible courses may be mentioned as deserving attention in this regard :—(1) Paying off the deficit on the instalment plan ; or (2) the creation of a perpetuity. Under the first scheme, arrangements are made whereby each year the Government pavs either —(a) A fixed amount, which is used first to pay the interest on the debt and then to reduce the principal, or (b) a fixed amount to reduce the principal and the interest due on the unpaid balance. The payments should be so figured that the deficit will be wiped out in about sixty years. Under the perpetuity plan the deficit is never wiped out. The Government issues bonds for the amount, which are turned over to the Superannuation Fund. Under this system the Government always has to pay the interest, but is never called upon to pay the principal unless the retirement system is wound up. The State's Obligation:— This is the climax to these extracts. The Government is under just as great a moral obligation to see that the benefits promised are paid as it is to see that the salaries and wages promised are paid. The obligation is if anything greater. Failure to pay promised wages or salaries becomes apparent fairly soon, and the employee, though damaged, can remedy the situation promptly by seeking other employment; but failure to pay the promised retirement benefits may not occur until the employee has reached an advanced age, and then the damage is great and irreparable. Sometimes the whole current of a man's life may be influenced by the fact that his employment promised him a retiring-allowance in old age. Relying on that promise, 'he may make no other provision. He may not be able to. It is no consolation to him if the system breaks down to have it pointed out that he has no legal redress, as the liability of the Government was limited in terms of the scheme, and as his rights were only such as the legislation establishing the system specifically gave him. Legal limitations on the extent of the governmental liability to pay the promised benefits are, to say the least, highly improper. The Government establishes a system, and is under moral obligations to know that it is sound. The moral obligations of the Government are probably equally great, whether the scheme is noncontributory, or wholly or partially contributory. It cannot well break its own promise to pay certain benefits, even if the cost may be greater than it had expected, nor can it compel men to contribute money to purchase benefits and then send them empty away because the Legislature which passed the retirement law did not have proper technical advice and adopted a miscalculation. The credit of the Government should be pledged to make good its own calculations in retirement benefits. These principles have not been enunciated in our words —we repeat that they are the pronouncements of recognized world experts on superannuation, who, it may be added, are mainly in accord in viewing a retirement basis of forty years' service as sound and equitable. From that A B C of the superannuation question we turn to the history of the Public Service Superannuation Funds,

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History of the Public Service Superannuation Funds. There has been some statutory provision for the benefit of public servants on their retirement ever since responsible Government was established in New Zealand. Pension without Contribution :— From 1858 to 1871, a public servant who qualified by age or length of service was entitled to a pension, without contribution, not exceeding two-thirds of his average salary for the last three years prior to his retirement. The pension system was abolished in 1871, but, again most important, all existing rights were preserved. Compensation for Loss of Office : — The pension system was combined alternatively with compensation for loss of office, computed as one month's salary for each year of service, and it was not until 1886 that this system was abolished, but again all existing rights were preserved. Compulsory Savings Scheme : — Every officer appointed after 1886 was obliged to pay 5 per cent, of his salary to the Public Trustee, to accumulate with interest compounded until retirement, when the full amount was paid to the officer. Compulsory Insurance with Annuity : —• In 1893, the Civil Service Insurance Act provided for the issue of a liberal policy, combining ordinary whole-life insurance—and it was a liberal policy, too —with an annuity payable at sixty years of age. The First Superannuation Scheme —Railways : — Ten years later the Government Railways Superannuation Fund was established, and, despite the Government Actuary's advice, the scale of contributions was fixed at a certain rate —definitely, the scale was not on an actuarial basis, and was apparently not intended to be. There was, however, a State guarantee, of which the Committee has already ample knowledge. The Teachers' Superannuation Scheme: — The next fund, established in 1906, was for the benefit of school-teachers employed by Education Boards. The rates of contribution payable ranged from 5 per cent, to 10 per cent, of salary, according to age on joining. The benefits offered were practically the same as those already provided for Railway employees. The Public Service Scheme : — The Public Service Superannuation Act was passed in 1907, and came into operation on the Ist January, 1908. It provided for payments by contributors ranging from sto 10 per cent, of salary, according to age on joining. This Act increased the rate for future contributors to the Railway Fund to the equivalent of the rate paid by contributors to the other funds —that is, ranging from 5 to 10 per cent. —but again all existing rights of Railway servants were preserved. Inducement to join Funds :— The strongest inducement offered to public servants to join these three funds was, that all continuous service prior to the date of joining would be included in the computation of retiring allowances. In other words, the Government took the financial responsibility for past service : though it has not paid for it, but that is another story. Original Proposals and Advantages : — The Acts establishing the Teachers' and Public Service funds provided for an absolute right to an allowance after — (a) The completion of forty years of service, or at age of 65, irrespective of length of service for males ; (b) After thirty years of service, or on reaching 55 years of age for females ; (c) On reaching the age of 60 years for males, and 50 years for females, with the consent of the Minister (without other conditions). There was therefore a permissive retiring point in the original Act. These, and these alone, are the benefits for which the Actuary recommended the rates of contribution and the amount of the Government subsidy required, and his recommendations were embodied in the respective Acts, Public Service and Teachers. The Public Service Act also provided that the rights of any contributor entitled to benefits under any other scheme should be preserved, but public servants who did not come under any other scheme were informed that, if they did not join their respective funds, they would be compelled to pay 5 per cent, of their salary to the Public Trustee, for their ultimate benefit. They had to pay in some shape or form.

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These, then, are the original terms of these two superannuation contracts, reasonable in their provision for contributions from public servants themselves, fair in the financial undertakings to which the Government committed itself, and sound actuarially (according to expert advice at the time of framing), provided they were adhered to by each party to the contract. The main feature of these alterations was, as I have repeated on a number of occasions, that all rights were reserved when any alterations were made, and we cannot find any legislation in any part of the Empire which has ever deprived existing contributors or annuitants of what they were legally entitled to under an Act of the Legislature. Burdens placed on Funds by State. Conditions of Retirement relaxed :— We now refer to additional liabilities imposed upon the funds. In 1909, the conditions of retirement were relaxed by the Government without reference to the existing contributors, and without regard to their interests. To meet the circumstances of the Defence Department (in which retirement was compulsory at 55 years of age, irrespective of service) legislation was passed to enable all male contributors to any of the funds to retire on superannuation : (a) After thirty-five years of service ; or (b) After thirty years of service combined with 55 years of age, with the consent of the Minister, who had power to make such conditions as he thought fit. Thus were created permissive retiring-points never contemplated in the original schemes. No restrictive conditions have ever been imposed under this section, so far as the Public Service and Railways Superannuation Funds are concerned, neither has the State recompensed the funds by the necessary payment from the Consolidated Fund to meet this heavy extra burden. Funds used for Retrenchment Purposes without Stale Recompense from Consolidated Fund : — In 1921 (Finance Act, No. 72, section 28) the above qualification was reduced by three years to meet special cases. This operated from Ist July, 1921, to 31st December, 1922, and was deliberately designed to facilitate retrenchment, but, again, no provision was made for State recompense to the funds. In 1930 statutory provision was made to permit the granting of allowances to certain retrenched members of the Defence Department (who otherwise were unable to qualify) within five years of a permissive retiring-point, for an allowance under the relaxed conditions of retirement mentioned above. That means that a man with thirty years' service or fifty-five years of age irrespective of service could go out or a man with twenty-five years' service and fifty years of age could go out. It may be mentioned in connection with the 1930 provision about the Defence Department that their pensions were loaded actuarially up to a point. There was still left an added liability on the fund. Conditions relaxed in Individual Cases:— In addition, successive administrations have provided special benefits by legislation, mainly to individuals. We quote : — 1919 Appropriation Act, section 44 : Private Secretaries to Ministers given past allowances as salary, but no interest charged on arrears of contributions. 1921 Finance Act, section 30 : Miss J. G. Ralston (Teachers' Fund) was given broken service though previously disqualified. 1923 Finance Act, section 20 : Provisions for retiring-allowances for Public Service Commissioner and Assistant Public Service Commissioner on relinquishing their offices, though not disqualified by age or length of service. 1924 Finance Act, section 34 : N. D. Hood was allowed to pay arrears of contributions without interest. 1924 Finance Act, section 35 : George T. Murray was allowed to count salary at a stated rate, but no contributions provided for. 1924 Finance Act, section 38 : Miss Catherine Gray (Teachers' Fund) was granted a pension as medically unfit, though she had already resigned three years previously. 1925 Finance Act, section 34: J. R. Samson was allowed a special pension, although not qualified by age or length of service. 1926 Finance Act, section 37 : Teachers' Fund—an officer reduced in salary by age or infirmity to have his pension assessed on salary for three highest years. 1927 Finance Act, section 20 : J. H. Moir (Teachers' Fund) interest on arrears of contributions remitted. 1929 Finance Act, section 37 : Officers of Legislative Department allowed to count breaks between sessions as service, but no contributions provided for. 1930 Finance Act (No. 2), section 40 : F. N. Johnson granted break of service as leave without pay. 1930 Finance Act, section 41 : M. B. Esson allowed to count special service. 1931 Finance Act (No. 4), section 43 : H. H. Sterling (Railways Fund) given special concession as to retirement " as of right." Whilst not questioning the propriety of these special enactments, our point is that they should have been accompanied by a special contribution from the State to meet the undue liability placed upon the funds.

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Additional Burdens created by the State solely Not one of the additional burdens that we have enumerated were at the instance of the Public Service Organizations —the emanated solely from the State. The Superannuation Funds have also been deprived of savings provided in the original statute (see section 33 of the Consolidated Act of 1927) which laid down that the remuneration of any retired officer on pension who may be re-employed by the Government must not exceed his annual rate of salary at the time he retired. If it did, his superannuation allowance should abate accordingly. During the period 1915-1931, no less than forty individual officers have been granted exemption by legislation, while in 1919 and 1920, a general exemption was granted for such officers whose remuneration did not exceed a fixed rate. I have here a list of these officers, if you desire to see them later. They are available. Premature Retirements on Actuarial Basis It was not until last year that the first practical effort of the Government to effect retrenchment without added liability to the funds was made. At that stage the Finance Act 1931 (No. 1) provided that within five years of a permissive retiring-point, officers could be retrenched on a retiring-allowance computed actuarially. Yesterday when Mr. Ingram was giving evidence on behalf of the Railway Tradesmen's Association he was asked a question by Mr. Savage. He said that this is an attack on the Superannuation Funds ; that certain benefits had been taken away by this provision. That is not so. This provision means that a retrenched person who would not be entitled to any allowance whatever could get one an actuarially computed one —or a refund of his contributions. It was an added benefit up to a point, but naturally any of the officers who were affected had possibly some quarrel with their Department because the Department did not make up the difference between the actuarial and the normal pension, but that is another story. The Financial Aspect of Added Burdens. In the Public Service Fund alone, the number of contributors who retired before attaining the full qualification of age or length of service, and who are still receiving retiring-allowances, is over seven hundred. These lam stressing are retirements at the permissive retiring-points created in the 1909 Act alone, not the original retiring-point of sixty years of age. Approximately one-third of the total number of annuitants, whilst the annual amount required to pay these annuities is roundly £158,000, out of a total annuities bill—l am speaking of the Public Service Fund only—(widows' and children's allowances excluded) of £430,000. The number of similar retirements from the Railways Department is approximately 460, and the amount of such annuities is £108,000 out of a total amount of £346,000. Thus, permissive retirements represent approximately 1,160, or 22 per cent, of the total number of annuitants (5,821) of the three Service Superannuation Funds, and they absorb annual retiringallowances of £258,000, which represents 23J per cent, of the total retiring-allowances (£1,099,891). Sir Afirana Ngata.] Have you figures for the teachers ? —The teachers for many years have had their pensions on permissive retiring-points (1909 Act) loaded, not actuarially but up to about 26 per cent. There was still a slight additional liability not intended there too. Vast Majority of Retirements Compulsory : — When reviewing these startling figures, it has to be kept well to the forefront that officers who voluntarily retire at these permissive points are few and far between. In fact, the proportion of forced retirements by the State has been conservatively assessed at 90 per cent. Ninety per cent, of Civil servants wish they had never seen them. Payment of State Subsidies —Financial Neglect. Shortages in Payment of Subsidies : — The State's failure to provide subsidies recommended by the Actuary from time to time has, in the case of the Public Service Fund, resulted in a shortage of £1,776,357, which amount includes £475,357 accrued interest to 31st March, 1931. In the case of the Teachers' Superannuation Fund, the shortage is £1,023,136, including accrued interest to the extent of £287,885. The Railways Superannuation Fund, as has been explained to the Committee, is backed by a State guarantee, with no provision for paying into the fund such sums as may be recommended by the Actuary. However, for the purpose of assessing the shortages in all funds to date, we refer to the fact that in 1929 the Actuary, after investigation of the Railways Fund, recommended that an annual amount of £340,000 should be paid into that fund from the year .1927 to meet the deficiency. Actually, payments have been made from that date at the rate of £170,000 per annum, so that the shortage in the Railways Fund to the 31st March, 1932, may be assumed to be in the vicinity of £850,000—1 have not made any provision for interest there, because I think in round figures that is not far wrong —subject to confirmation by the Actuary. Total Present Shortage In round figures, therefore, the shortage in the three funds is £3,650,000.

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Effect of State Guarantee on Shortage in Railways Fund : — The State guarantee in the case of the Railways Fund means that no question of breach of contract arises unless the State (a) removes the guarantee ; (b) alters the original conditions of the contract; or (e) fails to meet the benefits provided in the contract. So at the moment no one is hurt unless the Bill goes through. Breach of Contract by State : — In the case of the Public Service and Teachers' Funds, however, a definite breach of the legislative contract has already occurred by the State's failure to pay from time to time the subsidies recommended by the Actuary. We quote the terms of the 1907 Act: — " (1) Forthwith after the coming into operation of this Act, and in the month of January in every year thereafter, the Minister of Finance shall pay into the Fund, and out of the Consolidated Fund, without further appropriation than this Act, the sum of twenty thousand pounds, together with such further amount (if any) as is deemed by the Governor in Council, in accordance with the aforesaid report of the Actuary, to be required to meet the charges on the Fund during the ensuing year." That provision may not, in so many words, say " State guaranteed," but for all practical purposes it gives a State undertaking that the State will pay into the funds such moneys as may be necessary to keep the funds actuarially sound. Incidentally, it may be stated that the Government Actuary, in his last report, refers to the Public Service Fund as " State guaranteed." State's violation of Trust:— But the breach of faith by the State in its failure to maintain this contract (payment of subsidies as recommended by the Actuary) has resulted in its committing a graver breach. The State has made up this deficiency in the funds by misusing capital moneys belonging to the present contributors. It has applied these capital moneys to pay the liability for current retiring-allowances instead of preserving them to meet the future retiring-allowances of those present contributors. Thus the State, in its capacity as trustee for the contributors, has definitely violated its trust and has been doing so for ten years and longer. State suggests legislating itself out of Liability : — If the proposals in this Bill are proceeded with, then the present administration will use the powers of the State to legislate itself out of a liability for which a private trustee would be open to a penalty under the laws of the self-same State, as well as out of its existing contracts as to ultimate benefits of contributors. If it is predicated that the State may legislate itself not only out of its liability as a trustee, but also out of its present contracts one may well ask, " What reliance is to be placed on the proposed provisions for future payments into the funds ?" These may be hard words, but they do no more than express the actual truth. Intentions of Past Administrations :— We cannot permit those hard words to go forth, however, without expressing the belief that no past administration has ever entertained the idea that State laxity in meeting these liabilities would some day lead to threatened repudiation. Nor, as responsible public servants, can we believe that the present Administration—which has been sufficiently concerned to create the means of our addressing this Select Committee to-day could, after hearing the whole history of the superannuation position, make that threat of repudiation a reality. At this point we would like to quote from Stone and Cox's standard authorities on accident insurance in their 1927-28 issue. Dealing with contingency risks, they refer to certain of the Indian Civil Service who were taken over by the Home Government from local control, and to insurance companies being asked to quote premiums to cover the risk of the Home f4ovp.mmp.nt. abrogating their original superannuation contracts. In assessing this risk, the guiding principle was postulated thus : "Very little consideration is required to show that the possibility of a claim is extremely remote. In the first place, the refusal of any Government to carry out the obligations of its predecessors in such a connection is unthinkable." For over a decade the New Zealand Public Service Association, which incidentally has steadfastly declined to make any proposals which would impose an increased burden on the Superannuation Funds, has raised with respective administrations the question of the State paying the debts due by it to the funds, but their invariable attitude may for practical purposes be expressed in the words of Sir Francis Bell (Legislative Council, 11th September, 1930) in opposing a motion that a copy of the order of reference given to the Committee set up to inquire into and report to the Government on the position of the Superannuation Funds, be laid on the table of the Council. Sir Francis referred to the fact that the Civil servants had a contract with the Government, that there was no sense in paying in large amounts to stabilize the funds, that, besides the State's guarantee, there was a contract with public servants in that in consideration of their contributions they should receive a pension calculated by a certain method and, finally, to quote his exact words, " And who doubts that the pension will be paid, or who supposes that the actuarial insufficiency of these funds is going to affect the opportunity of the pensioners to receive their full pensions ?" and that was next door to the end of the debate.

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It should be recorded, too, that during the first 1932 session of Parliament the Hon. W. Downie Stewart, Minister of Finance, in a conversation with the General Secretary of the Association, myself, stated that he could not see the use of locking up millions in Superannuation Funds—that the moneys could be paid as they were actually required. Present Financial Position of Funds. We have given the position in regard to the actuarial deficiency in connection with the funds. We now turn to the actual finances of the funds, apart from the actuarial aspect. We give the following statistical summary for all three funds combined. We have tried to limit our figures as much as possible and to reduce them to simple terms. I think they are. fairly clear. Total number of contributors and amount of contributions — Number of contributors .. .. •• •• 40,308 Total annual contributions .. .. ■■ £520,236 Present Government subsidy .. • ■ • • • ■ £299,000 Total number of annuitants and amount of retiring-allowances— Number of annuitants .. .. • • • • • • 5 ,821 Total outgo for retiring-allowances (including medically unfit cases, but excluding widows' and children's allowances) .. .. £1,099,891 Total income and outgo for year ending 31st March, 1932— Total income (members' contributions and interest thereon, and Government subsidies) .. .. •• •• •• £1,106,864 Total outgo (including widows' and children's allowances, refunds of contributions, and administrative expenses) .. .. £1,184,310 Total amounts contributed since inception of funds — Total amount paid to funds by contributors .. .. £8,797,667 Total amount provided by State .. .. .. •• £4,872,107* Ido not know whether I need explain that. I have referred to it before. It simply means that the State bv getting certain people who were entitled to compensation to join the Superannuation Fund did not have to pay that amount out. The fund has carried it instead, and it should have been refunded to the fund though there is no statutory authority to compel them to do so in this particular case. Total accumulated funds— Total accumulated funds at 31st March, 1932 . . .. £5,560,373 Without in any way underestimating the seriousness of the ultimate effect of the failure of the Government to pay subsidies to the funds to the extent recommended b.y the Government Actuary, we contend that the figures given above indicate clearly the fallacy of statements made in the public press and elsewhere, that continuance of superannuation benefits on the existing basis would almost immediately cripple the Superannuation Funds. Comments on Income and Outgo : — It will be seen that the total outgo exceeds the total income by £77,500 approximately, but, until the year in review, the total annual income has invariably exceeded the annual outgo. This of course refers to all funds combined. This has obtained in spite of— (a) Loss of interest (£164,250) by reason of the State's failure to pay into the funds the sum of £3,650,000 as shown under that section of our statement relating to " Payment of State Subsidies—Financial neglect." (Note.—The interest has been assessed at 4J per cent., not the 5 per cent, suggested in the Bill, per cent, being the percentage used by the Actuary in his calculations.) (b) The undue burden of permissive retirements (at thirty-five years' service or fifty-five years of age with thirty years' service) primarily for retrenchment purposes, which has not only resulted in loss of income by way of contributions, but, as we have already shown, has swollen the outgo to the extent of £258,000 per annum. Non-recurring reduction in Income There is also a special reduction in the total income for the year ending 31st March, 1932, which is practically non-recurring. This is a result and aftermath of the wage-reduction legislation in 1931, enabling contributors who elected to pay on their reduced salaries to be immediately credited with their excess contributions for superannuation purposes on their higher salaries —that is, contributors made no further payments into the funds until they had exhausted this credit. The net result of this legislation was that current income for 1932 from each of the three funds suffered approximately to this extent: — £ Railways Fund .. •• •• •• 40,034 Public Service Fund .. •• •• •• 57,388 Teachers' Fund .. •• •• •• •• •• •• 21,000 £118,422

* Note.—This amount should be offset by £700,000, representing State liability for compensation rights transferred to the Public Service Superannuation Fund.

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Under normal conditions, therefore, with the benefit of these contributions alone, the total income for the year ended 31st March, 1932, would have exceeded the outgo by approximately £41,000. Effect on Outgo of Retrenchment Retirements on Actuarial Basis:— One other point worthy of comment is that permature retrenchment retirements on an actuarial basis under the provisions of a Finance Act of 1931, though not placing any additional financial burden on the funds in the long-run, have imposed abnormal additions to the present outgo. The money to pay these pensions has had to be provided to-day instead of in the normal course, probably ten years later. The amount involved in such retirements for the year ending 31st March, 1932, is in the vicinity of £20,000 per annum, of which 80 per cent, is borne by the Railways Fund. Accumulated Funds : — We can do no more than stress the fact that there is an amount of £5,560,373 still in reserve to meet any excess of outgo over income. Ratio of State Subsidies to Contributions:— Deducting the £700,000 (State liability for accrued compensation) the total State subsidies paid since the inception of the Superannuation Funds is £4,172,107, as against £8,797,667 paid by contributors. This is equivalent to a subsidy of 9s. 6d. to the £1. Ignoring the fact that we estimate that nearly £1,000,000 of the State's total deficiency (£3,650,000) in payment of subsidies is represented by accrued interest, and assuming that the full deficiency were paid by the State, the sum of this deficiency and what has actually been paid would, even then, be equivalent-to a subsidy of less than £1 for £I—in fact, 17s. 9d. to the £1. Deducting the £1,000,000 represented by interest, which would not have accrued if the money had been paid when it fell due, the combined subsidy (paid and unpaid) is 15s. 6d. to the £1, and this is the real indication of the State assistance required by the funds to date. Thus, the funds have borne all the burdens and stresses we have featured in this statement, and the heavy load of past service prior to the creation of the funds, for which no contributions were received, and has still required considerably less than a pound-for-pound subsidy to make them actuarially sound to the present time. We summarize:— £ £ Subsidies already paid by State .. .. .. 4,872,107 Less accrued liability for compensation .. .. 700,000 — 4,172,107 Subsidies due by State .. .. .. .. 3,650,000 Less estimate of accrued interest if payment had been made on due date .. .. .. 1,000,000 2,650,000 Total State Subsidies required from inception of funds .. £6,822,107 Total of contributions from members of funds .. .. £8,797,667 Ratio of State subsidies to contributions : 15s. 6d. to the £1. What is a Reasonable Subsidy ?— No reference to the rate of State subsidies would be complete without mentioning the opinion expressed in the National Expenditure Commission's report, that it is not unreasonable that a subsidy at the rate of £1 for £1 on member's contributions should be paid, and that there are many forms of public expenditure which should not take precedence over what is after all the real liability of the State to the funds. Position of National Provident Fund Superannuation Schemes: — Again, many of the superannuation schemes under the National Provident Fund are subsidized by the employers to the extent of £1 for £1 (the employers paying one-half of the employees' contributions) and on the top of that the National Provident Fund is subsidized by the State to the extent of 20 per cent. (25 per cent, to the year 1931). That means in those cases, and they are in the majority, that the employee only pays one-third, the other two-thirds being made up by the employer and the State combined. Private Provident or Superannuation Schemes. j§§ In New Zealand there are thirty or forty provident or superannuation schemes in existence in private business (including banks, insurance and mercantile firms, shipping companies, and local authorities) and it is almost a universal practice for these schemes to be subsidized at least to the extent of £1 for £1. I will hand in a complete list. Incidentally, the Commissioner of Taxes has, since 1923, legal power to allow a deduction from the taxable income of any employer of any amount set aside or paid by such employer to a fund to provide individual personal benefits, pensions, or retiring-allowances, to his employees—provided the rights of the employees to receive the benefits, pensions, or retiring-allowances, have been fully secured. Thus, the State, which suggests in this Bill the tampering with the contracts of its own employees, provides a safeguard for the employees of private firms.

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Wellington Barbour Board Superannuation Fund : — An ideal superannuation scheme for purposes of comparison is that of the Wellington Harbour Board, established in 1913. It has exactly the same basis as the original Public Service Superannuation scheme in regard to rates of contributions and retirement benefits. The Board subsidizes the fund to the extent of 65 per cent, of employees' contributions, and, in addition, on the retirement of an employee, pays that portion of his retiring-allowance for the period of service prior to 1913 (which was not paid for by the contributor) directly out of the Board's own funds. In other words, the Board meets its liability for back service, presented to the contributor at the creation of the scheme as it falls due, which in our fund has not been done. That fund is definitely actuarially sound. I think that the man who pronounces it such is the same man who delivers judgment on the Public Service schemes. Association's Views of the Bill. Objections to Proposed Legislation :— We do not propose to traverse in detail the various clauses in the Bill, because we urge that the Bill be not proceeded with. The complete review we have made herein, makes many of our objections abundantly clear. We summarize thus :— (1) That its provisions relating to the alterations in the conditions of retirement involve a breach of contract. (2) That it provides for the Government to legislate itself out of present legitimate liabilities and to modify reasonable prospective ones. (3) That its provisions are not necessary in view of —• (а) Existing statutory powers of the Minister in connection with permissive retirements (i.e., at thirty-five years' service ; or at fifty-five years of age with thirty years' service). (б) Existing legislation providing both for the payment of present liabilities and future subsidies. We have covered the points comprehensively under the various sections of our statement, but some further comments are essential. No Alteration should be made in Original Conditions of Retirement: — Apart from the question of breach of contract (if the conditions were modified), we contend that the original retiring-points (retirement on attaining 40 years' service, or at 65 years ; also the right to retire at 60 years with the consent of the Minister, &c. —refers to the ladies) are fair and equitable to all parties. They are regarded as such by leading superannuation authorities, and we specificially refer to Bernard Robertson and H. Samuels in their work on " Pension and Superannuation Funds." The retention of this particular permissive retiring-point (60 years, with the consent of the Minister) is ail essential for the wellbeing and efficiency of the Service, and many instances of the undesirability and unfairness of retaining certain employees beyond this age could be cited. I may be asked a question on that, therefore Ido not propose to make any comments at this moment. If I am not questioned on it I will make a statement later. Suggested imposition of Conditions in Cases of Permissive Retirement (1909 Amending Act) We have made clear that a very serious drain (£258,000 per annum) on the financial resources of the funds has been occasioned by the permissive retiring-points (fifty-five years of age with thirty years' service, also thirty-five years' service) provided in the amending Superannuation Act of 1909. We urge that the existing powers of the Minister in charge of a Department to impose conditions which would relieve the funds in future cases of retirement should operate forthwith, some provision bein» made (as suggested by the Actuary in his last report) to obviate possible hardship in the case of those compulsorily retired, especially if such retirements are the result of a general retrenchment policy. This could be attained by the employing Department paying any additional liability created by such retrenchments. No alteration whatever in the existing law is required to give this great relief to the funds—it is merely a matter of arrangement with the Government, and, in fact, conditions have been imposed in the case of the Teachers' Superannuation Fund for some years past. Extension of Powers of Superannuation Boards It is unfortunate that neither the Public Service nor Teachers' Superannuation Boards have any powers in the matter of imposing conditions in the case of these 1909 permissive retirements. It is in the hands of the Minister, but in the case of the Railways Department it is the Board itself that is the culprit, because full powers are vested in the Railway Board in this very direction, but not under the Teachers' and Public Service. It would be highly desirable to have the powers at present vested in a Minister in the hands of the Boards themselves. It might be possible for the Government to arrange to secure the recommendations of the respective Boards in the matter of making conditions. Provisions for Payment of the Present State Debt to the Funds : — We submit that the only right and reasonable step for the existing Administration to take is immediately to pay its present debt (£3,650,000) to the funds by the issue of inscribed stock to that extent, to be allocated to each fund in proportion to the deficiency therein. 1 mentioned earlier that

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there was no liability on the part of the State to pay its present debt assessed by the Government Actuary to that fund at all, but if the Railways Department still carried on on the old order and paid in sufficient money to overtake outgo or to keep the two balanced, then the Railways Department cannot complain, but in our two funds, Teachers' and Public Service, the actual shortage is £2,799,493. This would provide the funds with an assured annual income of £164,250 (calculated at 4§ per cent.). Incontrovertably, such a course, we contend, is the only one that can be followed with honour to the State, and its adoption would mean that the State would have met its financial liabilities to the funds to date. In practice, this transaction would involve book entries only as between the Government and the respective funds, the State's cash liability being confined to meeting the annual interest (£164,250) on the stock issue. That would not be wholly a burden on the Consolidated Fund, because at the present moment 40 per cent, of the subsidy is being paid out of the funds of trading Departments. They naturally would have to bear their share. Provision for Payment of Future Subsidies : — We submit further, that the payment of the present debt in the manner suggested above, together with future regular payment of an adequate subsidy, either— (a) In accordance with the Actuary's recommendations as to the sums required from time to time as provided in the original Acts ; or (ib) A fiat annual subsidy (possibly £1 for £1) as may be determined by the Actuary as necessary to meet the future liability over a period of, say, fifty years, — will result in the respective funds, in the years to come, gradually becoming financially stabilized, provided the abnormal burdens are lifted as we suggest. In connection with the suggested pound-for-pound subsidy, we stress that superannuation authorities almost universally advocate a subsidy on that basis, that private businesses in New Zealand follow this course, that the National Expenditure Commission makes the same suggestion, and that the present Administration itself proposes this in the Bill under discussion. Again we repeat that neither of our proposals regarding payment of subsidies requires any amendment of the existing law. We desire to reiterate that the funds have, during their periods of existence, required State aid (paid or unpaid) to the extent of 15s. 6d. to the £1, and that this has been sufficient to carry the extraordinary loads we have outlined; also that the superannuation scheme of the Wellington Harbour Board (an exact replica of our original scheme) has succeeded in retaining actuarial soundness on a 65 per cent, contribution by the Board, plus direct responsibility for back service. In conclusion, we have faithfully presented the Public Service views, and, in so doing, have in all sincerity revealed the full position in regard to State superannuation as we know it, and the issues involved. We believe that our proposals are in the best interests not only of the Public Service, but of the Government itself, and that any departure from the traditional honour which binds the State to its pledges would have far-reaching effects, which we will not attempt to amplify. The Chairman : You have heard the Statement read by Mr. Millar. We will now take any questions. Mr. Dickie : You realize that in other Government superannuation schemes the retiring-age is 65 years as against 60 years here ? I question that. It seems to me to be a question that wants a little elaboration. I think the Government Actuary, if he gives evidence before the Committee, will show you that you have to go on the law of averages in things of this kind. In our Old-age Pension Act, 65 years is the age where apparently the average individual is expected not to be able to work any longer, otherwise why pay him the old-age pension. Sixty, I suggest, is the age when a man, after giving his lifetime to a Government or any other service can expect to get some little enjoyment out of life ; to have earned it, and that principle seems to be followed in almost all legislation in New Zealand on the subject. If you refer to the National Provident scheme —the scheme for the man on the street —you will find that every benefit under it is given at 60 years of age. The references by experts —and we have quite a number of names quoted in our statement —show that they too are in favour mainly of the 60-year basis. The Local Authorities Superannuation Act, 1908, definitely lays down that same provision—optional retirement at 60 —and at 60 years of age, if a man has been his lifetime with his employer, in nearly every case the man has served forty years' service. Then under the National Provident Amendment Act, 1914, which is the scheme under which many private employers in the Dominion cover their employees, the definite age is 60 years. Why it is so important in our Service that the 60-year basis should be included is also on the grounds of efficiency and the type of work. You take a Physical Instructor in the Education Department. Most of them do not join until they are in their late twenties. Can you imagine them going around the schools displaying physical jerks after 60 years of age. Are they fit to do it ? You turn to the Mental Hospitals Service. The average Mental Hospitals attendant, after 60 years of age, is not of full use in the Service, and the same thing applies to the women who are getting on in the middle fifties. On the grounds of efficiency they should not be there. It is the whole essence of a superannuation scheme, as I have shown in the extracts from the experts. The same thing applies in the Prisons Service. Both in the Mental Hospitals and Prisons services if this provision went through making the age 65 years, you would have, in a few years, possibly 70 per cent, of the Prisons and Mental Hospitals employees between the ages of 55 and 65 years. Any one who knows anything about their work knows that that would be no good to the State. In our Defence Department at the present time they deem an officer unfit to carry on after 55 years of age. He has to go out then. It took the Public Service Association some years to get the Government to retain the services of those men for two or

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three years, to enable them to get the benefit of the permissive retiring-allowance. Then you have the shorthand-typists. Most of them join between the ages of 18 and 22. Can you visualize a Public Service in which you are going to have a large number of women in the fifties taking shorthand notes ? It is essentially work for a comparatively young woman. Then, finally, the whole basis of our superannuation scheme was actuarially sound and the retirement at 60 with the consent of the Minister was one of the points in the original contract, the original basis, and it was a factor in determining what rate of contribution we should pay. It has to be borne in mind that if an officer joins the service at 17 years of age and pays superannuation during the whole period of his service he actually pays—actuarially—for 87 per cent, of his final annuity, and that is after you have taken into account the chances of ill-health causing early retirement; the chances of having to pay a pension to his widow if he dies, and the chances of having to pay pensions to children under 14 years of age. I would refer you to the actuarial examination for the period ended 31st December, 1910, which includes a complete table of percentages showing what we actually pay for, and you will see that if an officer enters the service at 17 years of age and commences contributing to the fund right away, he pays for 87 per cent, of his own pension. And we have never questioned the actuarial computations. Your main contention is that the Government should keep its contract ? I think every one who has come before us has made that strong point. You realize that all other contracts —i.e., a mortgage contracts, landlords' contracts, lenders to the State, &c., are having their contracts scaled down ?— Up to a given year. Up to a limited period. There is no limit in this Bill. Again, it is rather important. If you join an insurance company The contracts are all the same «—Quite true ; but this is a contract in which we practically pay for what we get, and for those with back service who joined up for part of their service, the State made a present of it. Because, from 1908 until the present date, they have not paid for that present, should they now say, "We gave you the present, but we are going to make you pay for it ? But to come to the existing contributors who joined the Service since 1908, they are in exactly the same position as a man who takes out an insurance policy. There is no suggestion that an insurance company would be permitted to take a premium for forty years and now say that everything is coming down and they are going to cut a certain amount off the amount of the policy. On page 27 you state that it is necessary for the Government to issue £3,650,000 in inscribed stock. Would you consider it honest for the Government to issue Treasury notes to several millions ? It has issued Treasury bills for other purposes. Would that be a satisfactory solution ? —We come to this point, that under what we maintain is a fair and equitable contract, the Government has failed to do something that it contracted to do. Not only was it a contract, but we have endeavoured to show" that in comparison with other schemes which are actuarially sound, the basis laid down by the Government Actuary That is not an answer to my question. I asked whether you thought it would be fair for the Government to pay in Treasury notes and pay you in depreciated currency ? —Any payment would be better than what we are getting at the present time. Would that be acceptable ?—We appreciate that something has to happen, and we say that the £250,000 continuous liability (relating to retiring-allowances being paid to contributors who retired at permissive retiring-points) placed on the fund should be wiped out so far as the future is concerned. It would affect the Public Service adversely up to a point, but so far as the future goes, if the Government or the members of the Committee can suggest any better way of meeting their liability, well and good. The Government has already got a loan on its £10,000,000 Discharged Soldiers Settlement Account invested to cover the last deficit, and I suggest that if an earthquake occurred in, say, Palmerston North, and the town was wiped out, the Government would find the money necessary there, and what greater moral claim, lies on their shoulders than meeting the retiring-allowances of men who have put in their lifetime in the Public Service ? Mr. Savage : On page 13 you make reference to retrenched members of the Defence Department, and say conditions were relaxed in their cases, and then on page 15 you say that during the period 1915-31 no less than forty individual officers have been granted exemption by legislation, and state you have a list, of the names of those officers. Then on page 26—1 am quoting from these pages because they contain similar references —you say that in a number of cases officers were retained in the service after sixty years of age and that many instances of the undesirability and unfairness of retaining certain employees beyond this age could be cited. What I want to get at is this : Can you supply greater details, in the first place, in the case of officers of the Defence Department, who they were, and the amount of money involved in their retirements ; in the second place, in regard to the other forty individual officers granted exemption by legislation, who they were, and the amount involved in their cases ; and, in the third place, details of the instances of the undesirability and unfairness of retaining certain employees beyond sixty years of age ? I think it is due to this Committee that we should know who these people are and the money involved in their particular cases and that that information should be put in as evidence. The Chairman.] Could you supply that later, Mr. Millar ?■—To get that information we would have to exploit avenues that are not open to us as an association. We can give you the names and would suggest that it is the function of the Committee to get all other information from official sources. Mr. Savage.] On page 15 you make reference to a question which I asked yesterday in regard to section 14 of the Finance Act, 1931, and I think you said that the rank-and-file members of the Public Service were not detrimentally affected by the passing of that clause. We have had evidence on a former occasion to the effect that certain members of the Railway service who were compulsorily retired and were entitled to get something like £134 or £135 per annum, were retired on about £75 per annum ? —I do not think that it is quite fair to put it that way. I can quite understand the feelings of the people concerned. They did have a claim, but it was not on the fund. These men

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were not eligible to retire on a pension at all. They could have been given three months' notice and gone out of the service with only a refund of their contributions. Supposing that clause had not been passed, would they have collected £130 instead of £70 ? — They would have got their cash back. They were refunded what they paid into the fund and in any case, from that point of view, they had no complaint because they still could elect either to take a refund of what they had in or an actuarially reduced pension. They did feel that the actuarially reduced pension was not fair, but anything additional should not have been paid out of the Superannuation Funds. It was the State's duty to make up the deficiency between the actuarial pension and the amount of a normal pension, but the Government did not provide for the Department to do that. Could you give us any idea of the amount in excess of £300 that is paid out annually in retiringallowances out of the Public Service Fund ? —You ask me to deal with people who have gone out of the Service ? Yes, the amount that is being paid out annually now in excess of £300. Can you give us the aggregate ? —Yes, but again I think that figure might come from official quarters. However, the amount is £86,000. Mr. Dickie.'] Does that include the Railways ? —Every one. Out of a total of approximately £1,100,000 paid to existing annuitants, £86,000 refers to those over the £300 limit. Mr. McCombs.] We had evidence from the Railway people that the amount was £23,000 or £25,000. That figure must have referred to the Railways Department only I—l1 —I should say so. Have you the figures for the Railways ?-—Not divided separately. You have been dealing with the principle of the Bill rather than the details ?—Exactly. You made a statement in regard to other countries in the British Empire, and stated that they had not repudiated their legal liability to Superannuation Funds ? The statement has been made that New South Wales has done so ? —lt did not. Do you know the facts ? —The facts could probably be better outlined by the Government Actuary. I take it he will be appearing before the Committee. The position is, to use a slang phrase, that the fund " went broke," and what we are putting up to this Committee now is that steps should be taken to ensure that our fund does not get to that position. That is the difference between the two. But it did not legislate itself out of all liability for annuities. Every man who had gone out on a pension got it, but from the Consolidated Fund, not the Superannuation Fund. What I did say was that in any alterations to the law in the Dominion regarding the retiring-allowances, or anything of that kind, the existing rights had invariably been preserved for those who had gone out on pensions and the contributors too, and we can find nothing in any English-speaking country which shows that there has been legislation to alter the law for existing contributors. Was the New South Wales scheme guaranteed by the Government ? —Not that I could find out. On the score that it was not guaranteed it could " go broke," to use your phrase, without any breach of contract so far as the Government is concerned ? —lf my information is sound, I have stated what I think, but the Government Actuary can verify what I say. You made the statement that it, was so ? —I made the statement that there had been no legislation to legislate anybody out of their rights. All the people who retired on superannuation in New South Wales got their pensions, and that was many years ago, from the beginning of superannuation schemes almost. I would like to know the facts in regard to that. It seems to me it does not make very much difference whether there is special legislation or not. If the State says it will not pay and it does not guarantee the fund it does not matter whether you call it legislation or not ?—I do not think there was a guarantee, but we will undertake to provide the Committee with a full statement. That is all I want. Mr. Wilkinson.] On page 25 of your statement you state, "We do not propose to traverse in detail the various clauses in the Bill, because we urge that the Bill be not proceeded with," and yet I understood you to say that you recognized that something must be done ?—lt can be done under the existing powers. Under existing powers ?—Yes ; because the undue strain on the funds is caused by the permissive retiring-points made in 1909. The shortage in the three funds amounts to £3,650,000 according to your statement ? —To date. Yes, but the Government Actuary's report in 1927 stated that the deficiency amounted to £18,000,000 and the Commission reported that the deficiency now amounted to £23,000,000 ?—Quite true, and if things go on as they are now you might get a report from the Government Actuary next year saying that the deficiency is £30,000,000. The Committee wants to know which statement is the right statement ? —lt is not a question of a false statement at all. The estimate of the Government Actuary, as I understand it, is the liability for present contributors and for past service of present contributors who did not pay for that service— a contingent liability. I would like to refer to the scheme of the Wellington Harbour Board. Assuming a man with forty years' service goes out on superannuation in 1933 and joined the fund when it was created in 1913, he would be paid in for twenty years. He would be paid twenty-sixtieths of his pension out of the Superannuation Fund and the remaining twenty-sixtieths would be paid by his employers, the Harbour Board. The State, instead of meeting the bill for back service at the time, is now merely meeting it as it falls due —as people with back service go out —and is in arrears with that bill to the extent of £3,650,000. It has to meet more than that, it has to meet the added liability created by these permissive retirement points. That does not get away from the point that there is a discrepancy between the two statements. What, has the Committee to recommend the Government to provide for, the £3,650,000 or the full

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amount ? —The Committee, I suggest, has to recommend the Government to meet the £3,650,000 lor all three funds combined., and an adequate subsidy for the future, and we are perfectly prepared to agree on what the Government Actuary states is due at the moment. I think you will find that we are within the vicinity of it. t . What effect do you think it would have on public opinion if the Government issued inscribed stock up to £4,000,000, the interest on which would be payable to the funds «—What is the thinking public saying already about the State's attitude in repudiating the liability ? Already the A.M.P. Insurance Co. is sending out feelers around the country asking that we join them because the Government guarantee is not worth a snap of the fingers, and the T. and G. Co. is doing the same. On page 18 you say, " But the breach of faith by the State in its failure to maintain this contract (payment of subsidies as recommended by the Actuary) has resulted in its committing a graver breach. The State has made up this deficiency in the funds by misusing capital moneys belonging to the present contributors. It has applied these capital moneys to pay the liability for current retiringallowances instead of preserving them to meet the future retiring-allowances of those present contributors. Thus the State, in its capacity as trustee for the contributors, has definitely violated its trust, and has been doing so for years." If the Government is not to be trusted with regard to past transactions why lean on the Government in the future ? Why not establish a fund of our own ? —Unless the Government meets its liability when the fund started, as practically all other schemes do,we could not do it. You say that there is a shortage of £3,650,000, and if that were paid the fund could be established on a new basis ?—With a pound-for-pound subsidy in the future and those permissive retiring-points killed. Those permissive retiring-points are terrible things. You are speaking only for the Public Service ?—ln my statement when I come to figures lam speaking of all groups combined. My figures refer to the lot. I understand the Railway people object to any suggestion that a payment of £3,650,000 would do the job. They have estimated their shortage at £9,000,000 ?—That is quite correct. The £9,000,000 and the £23,000,000 are quite correct, but we are talking about two entirely different things. We are talking of the liability that has accrued up to the moment, and evidence of what we are saying is included in the Actuary's reports. We are quoting his figures in regard to the Teachers and Public Service Funds. At that rate, if a reasonable amount was allowed for past liabilities and a pound-for-pound subsidy given in the future, the Service would be quite content to take the whole tiling over ? Provided the Superannuation Board had full powers in regard to those permissive retirements which are at the present time in the hands of the Minister, and which we think have been misused. If the Government which retired the officers at an earlier age than that allowed for made good the difference, would that be all right ? —Yes. Mr. Ansell.] On page 26 you referred to the permissive retirements, and then you go on to say, " it is essential for the well-being and efficiency of the Service, and many instances of the undesirability and unfairness of retaining certain employees beyond this age could be cited. Did you qualify that statement by giving some instances of what you mean by that ?-—I think I covered the ground there when I replied to the first question asked by Mr. Dickie. It would seem that you are quite content with the present constitution of the Superannuation Board ? —I did not say so. You say, " We urge that the existing powers of the Minister in charge of a Department to impose conditions which would relieve the funds in future cases of retirement should operate forthwith, and then go on to say, " No alteration whatever in the existing law is required to give this great relief to the funds." What lam driving at is this, I understood you to say, and other witnesses have given evidence to say, that the enforced retirements have been a heavy burden on the funds, and the suggestion has been made that any difference between the amount that should have been paid by the fund and the amount which the fund has been compelled to pay and which is a burden on the fund, should be met by the trading Department that has dispensed with his services ? —Yes. How would it appeal to you to have a Board that was entirely free from political control, where the Minister could not say to the Superannuation Board that they had to pay a man a certain pension, but where the Board would only pay out on an actuarial basis and any shortage up by the trading Department concerned ? —We are with that up to a point. In the Teachers Service they are retired on a certain condition which means that they get their ordinary pension reduced by about 26 per cent. Your suggestions regarding a Board free from political control would not quite work out, because in the Railways they have had that power all along, and they have used it in the same way as the Minister has used his. The Teachers' Fund and our fund are different they have such power. You would still have the same situation. As a matter of fact, the 1909 provisional retiringpoints, with the consent of the Minister on certain conditions, should never have been there, but if the Minister will exercise his power and, as I suggest, work in co-operation with the Boards, then you relieve those funds for the future of £250,000, but the funds would still have to carry the past loading of the funds. I think the loading of the funds is one thing we should endeavour to stop ? A\hile we are talking the thing is still going on. Enforced retirements ?—Yes. Enforced retirements on permissive retiring-points. I can quite understand why that is being done. It is because the authorities may not know where they are in regard to this Bill. The fund, at the present time, is continuing to be injured, and that is why we urge that it should be stopped forthwith. In what Departments ?—Twenty-eight in various Government Departments. In the Public Service Fund alone there are twenty-eight, and I would not be surprised, though this is just a matter of opinion, if there were not a few more in certain other sections of the Service,

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Mr. W. Nash.] The value of the superannuation service is assessed on the amount of salary on retirement ? —ln other words, it affects the salary paid in the Service. The salary might be £500 a year if there were no superannuation, and £475 if there were superannuation ? —There is a natural tendency in that direction. Ido not want to raise any point about the rates of pay in the Public Service, but I think most members of the Committee know what the rates of pay in some of our principal Departments are compared with the rates of pay outside. As far as our general staff is concerned, take our artisans, and General Division men who would be subject to an award outside the Service. Tlxey all had that 10 per cent, cut which reduced them 10 per cent, below the minimum award rate for all similar artisans employed outside the Public Service, and for years, still keeping to our artisans, the standard wage in the Public Service for those people has been the minimum award rate over periods when outside the minimum award rate was a myth. Mr. Dickie.] They had some security of tenure ?—And superannuation to balance it up to a point, and they recognize that. So far as our clerical and professional groups are concerned, from 1914 up to 1920 they were lagging well behind outside employees —I am comparing their improvements in salary on account of the living cost with the increases made by the Arbitration Court. Then for a short period, in 1920-21, they were practically placed on a level; and from that moment to this there has been a drift downwards. It is the only way in which you can make a comparison in general terms. Mr. W. Nash.] You think that superannuation benefits are the same as salary and wages ? —You are referring to the extracts that we have printed ? It is certainly a factor ; because if I were thinking of leaving the Service to-morrow, assuming I were now in the Service, not only would I think of what wage I am getting, but also what the future held for me by way of superannuation. The superannuation is something due to the individual for something that he has paid for, and also it is taken into account when he gives his service to the State, and it ought to be paid the same as salary and wages?— Those extracts cover the ground very effectively. I only wanted you to say " Yes "or" No I say " Yes," absolutely. There is a condition that if members stop a service, the superannuation benefit should be lost ? — If there is a break in service ? Yes. Supposing the railway men decided that the conditions being offered to them were unjust and unfair, and they decided to stop the trains from running. They might lose their superannuation if they stopped running the trains. At that point the superannuation is definitely inside the salary and the wage ? —lt is a factor. _ _ Do you believe in a guarantee or a fund ?—lf the guarantee meant what the word conveyed it is quite all right; but I maintain that under our Act, to use the phrase of the Government Actuary in his report, our fund is guaranteed up to a point; payments have been guaranteed, "and those payments represent sums sufficient to keep the fund on an actuarial basis but they have not been paid. So that if payments are made in accordance with the contract entered into by the State, the employees would not worry about a fund ? —I would not quite put it that way. I feel, from a strictly business viewpoint, that an actuarial basis at the outset is the aim ; and if we have departed from it in any shape or form we should go back to it. It will cost £23,000,000 to put it on an actuarial basis. Do you think that ought to be done in preference to continuing the guarantee to pay the benefits ?—No, because that is not in accordance with the terms of the Act. The Act says that the State shall pay from time to time as the liability falls due. . . . You said you preferred an actuarially sound basis. If it costs £23,000,000 to make it actuarially sound, would you prefer that that should be done or that the guarantee should be continued ?—I would'think it would be idiotic to suggest that £23,000,000 should be put into any fund, at this stage or at any other. Mr. Dickie.] Twenty-three million notes ?—Mr. Morris Fox deals with that very comprehensively in his report. Mr. W. Nash.] The guarantee is a better thing than having an actuarially sound fund ? —I think the guarantee that the State shall pay in from time to time such sums as may be recommended by the Government Actuary is necessary, but the amount should be paid year by year. Is that not a guarantee «—You can call it what you like. That is how it appears to me. The Government Actuary and the Commission, in making their reports, state that the ratio of salaries for the Public Service was particularly high during the war period and some of the post-war period, and that that factor had occasioned a very heavy load on the fund. Do you think that had anything to do with the fund not being in a good position now I—l1 —I think it has helped to embarrass it somewhat; but that will be balanced in part by reason of the fact that there is a big section of the Service now who have elected to continue to pay their superannuation contributions on their highest salary. But assuming they do continue to pay on the higher salary —and that is the war period, the peak salary —will they not be a particularly heavy burden on the fund still ?—Up to a point. Can I put it this way ? It was a fact that the Actuary, at the inception of the fund, possibly could not take into account —he would have to deal with averages in assessing the £23,000,000 that we have been talking about, and the same thing would obtain in the future—something abnormal may come along. I want to see if any injustice is being done to public servants. I think the Government ought to carry out its guarantee and keep the fund going. And assuming ten years from 1905 to 1915 brought the salary lift from £120 to £240, and that the Government in 1915 to 1925 took that salary to £450 and then in the normal run of things brought it back again in 1935 to £340, and retirement is made on the £450 basis, will that not put a particularly heavy load on the fund 1 — It will up to a point; the income is getting the benefit in a large number of cases of contributions on that higher salary that is not being drawn by the individual. That will help to balance it. Not quite, though.

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Can you tell us why these compulsory retirements were made ? —ln the case of the general Public Service there have only been a small number of compulsory retirements ; the work is there to be done. In one or two other Departments outside our fund it so happens that conditions are such that the volume of work has fallen off. Some of our Departments are busier than they ever were, notably the Labour Department and the Land and Income-tax Department. You would not like to make a report on the reason for each individual compulsory retirement ? — I could not. In our Service there are few. In general terms, in the Public Works Department I would say the money was not there to spend on additional works. On page 14 you give a number of special cases where the conditions in connection with superannuation were relaxed. Does that mean that the Government has been giving contributors' funds to others that were not entitled to them ? —They have been misusing them. They have been taking subscriptions from one section of employees and using the money that they were taking from them to give special benefits to another section ? —We stress that in our statement. You are giving us a list of those special retirements ? —I have already handed it in. They are hardly special retirements. On page 18 there is a reference to the misusing, as you say, of capital money belonging to the present contributors. Then on page 22 you suggest that the funds, £5,500,000, are all right, and that there is no need to worry about them. If the capital is being used, will that not extend the difficulty that you are criticizing on page 18 ? —Quite true. But bear in mind we were merely answering statements that have been made now and again that the fund was in a state bordering on collapse if the Government did not make these modifications at the expense of the Public Service. We say it is not quite as bad as that. You mean that, part of this £5,500,000 could be used ? —lf it comes to a pinch ; only for the time being. On page 21 there is a reference to £700,000. What is that £700,000 ?—When the Public Service Superannuation Act came into being, certain officers were entitled to compensation, without payment by them, of one month's salary for each year of service. When the scheme came down the Government said, " You can join the Superannuation Fund if you want to ; but we will still preserve those existing rights " ; but when it came to a question of getting out of the Service, after they joined the Superannuation Fund, almost without exception those men said, " We will take the superannuation pension." They could not get both. And so the Government did not have to pay £700,000 for compensation rights. On page 14 you give examples of special retirement benefits, where those retired had the full benefits of the scheme. But the railway men compulsorily retired have had to retire, as mentioned by Mr. Savage, on a £77-odd yearly pension whereas they would have got a £154 15s. pension ?—You are right, they did receive special benefits. But under section 14 of the Finance Act every public servant, whether in the Railway, the Post Office, or the general Public Service, were cut the same — had the actuarial reduction. Mr. Dickie.] But they were not really entitled to superannuation on their service at that time ? — No. Mr. W. Nash.] These men entered the Service under an agreement that they were to contribute a certain proportion of their salary to a Superannuation Fund and at a certain given time they would retire after forty years' service. If retired after thirty-two years' service they are in a much worse position on the retiring-point than if they had stayed in for the forty years, because they lose eight years' salary, and then, instead of getting the pension they anticipated, they do not get nearly as much ? —That is quite true. But in any service, if abnormal circumstances come along and there is not the work to do, the Government could hardly be expected to keep the men on. You do not think there should have been special treatment for some on a high-salary basis who retired other than on an actuarial basis, when the rank and file when retiring on an actuarial basis are finding themselves in a worse position ? —Quite. Mr. Dickie mentioned contracts broken. Public servants now are paying extra taxation. They have had two cuts in their salaries ; in addition the)' are paying the unemployment-tax. So that in addition to that they would get their pensions reduced on top of those three or four other factors. There will be half a dozen contracts broken ?—ISTo type of contract such as we have with the State has been broken so far. This is our insurance policy. You mention the National Provident Fund. «There is one point regarding the National Provident Fund worth noting, and that, is, that its administrative costs are lower than any of the insurance companies in the Dominion—less than one-half. It is worth while having the National Provident Fund ? —I only quoted that to show that the outside employee whose employer had linked up with the National Provident Fund and paid one-half of his contributions was actually only paying for one-third of his benefits ; and in our case we are paying 87 per cent, of our benefits. The Harbour Board only contributes 65 per cent, of the salary roll for their superannuation fund. Do they give the same benefits as the State ? —Exactly. But they pay up the back service as it falls due. That is what our £3,000,000 represents. The public servants have been meeting the liability of the State for back service ? —That is so. The Hon. Sir Apirana Ngata.] Beginning with your deficiency ; on page 21, the excess of outgo over income is estimated at £77,500. You say on the next page that under normal conditions the total income would have exceeded the outgo by approximately £41,000 ? —That is only taking one factor into account. That is for the three funds combined ? —Yes. 7—l. 15.

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Would that not be affected by a possible loss of interest on investments ? A lot of these funds are invested on mortgage, so that there is a possibility that the excess of outgo might even under normal conditions have applied ? —Not to this particular year. Every man, instead of having to pay his £1 or so a month towards the Superannuation Fund, paid nothing until he had eaten up the money that had been credited to him for the payments he had been making on his higher salary before the cut. I suppose in the income you took into account the interest on investments I—Everything.1—Everything. There is a possibility of that being reduced ? —There is always a possibility of a reduction, things being as they are. Supposing we were budgeting for 1933-34, without taking into account the actuarial position, but letting all the other conditions remain—that is, practically the view of the Public Service, that all other conditions remain as to age and so on with the exception of the permissive retirements ? —Which are costing £258,000. Your budget would keep in view the certainty, anyhow, that the income would balance the outgo of the funds ? —lt ought to. In the income of the fund you have " Annual contributions, £520,236." Supposing you adopted the pound-f or -pound subsidy basis, the Government is short £221,000 on that, and must provide for it. Then, in addition, you want £164,250 ? —We say the sum of those two figures——. That is 4J per cent. ?—Plus the permissive retiring-points. Do they come out of that ? —lt would modify the load on the fund for the future. Working out what the State should contribute, the State should contribute in addition to what it is contributing now £221,236, and £164,250 —that is, an additional £385,486. Now, where does the £258,000 come into this ? —lt really does not come into it at all at the moment, because the Government would still have to carry that load for the past, but it would modify the rate of future liabilities to the fund. Shall we say that the additional amount the State has to find would be £385,000 ? —We say, yes, that is our estimate. We do not say that it is on a proper actuarial basis, but with our knowledge of the funds we say that that should come somewhere near it, provided you lighten the load in the future. It would still be less than what the Government Actuary recommends as necessary in his actuarial report, but he takes into account that the rate of retirement will go on as it is, and we say it should not. But do not forget that the trading Departments will have to bear their share, both of the £164,000 and the future subsidy. Assuming £385,000 additional as the amount that the State would be called upon to pay into these funds, the result would be an accumulation ? —Well, we would hope that it would be. Ido not know that the accumulation would be very great the next three or four years. It must be, if your other figures are all right ? —Why ? The income and outgo would about balance ? —Quite true, but there is a movement forward —an additional burden for retiring-allowances year by year. The following year these mathematical gentlemen might want more paid in, or less ? —Exactly. lam trying to combine the views of the various sections of the Service. The Railway people want much less ?—We are trying to look at it from a purely business point of view, and to get somewhere near an actuarial basis when it comes to assessing what is required. The Railway service is more optimistic about the State guarantee than what the Public Service is ? —We feel that the guarantee wants to be backed by the goods. Everybody seems to be falling back either on the State guarantee or on some payments that will assure that the liability to superannuitants shall be maintained ? —We say that ours is a fairly accurate estimate of what should be done for the time being ; and the position can be reviewed in, say, three years from now. It means £385,000 additional ?• —Or £160,000 per annum more than the Government suggests in the Bill. The Chairman.] You say " Benefits in event of service, accidents, or disease should be borne entirely by the Government, whereas optional benefits should be paid for wholly by the employee " ? —■ That is a quotation from one of the Superannuation experts, in support of what we are advocating, that the 1909 optional or permissive retiring-points should disappear. I read through your report last night, and have also gone through it again this morning, and I am rather surprised to find that at no stage have you referred to the £300 retiring-allowance. I would like to know what the views of your service are upon thift, matter ? —We are against the Bill. We say that it is not necessary, and that therefore the removal of the £300 maximum issue does not come into it. That is our feeling at the moment. Do you think it should be retained ? —We do not want anything at the price. But so far as the attitude of some of the other organizations is concerned, you can quite appreciate their feelings when hand in hand with the provision to increase the percentage payment by certain groups there is the proposal to remove the £300 maximum. You do not agree with the Commission ?■ —I have stated the position from the viewpoint of the other organizations. If you want the considered opinion of our association I must give it to you. That is what we want ? —We consider that the place to remove what we regard as an injustice to some officers is not in a Bill breaking our contracts. If the Government at some future time and place desires to place these officers on an adequate basis it is in their own hands. The whole essence of the superannuation scheme is involved in the question of the removal of the £300 maximum. In the first place, apart from not being fair —because, as I explained earlier, a man pays for 87 per cent, of his own pension, on the Actuary's figures —if you take, say, 6 per cent, of his whole salary for life, and limit his pension to £300 a year, it is a plain steal.

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Mr. Wilkinson.] He gets back the difference ? —He does not. Mr. W. Nash.] It is in the Act; the difference between the amount that he is paid out by way of pension and the actual amount contributed is paid to his dependants after he has passed away ? —That is a different matter altogether. What happens is this : if Igo out on pension, and I pass away fairly soon, then if I have not drawn all I have paid in by way of pension—no interest —my widow, if I have one, gets the difference. But where does that get us ? They have been taking 6 per cent, of my salary for forty years, no interest—and it probably ought to have doubled the amount paid in, possibly more —nearly trebled. Where are we ? Mr. Wilkinson.] The witness was rather misleading the Committee when he made the statement that it would be a plain steal, in view of what he has said later ?—ln what direction ? Regarding the amount paid in and not returned. It is returned, according to your own statement, excluding interest ?■ —The interest would probably have trebled the money. He has never got this money back. My point is that actuarially a man pays for his full pension on the basis that was laid down —i.e., according to the average salary for the last three years of service. The Chairman.] What we are to understand is that you have no desire to make any further comment upon the £300 maximum question. If the Government like to introduce legislation later on dealing with those particular officers, that you think would meet the case ? —lt would have our whole support. But I think it should be said that this goes to the whole root of the superannuation scheme. As I mentioned earlier, it is to promote the efficiency of the Public Service. Not only is it an inducement to get a man in to begin with, but it is an inducement to keep him in when he is tempted by outside offers. And your most efficient men are the men that you want to retain, the men who get those offers. They might not be getting them to-day, as things are to-day. But without going into full details, that is the factor involved. We have got away from the question that I asked you. Do you approve of the suggestion of the Commission ?—My answer is, Not in this Bill. Mr. Hargest.] Does your association believe in the elimination of this maximum of £300, quite apart from the Bill ?- —Yes. It believes in the elimination of it ?—Yes. On page 11 you refer to the inducement that was offered to public servants to join the Superannuation Funds. What have you got in support of that—have you got anything at all ? —That piece of paper (produced) ; the original letter. On page 19 you refer to a statement by Mr. Downie Stewart. Do you agree with what Mr. Downie Stewart said ?—I agree with the sentiments, when it comes to a question of meeting the liability. Of course, the Wellington Harbour Board is only a small scheme compared with the Government ?■ — The Wellington Harbour Board scheme was created under the Local Authorities Act, 1908 ; and similar schemes under that legislative provision are the Auckland Harbour Board and the Buller County Council—the only three that have taken advantage of that Act. You admit that they are only a small thing compared with the Government superannuation scheme ?—But the principles are the same. On page 25 you say, "... because we urge that the Bill be not proceeded with." Do you mean by that that we should not proceed with this Bill —we should let matters remain as they are — or that the fund should be put into a proper state of order ? —We mean that the Bill should not be proceeded with, because it is not necessary. We also hope, when this Select Committee of the House has heard the story as we have tried to paint it, that the Government will put into operation the existing powers and pay up. Mr. Verschaffelt.] You referred to the Government Insurance Department, and the value of State guarantees. I want to be fair to the Government Insurance Commissioner. Is it not a fact that the State guarantee is of no value to the Government Insurance Department at the present time, as all its transactions had been based on an actuarial basis ? Would you doubt the statement of the Government Insurance Commissioner that apart from its value in the past as a canvassing asset amongst certain sections of the community, he does not value the State guarantee, that it is of no value at the present time, that if it were taken away it would not affect him ?—He certainly would not regard it as valuable, after the Act of last year —that helped to undermine it. But assuming that an epidemic swept New Zealand, and all actuarial calculations " went to blazes," there might be a tremendous load on the Government Insurance Department, beyond their power to carry. That would apply to all insurance companies. You would not say the Government Insurance Department is less financially sound than any other insurance company in New Zealand ?—The State guarantee is what influenced a lot of us in taking up policies with the Department; it has been used as a catch-cry, as a selling proposition. You are, of course, quite well aware that men have been retired after forty years' service as young as fifty-two years of age. Do you not think it would be fairer, instead of taking a service basis, that an age should be fixed for it ? —The fifty-two-year age retirement that you mention is an exaggerated case. No, there have been quite a number of them, in one particular Department—a very large Department ?—There have been some by reason of the messenger service being counted, in the Post and Telegraph Department; the policy of retirement after forty years' service is spread broadcast in every bit of literature you like to pick up. That was an abnormal condition, and should not interfere with the principle. So far as the clerical side of the Service is concerned, I think the Commissioner will admit that the average commencing age is now about eighteen. At present, but you will not get the effect of it for forty years ? —And the messenger service in the Post and Telegraph Department, remember, is blocked for superannuation purposes in the future. That was the real trouble. That is merely a miscalculation that arises, something that happened. 7*

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The association does not doubt the accuracy of the Government Actuary's figures in regard to the actuarial shortages in the funds ? —The Public Service Association and the Government Actuary have been voices in the wilderness for ten years, trying to get the Government to do something about them. And when the Government Actuary say there is a shortage of £23,000,000, you would not doubt that ?—I think if the Government Actuary were asked a question as to what the total sum would be if the Government gave effect to our proposals and cut out the 1909 permissive retiring-points, that the figures would be quite different. The whole object of the Bill is to make it less, to cut it down ? —The whole object of the Bill is to cut it down at the price of breaking contracts. What you are asking for, as you stated to Sir Apirana Ngata, is for the Government to pay you an additional amount of £385,000 ?—£164:,000, apart from the Bill. In perpetuity, and an additional payment of £220,000. Do you think there is any prospect of that being done at the present time ? —lf the Government does not propose to pay the additional amount, why bring the Bill down ? Would it not be better to get £221,000 and the conditions in the Bill, than to get nothing at all if there is no Bill? — The Government can do it without a Bill. They could ; but if you have it set out in a Bill? — Then the sooner public servants know that the Government is going to repudiate its responsibility in connection with the Superannuation Funds, the better for all concerned. That is what you are drifting to ? —lf this Committee does not appreciate the position, after the mass of evidence that has been placed before it, then I cannot say any more. If the Bill is proceeded with, what are the views of the association regarding the provision applying not only to future annuitants, but to existing annuitants ? —That is going to be dealt with by the representative of the Superannuated Officers' Association. Why should Ibe asked about it ? But you have asked me for my opinion, and I will give it. So far as those officers are concerned, their contract, from their viewpoint, is completed —they have gone out on a certain basis ; and if you can turn round now and say, after it is all over, " We are going to revise the whole condition of your retirement," where are you getting ? Comparing the two, if it is done for future entrants, would it be fair to make future entrants pay for past entrants ?—lt would not be fair to make present contributors pay. What you do for the future, for people who are not in the Service to-day, is another matter altogether —that is in your own hands. There is just as binding a contract ? —When it comes to a question of past annuitants, I say it is utterly unfair that you should cut down their pensions ; they have no chance to qualify for a higher pension, whereas the men in the Public Service at the present moment have the opportunity to qualify. And I say this, too, that I am quite satisfied, and you should bear me out, that quite a lot of the recommendations which resulted in men being compulsorily retired were because the Permanent Head concerned knew that that officer was going to get a given amount of pension. And now you want to shoot it to pieces. Mr. Gostelow (Government Actuary).] On page 17 you say " the total present shortage in round figures in the three funds is £3,650,000." That, as has been pointed out, is in direct conflict with the National Expenditure Commission's report that the shortage is £23,000,000 ?—But we bring the shortage to the present moment. And there are two sets of figures, according to your own reports. That is a direct contradiction —" a total present shortage of £3,650,000 "as to the £23,000,000 ?—Would I be right in saying " the liabilities that have accrued to date " ? What I want to bring out is this : Does your association accept that figure of £23,000,000 ? —We would not attempt to question it because we cannot —we have not the data on which to analyse what vou have done. It is an. actuarial calculation, and we do not profess to be actuaries. We do not say it is not so, but we do say that you have taken for granted, as all actuaries would, that the rate of retirement and the age of retirement stay somewhere near where they are at the present moment, and we say that the State should put the brake on those permissive retiring-points—that it must be a considered factor in your estimates. _ . But you are quite prepared to admit that the £23,000,000 figure is reasonable ? We are quite prepared to take it for granted. You say so, that is enough for us. But you also give a of £1,100,000 for the Teachers, and £1,700,000 for the Public Service, and on top of that we have tried to estimate the Railways at £850,000. There is a big difference between a " deficiency " and " subsidy arrears ? Quite true, there is some difference. On page 22 you say, " We can do no more than stress the fact that there is an amount of £5,560,373 still in reserve to meet any excess of outgo over income." Do you think that £5,000,000-odd will go very far ?—How far will the fund go if the Government does not foot the bill ? I suppose you are aware there is over £1,000,000 pension liability per annum at the present time ? —£1,100,000 nearly. And assuming, for the sake of argument, the hypothetical liquidation the winding-up of the funds—to pay that £1,000,000-odd annually you would want a capital sum of £12,000,000 ? I will say this, that if the fund is in such a state that it will " go broke," which would mean that there was a liability to pay every contributor every penny he had paid in plus the existing pensions and even New South Wales carried on—it would cost the Government so much money that it is not worth while thinking of at the moment. If the funds were wound up now, the present annuitants could not be paid. Regarding age 60, m most other countries 65 is the standard age, 70 in some countries ? —I am not prepared to say that your statement is incorrect. All I will say is that everything indicates that the forty-year service basis is a sound basis.

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You have seen the statement put in by the Amalgamated Society of Railway Servants, that the railway man engaged in any of these occupations, before reaching age 65 has had his nerves shattered, his eyesight strained, his hearing weakened, and his general physical efficiency reduced in other ways long before he is 65 years of age. Does that statement apply to these men that you want to let go out at age 60 ? —They are not my words, and we do not have to stand on an engine-plate and drive the " Limited " to Auckland ; but we do say that there are certain types of work in the Service, particularly the Mental Hospitals, where, from the point of view of efficiency, not only of the individual and the way in which he does his work, but of the care of the patients, in a lot of instances they should not be there. lam talking mainly about his physical efficiency, his physical state of health at age 60. If that statement as presented by the Railway Association is true, can you give the Committee any idea of how many men would be on the fund as pensioners at, say, age 70 ? —lt looks as if there is a catch in it. But in our Mental Hospital service the percentage of men who get out on superannuation is very small indeed. Ido not want to take any particular Department. I think this Committee should know —and I think you will agree with that—-that people do not only live two or three years to draw their superannuation. I have figures taken from the last valuation reports, and they show that at age over 70 there are 1,435 annuitants ; there are 656 alive'over age 75 ; 252 are alive over age 80 ; over age 85 there are 64, and of those 64 over age 85, 30 of them are railway men ?—That is very interesting news, but I do not suggest that it is something very wonderful, because in the statement that you have made you indicate, if I read you aright, that if a man is fortunate enough to get to the sixties —to 62, or 63—the chances are that he will get away with it up to 75. I want the Committee to appreciate that the statement put forward by the Railway Associations about " the expectation of life " —i.e., 68J and 62§, is ridiculous ?—ls it reasonable to use me as a stalking-horse ? I wanted the Committee to get your views, as you have introduced the age 60 ? —lt was introduced by an actuary himself as sound at the commencement of the fund. There are 40-odd mental-hospital employees out of 1,200 —and we have had mental hospitals, unhappily, ever since New Zealand was New Zealand —who are at present on the fund. The percentage of annuitants to contributors in the case of the mental hospitals is only one-third of the normal. The Chairman.] The cost of administration of the payments to pensioners of the Public Service runs into about £3 per head, as against about £1 6s. or £1 7s. in another Department ?—Unhappily the contributors pay for that. That, according to the Government Actuary, should be refunded to the funds as part of the State subsidy, but it is not. It ought to be reduced. Mr. Savage.] In reference to those above the £300 maximum, if a person, say, with £1,000 a year, three years prior to his retirement was suddenly jumped to £2,000 per annum and retired on that basis, he would not be paying 87 per cent, of his retiring-allowance, would he V —lf he were retired to-day, no, because he had a present made of the service prior to 1908. But again you have to deal with averages in all these cases. If you ask me my opinion as to what I think about that, then I should say that no man should be permitted to pay for superannuation purposes on a higher salary than the normal highest salary point in the Public Service, and that we regarded, prior to the cuts, as £1,500 a year—the Public Service Commissioner's salary. Then if something happens—perhaps a man with high professional qualifications has the opportunity of getting a position outside the Service if you do not pay him more money, or if you have a special position, as in the Railway Department, when the salary was raised because you brought a man out from Home —things of that kind would not occur in future. Mr. Hargest.] I take it you are of the opinion that the Government should stand for the whole of its contract with the Public Service ?—With certain modifications. Supposing the State were entirely unable to do it. Would you object to any scheme of reconstruction ? I am not saying the State will or will not do it, but the point is that the taxpayer, I suppose, is approaching the limit to-day ?—We say that the debt that has been piled up by the State is a legitimate one, that the basis was sound, and is still sound. Back service plus illegitimate burdens have been placed upon it. We say, (1) Immediately remove those unreasonable burdens, and (2) pay up at the moment; that a reasonable pension, somewhat on the lines that has been paid by outside schemes, should be paid by the State. The evidence goes to show that the State should find its share of contributions. But the taxpayer might not be able to pay it. What has your Association to suggest, or have you thought over any possible scheme of reconstruction ? —I say that our proposals are a scheme for reconstruction. I have pointed out that one-quarter of the whole expenditure on pensions at the present moment has been created by the permissive retiring-pensions. I have suggested : Remove that weight in the future ; pay the £164,000 per annum —40 per cent, would be borne by the trading Departments ; and take your stocktaking three years from now ; plus £1 for £1 in the future. You mean that those people who retired earlier should be a liability on the Consolidated Fund, that they should be removed from the Superannuation Fund ? —That is in the hands of the State to determine. You must have ideas on it. What would you do with those men, if you took them off ? As far as they are concerned, I agree with you that they have done all they have been asked to do. They have been placed by the State on the Superannuation Fund to-day. What would you do with them— would you remove them from the fund and have them a charge on the State, or let them starve ? — If they have to go out, they can come to the point that they can get a reduced pension.

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They are out ?—They can get from the fund the reduced pension to which they are entitled from the fund. Mr. Dickie.] An actuarial pension ? —I have not used the word " actuarial," but it would naturally have to have some relation to it. In the Teachers' Fund there is a 26-per-cent. loading. Then it would be for the State to determine whether it was going to fill the gap between the loaded pension and the normal pension. Some countries do it. South Africa did do it. New Zealand has not done it so far.

Dr. Theodore G. Gray, Director-Genera] of Mental Hospitals. (No. 13.) I would confine my remarks to one aspect of t.lie superannuation scheme, and that is in regard to the question of retiring-age. I understand the proposal in the Bill is that the minimum retiring-age should be 65 in the case of males, and 60 in the case of females ; and otherwise that the pensions would be computed on an actuarial basis. In regard to the staffs of mental hospitals, we do not like to take them on too young, never under 21 ; I prefer the limit to be 25, but in actual praptice the average age at which our staffs come on is 29 years 10 months. We feel that mental-hospital work calls for qualifications peculiar to the job. The staffs have to be interested and keen, they have to be mentally alert, and to be tactful, and goodtempered, and all the rest of it. We attach so much importance to all that that we give them a threeyear probationary period, during which there are courses of lectures, and a fairly stiff examination to pass ; and those that do not come up to the standard fall by the wayside. Then at the other end we find that people, when they get to over 60, are not a great deal of use to us ; they are less tactful, they are less patient, they are more peevish and irritable, and less inclined to put up with some of the things that mental-hospital staffs have to put up with, and the consequence is that we have all the time to consider that attendant and that nurse ; you cannot put them in charge of constant observation cases, or of people who are suicidal, and so on —it is a very harassing job, and after twenty-five years' experience of mental hospitals my opinion is that it is not wise to retain people much after that time. Now, the whole thing boils down to conflict between the interests of the members of the State and the interests of the Department. If the pension is to be computed on an actuarial basis, of course, then the people suffer personally. There are forty-seven annuitants in our Department at present, since 1918, and the average length of service as far as the males are concerned is twenty-seven years ; the average length of service for nurses is twenty-three years ; so that it is very obvious that, if the Bill is proceeded with as it stands at present, those members of the staff are going to suffer a very serious disability —their pensions would be very seriously reduced. Very few get to the forty-year service ; only one member of our staff has ever had forty years' service and he died about a couple of months after retiring. Then, on the other hand, we have the factor that they are of less use to the Department. In discussing the matter the suggestion was put up to me that one way of getting over it would be, perhaps where a person was retired before the age and it was felt that an additional burden would be put on the fund, that the Department itself might pay for the difference. There is only one other matter which I would like to touch upon, and that is in regard to the question of the retiring-allowance paid to professional officers, to the members of the medical staff, and so on. At the present moment everybody is on the £300 limit. The average age at which a medical officer joins the Department is 30, so that, practically speaking, nobody has got a chance of reaching forty years' service. When I was in London six years ago, part of my job was to select new Medical Officers—it was very difficult to get officers of the required attainments. One question that was asked by all the applicants was as to the amount of pension, and a considerable number simply turned it down when they heard that there was a £300 limit, because they could get considerably more than that at Home, and pay very much less in the way of contributions. Mr. Dickie : The suggestion is that the Department should pay the difference ? The Chairman.'] It is only a suggestion. Mr. Dickie.] What is the position of the Mental Hospitals Department to-day with regard to the amount of fees received in relation to the cost of running ? What do they cost the State to-day ?— As near as I can remember, £121,000, according to last year's figure. Mr. Savage.] Your main point is that because of the nature of their employment it is not right that they should be asked to fulfil forty years' service ? —I think it is too much ; particularly at the age when they begin to go over 60, they are not the same —there is no question about that, to my mind. You agree that the difference should be made up in some way, and your own suggestion is that the Department should ?—That has been suggested. Mr. Hargest.] You suggest, in the form of a grant by the Government ? —I do not think people should be allowed to suffer on account of the nature of the service ; if they are retired on account of the job, I do not think it would be a fair thing altogether. With regard to the £300 limit, I suppose professional men coming in on a fairly high average salary feel that they are paying far more than they are getting out ? —As it appeals to me personally, for some years past I have been paying £62 10s. a year for benefits for which another man is paying £22 10s. a year—that is, £40 taken off my salary which I do not see, and on which I lose interest. Do your people feel that they should get out what they pay in for ? If they pay in for an annuity worth, say, £350, they should pay in for that I—Yes. They feel that there should be an adequate pension. They do not think that pension is adequate compared with pensions in other walks of life. Mr. Wilkinson.] What salary do the officers receive who pay in as much as £62 a year ? — £1,250 —when I was getting that; of course it is now down to £980-odd.

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Robert Martin, Ex-Postmaster, Palmerston North. (No. 14.) The statement below, submitted by Robert Martin, ex-employee of the Post and Telegraph Department, lately retired from the position of Postmaster, Palmerston North, is presented for the information and consideration of your Committee : — I joined the Postal Department in May, 1882, conditions of service being subject to an Act of Parliament which ensured to me payment of compensation on retirement at the age of 65, of one month's salary for every completed year of service ; payment to be made in one sum and no contribution sought from the individual. Early in 1908, all officers of that Department were addressed by circular letter from their Permanent Head, which enumerated thp advantages of the then proposed superannuation scheme. Retirement after forty years' service, if desired, was possibly one of the most attractive conditions offered. A second proposal was that contributors to the scheme, on retirement, would receive a yearly allowance for life based on two-thirds of his average salary during the last three years of service. The condition required to secure these benefits was a monthly contribution from the officer's salary at varying rates, from 5 per cent, upwards. In my own case the assessment, according to age, was 7 per cent. After serious consideration I accepted, in writing, the terms and conditions offered, and contributed to the Superannuation Fund for seventeen years, until my retirement from the Service in 1925. The proposal now advanced, that this agreement be varied or cancelled, regardless of my concurrence, I most strongly object to. On the above-described conditions, in effect a guaranteed annuity for life, I entered into certain commitments in respect of life insurance, acquirement of a home, &c., and my position would be seriously prejudiced were my income further reduced, having in mind the heavy additional taxation in respect of income-tax, unemployment charges and levy, to which we are all now subject. In 1908 many officers declined to accept the conditions offered, preferring their right to receive an accumulated amount on completion of service. Most, if not all these men, have now retired and drawn their benefit. It is suggested that there is now no resource or recovery in respect of any payment made to such officers, irrespective of any Act of Parliament enacted subsequently. To vary the agreement, entered into with ex-contributors, by reductions of benefits or otherwise, while noncontributors escape scathless, is a proceeding which I submit would be impossible to justify, either in equity or good conscience. Admittedly had I remained in the Public Service, my salary would be subject to any variation directed by the authorities ; but now, as an entirely free and independent citizen, owing neither allegiance nor duty to any Government Department whatsoever, I object to, and protest against, any parliamentary Act or action which would regard me in effect as still an officer of the Service, and my income subject to dictation, variation, or reduction by the Government of the day. I would like to say that this is my personal opinion, my view of the case. I have not been in communication with any superannuitants' society, Public Service retired officers' society, or any other society whatever. I happen to live to a certain degree in isolation, and had occasion to pay a hurried visit here, so I took this opportunity of presenting this case before you. The statements are correct to the best of my knowledge and belief. There is a slight alteration in the date, which would not affect the subject-matter of the letter. Mr. Dickie.] You are objecting to the clause in the Bill relating to the ten years' average ? —That is my point. By how much would it afiect you ? —I have not the figures exactly. What is your present pension I—£4oo per annum. You do not know how much it would affect you ? —So far I have not been able to get the figures as to what my salary was ten years before I retired ; I retired in 1925. Would not my salary be considered ten years previous to that ? The Chairman: The Public Service Commissioner tells me, from 1921 to 1925. Mr. Gostelow.] You take the ten years back, or the three years prior to the 31st March, 1921, whichever is the greater ? —Well, I should say under those circumstances, if you go back to 1921, that I should be reduced certainly 10 per cent., possibly 15 per cent. ; and going back the full ten years I consider I would possibly be subject to a 20 per cent, cut, because I had rather rapid acceleration at the end of my service, because a great number of retirements occurred in the postal service in 1920-21. Mr. Savage.] Have you any definite information as to what you could have done with the same amount of money had you paid it into a private insurance company for an annuity ? —lt is hard to say ; I have not gone into that point —I have no figures at all. Mr. Hargest: Would it be possible for Mr. Martin to get information as to his salary during the whole of the period from the inception of the scheme in 1908 until he retired ? His is a most interesting case, and I suppose is typical of very many. The Chairman: The Public Service Commissioner has intimated to me that he will supply the required information.

John Thomas Cars, Accountant, New Zealand Post and Telegraph Department, representing tie New Zealand Post and Telegraph Employees' Association. (No. 15.) It is a matter for regret that the investigation of the Superannuation Fund was entrusted to the National Expenditure Commission as a subsidiary task to its vastly more urgent duty of reducing the expense of public administration. In justice to all concerned such an investigation should have been carried out by a body which could give its whole attention to this one problem, having due regard to the temporary difficulties through which the fund is passing, and capable of visualizing future action

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which would gradually have the effect of strengthening the fund without recourse to the extreme measures now under consideration. Instead of this the matter was handed over to a body which was charged primarily to find ways and means of effecting immediate and drastic economies, and it has obviously brought to its task regarding superannuation that same attitude of mind which caused it to recommend wholesale salary cuts, reduced old-age pensions, &c. Thus the position of contributors and superannuitants has been unfairly penalized, firstly, because the inquiry was conducted in an atmosphere of drastic economies, and, secondly, because the factor of urgency has been introduced, quite unnecessarily, at a time of financial panic. It is evident that the Commission did not bring very much original thought to the framing of its recommendations, as a comparison of the Commission's report with that furnished by the Government Actuary, as at the 31st March, 1930, will show. Section 1445 (1), page 143, of the Commission's recommendations (suggestions to postpone the date at which a contributor may retire) has been lifted word for word from the Actuary's report (page 4, paragraph 23 (a), while in the further recommendations, although the wording has been varied, the intention is exactly the same. We are therefore forced to conclude that the Commission, faced with the huge task of combing out State expenditure, has been content to treat superannuation as of secondary importance and to accept in toto the views of the Actuary. Without reflecting in the slightest degree on the Actuary, who is doubtless a highly efficient officer, we thus have the position that legislation having for its effect the imposition of serious hardship on a large class of citizens, and, what is even worse, the destruction of public confidence in the guarantee of the State, has been introduced virtually on the recommendation of one man, whose sole duty, after all, is to present figures to the Government so that any necessary increase of subsidy may be provided for. All parties are agreed that the causes of the present actuarial deficiency must be laid at the door of the Government, and the Government alone ; firstly, by its failure to subsidize the fund in an adequate manner, and, secondly, by making the fund a convenient buffer when embarking from time to time on a policy of retrenchment. It is no news to the Government that its failure to pay the necessary additional subsidy would eventually cause trouble, as every three years the Actuary, in the course of his duty, has reported the result of his calculations and named the amount required as additional subsidy. There the matter has ended, except that in 1930 an additional £100,000 was paid over. [It should occasion no surprise, therefore, if both contributors and annuitants feel that the present measure, which throws practically the whole burden on themselves, and which has been introduced at a period of acute financial stress, is dictated by a desire on the part of the Government to escape the consequences of its default in the past.] Its introduction at this time, when the spirit of financial panic is inclined to cloud mature judgment, and when the normal respect for the sanctity of contracts has been weakened, may be opportune from the point of view of passing the Bill into law ; but only if Parliament subscribes to the doctrine that in times of stress, the State, in the exercise of its sovereign powers, may permanently repudiate its legal obligations towards its own servants. We use the word " permanently " advisedly, because all other emergency legislation recently passed has been of a temporary nature, the date of expiry having been specifically named, whereas the present Bill, if passed into law, will operate for all time. I have already referred in a general way to the imposition of serious hardship. So far as can be visualized at the moment, contributors whom my Association represents will be detrimentally affected in the following ways :— (a) Financial loss : The average member will be deprived of five years' retiring-allowance worth about £750. In addition, he will be required to contribute to the fund during those five years approximately £55. Thus his total financial deprivation will be £805. This is a most conservative calculation, based on the existing rights and liabilities of two great classes—the rank and file of the Clerical and General Divisions, respectively. Higher-paid officers will, of course, suffer a proportionally greater financial loss. (b) Loss of retirement rights : Each member will have his period of retirement reduced by five years. In other words, the evening of his days, instead of being spent in that peaceful enjoyment which he has spent half a lifetime paying for, will be a time of drudgery, when advancing years have impaired efficiency. " The general effect will be to load the Department with a preponderance of elderly people, slow at their work, and in many cases suffering under a sense of grievance. This will prove particularly harmful in the Post and Telegraph Department, where youthful vigour and zeal are qualities absolutely essential to enable it to deal effectively with its multifarious activities. (c) Loss of promotion prospects : Even under present conditions the rate of promotion in the Post Office is painfully slow. This is unavoidable in a Department which depends for its efficient working on a large army of rank-and-file workers, directed by a small number of controlling officers. The natural result is that the percentage of controlling positions in the Post and Telegraph Department is the lowest in the whole Public Service. If the present Bill becomes law the immediate effect will be to block practically all promotion for at least five years. Section 7, clauses 2 and 3 (a), makes provision for granting an actuarial pension to contributors who are compulsorily retired after not less than twenty-five years' service. At first sight this seems to be a humane proposal, designed to make some provision, no matter how small, for people who

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might otherwise be left destitute. There is, however, a very real apprehension amongst a large class of contributors that this section will be invoked for wholesale retrenchment purposes. I refer particularly to linemen and other members of the General Division, who have mostly joined the Service after reaching adult age. A very large proportion are returned soldiers who probably averaged thirty years of age when they became contributors. The work these men perform requires strength and activity, and the belief is prevalent among them that once they have completed twenty-five years' service, and are beginning to feel the effects of age, and perhaps of war service, they will be quietly retired on a pittance. The foregoing facts relating to hardships are submitted to make it clear that contributors will be compelled to make many real sacrifices, direct and indirect, so combating the rather superficial idea that after all a few years' extra work will not hurt the public servants. The direct financial sacrifice, together with the indirect results in the form of delayed promotion and impaired efficiency, cannot be ignored when considering the question. My organization takes the view that, notwithstanding the default of the State in the past, there is no immediate cause for alarm. Even without a change of present conditions the fund can carry on for years to come, certainly for long enough to enable the country to recover from the present depression, and consequently to allow the Government gradually to increase its contribution to the fund, and so by degrees eventually overtake its liability. This would be infinitely preferable to rushing through legislation at an abnormal time which will impose on those least able to bear it a serious and permanent hardship. It would also have the effect of preserving to the State that reputation for straight dealing and national honesty which has for many years stood behind our many State activities, the loss of which would have an effect which can scarcely be imagined, but would undoubtedly prove nothing short of a national disaster. This is no mere flight of fancy. New Zealand is a country heavily committed to various enterprises which depend for their success on the people's absolute faith in the State guarantee. Signs are not wanting at the present moment that this faith has received a shock, and we are aware of a feeling abroad that if the Superannuation Bill becomes law, and thus legalizes a wholesale repudiation of solemn contracts, the already wavering belief in the soundness of Government institutions will be for ever destroyed. We therefore request that the Bill be not proceeded with for the following reasons : — (1) It is unnecessary. (2) It is a breach of contract. (3) It will impose serious hardship on those who have fulfilled their share of the contract. (4) It will do immense damage to the prestige and good reputation of New Zealand. Mr. Dickie.'] You realize that in a great number of superannuation schemes in other countries the retiring-age is five years greater than ours ? —I am aware of that. Do you consider that in your particular Department, the Post and Telegraph Department, a man's efficiency would be seriously impaired if he had to work for another five years ? —I really think so, from my knowledge ; I have had long service in the Post and Telegraph Department, and what I consider is a necessary quality there is physical efficiency. A great number of your officers retire at considerably under sixty years of age ? —At present they do. Due to starting at a very young age. Your officers start at a lower age than in most of the other branches of the Public Service ?—The Post and Telegraph Department depends for its recruitingground on primary-school boys really to a very large extent, boys recruited as telegraph message-boys. You can realize that any hold-up of retirements in our Department is going to have a serious effect in that direction. But a great number of officers in the Post and Telegraph Department have retired well under sixty years of age ?—At, say, fifty-four. Has not the state of affairs with regard to your fund been brought about largely through officers in your Service retiring too early ? —No man is retired except in terms of the Act. But many retired after thirty-five years' service ?—Those men retired strictly in accordance with the terms of the Act; and many of them have not retired voluntarily, at any rate —they certainly have tendered their request to be placed on the Superannuation Fund, but the fact remains that many of those men have been persuaded to do that. But many have retired under fifty years of age ? —I quite believe it: Ido not doubt it for a moment. Mr. Savage.] On the first page of your statement you say that it is evident the Commission did not bring very much original thought to the framing of its recommendations ; and there is a further suggestion that in your opinion the Commission did not have the time to make an independent investigation into the Superannuation Funds —they simply took some one else's opinion about the matter ? —Yes, that is the conclusion we arrived at. In the matter of the £300 limit, what do you think of that ? —To be quite frank, I am not enthusiastic about it. Possibly it does create injustice —that may be right —but we cannot overlook the fact that the men who are affected by the £300 maximum entered the Service with their eyes open — they recognized it, or must have recognized it, as one of the terms of their engagement, and for that reason I really cannot see that they have any particular grievance. Particularly am I concerned with the fact that the Bill has for its effect in the vast number of cases the imposition of a hardship on one class for the purpose of giving a very considerable benefit to another section of the Service ; it seems to me inconsistent with the general tenor of the Bill. Assuming that in many cases special privileges have been given to certain public servants in the various branches when they were retired, these privileges being made at the expense of the Superannuation Fund ? —Without a doubt that has occured.

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I suppose it would be correct to say that we need not worry about the £300 limit if other conditions were made to fit in ? Because if a man is getting £1,000 a year, and contributes accordingly, it would appear to me, without any actuarial knowledge, of course, that the fund would not suffer provided he was not given special privileges by way of special legislation, and all this kind of thing. My suggestion is to frame the Superannuation Act in such a way as to make it that the fund would not suffer and the superannuitant would not have any cause to grumble, even the highly-paid officers, without tampering with the £300 limit at all. To boil it down to simple language, do you think the Act could be so framed as to allow a man to retire—say he was getting £1,000 a year and he retired on two-thirds of that, it would be possible for him to retire on two-thirds provided other conditions pertaining to his service and payments were put on a proper basis comparatively with other members of the Service ? —Of course under the Superannuation Act conditions of contribution and service are uniform. A man, for instance, goes to £1,000 a year ; he stays at that for three years, probably ; then he suddenly finds himself jumped to £2,000 a year ; and when he retires he retires on that basis. He has been getting £2,000 a year, or even more than that, for the three years, yet for the greater part of his service he has been on a comparatively low figure ? —-That is true, such things have been known. I presume they were not anticipated when the Act was framed. My suggestion is that those things might be taken into consideration when making any amendment to the Act. However, straight out from the shoulder, you are not enthusiastic about the £300 limit at all ?—Not introduced in its present form at all. Mr. Hargest.] Do you consider that the age sixty-five, or sixty years of age with forty years' service, would be detrimental to the men of your Service ?—Yes, I do; I think it would be extremely detrimental. I have already mentioned, with a Service such as ours, consisting of large numbers of men who working actively in a physical sense, that to compel them to work to these ages on that particular class of work would probably mean that their efficiency would slip ; and I can visualize that as that occurs opportunity would be taken to retire them on an actuarial pension before reaching those maxima. I feel sure that the future has that in store in the event of this Bill coming into law. The efficiency of the Department will, I am certain, suffer, with a preponderance of these older men. Going back to the £300 limit, might I quote it from a different angle from Mr. Savage. Supposing under the new Bill an annuitant's contributions were worth more than £300, and supposing he got, say, £350 or £400 without any additional loading —your Association would have no objection ?—Provided fellow-contributors were not called upon to pay for the additional, they would have no right to object. There is a feeling amongst a number of superannuitants that they are contributing more than they are going to get out of it. If the pension were calculated on an actuarial basis, and if, on that calculation, and annuitant were entitled to, say, £400 or £500 a year without loading, your Association, I take it, would be agreeable ? It is not a question so much of the average of the last three years as a general average over the whole of the service, in the case of these higher contributors ?—I should not think there would be any objection to a man getting what he has paid for. Mr. W. Nash.] Assume that a man was getting £1,250 a year until the last four years of his service, then his salary was raised to £3,500 a year, and then he retires on £1,450 a year. Would not that automatically put the fund out of gear ? —Naturally, I should think ; that is one of those things that it is very hard to deal with. Of course your question would suggest that the rate of progress at the commencement of a man's career to its end should be graded with a view to the Super animation Fund. We will always, I suppose, have the case of a man who makes a sudden jump, either from natural genius or for other reasons, in the last years of his service, and it is very difficult to say just how such a case could be dealt with. Would you say his natural genius jumped in the last three years ? —I said "or for other reasons." But this is a special case, and I think it is typical of some others. Here is a man in the Service with a maximum salary of £1,250 up to 1927 ; then from 1928 to 1931 he receives £3,500 ; then in 1931 he retires on £1,450. You could not imagine the fund being actuarially sound on that basis ?—-No fund could stand that, unless when the original calculations were made provision was made to meet a proportion of such cases. The other point in that particular case of the "jump " is that it never applies to the rank-and-file men ? —Oh, never. And all the advantages with regard to the jump in the later years would go to the people on the high salaries ? —Without a doubt. Would your Association be in favour of an automatic subsidy if it could be worked out, the amount required to be paid in corresponding in some degree to the amount of the contributions ?— I do not know that there could be any " objection," for the simple reason that we have never had anything like it in the past. Which would you prefer —a guarantee, or an actuarially sound fund ?—The "actuarially sound " argument is a bit of a bug. Our claim is this : that while we know the fund is not actuarially sound—■ the Actuary has told us so —we claim that it is not in such a state of insolvency that it cannot be saved over a period of years. I personally feel that the fund could carry on for several years yet without entrenching on its capital, even. Ido not want to see this actuarial idea used as a means to attack in a wholesale way the present provisions that exist under the Superannuation Act. Assume that we accepted the fact that the Government ought to carry out the agreement that it has made with its employees — and everybody should, I think, accept that — then we come to another point. Would you sooner have a guarantee or a fund 1 Which would you prefer—the fund with the money or some form of credit lying behind it, or the State guarantee ? —Personally I would be inclined to favour the guarantee from the State that it will not default on its obligations. You would sooner have a guarantee than a fund 'Yes.

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The making of the fund actuarially sound means the payment of £1,000,000 a year, according to the Government Actuary. And you would sooner not worry about the payment of the £1,000,000 now ? —We do not want the £1,000,000 now if the country needs it, provided that the good faith of the State should be absolutely relied upon to meet its obligations as they accrue. The fund is now £5,500,000. Soon, the Government Actuary says, that is likely to decline by a quarter to half a million a year, by encroachment on the capital, with the normal subsidy being paid in. Would you be concerned then about the state of the employees ?—Of course, we have reasons in this Bill —the danger of the State attempting to avoid what is after all a legal obligation on the State—that endangers our position to some extent. On the other hand, we are asked to accept a scheme of things which means that the fund must be kept actuarially sound all the time, and under the Bill that is going to be brought about very largely at our expense. The price to pay for actuarial soundness at the present time is too great, and under the circumstances we would prefer to depend on the future good faith of the State. You mention in your statement that the objection that you have to the alteration of the contract with you as compared with the alteration of other contracts is that your contract is proposed to be amended for all time, whereas the other in most cases is confined to two years ? —That is so. If it were a case of a cut for a short period, you prefer the same cut being made on your superannuation for two years, rather than for all time, to lose the benefits that you have contracted for ?— I do not know that it would be quite fair for me to say that, because the load would then fall on superannuitants. All the members of the Service have lost two portions of salary in successive cuts. Do you think it would be fair for the same amount of reduction to be made in the amount paid to superannuitants, provided you definitely had a limit that it did not go below £150 or £200 ?—For a specified period of time ? Yes. —That would certainly be preferable to the provisions of the Bill. The Chairman.'] You say, " It should occasion no surprise, therefore, if both contributors and annuitants feel that the present measure, which throws practically the whole burden on themselves, and which has been introduced at a period of acute financial stress, is dictated by a desire on the part of the Government to escape the consequences of its default in the past." Just what do you mean by that—what has led you to make that suggestion ?—My suggestion is dictated by the belief that the introduction of what you might call a superannuation " scare " at the present time is liable to affect the public mind to such an extent that it is prepared to allow repudiation. It is only a suggestion on your part that it is " dictated by a desire on the part of the Government to escape the consequences of its default in the past " ? —Yes ; it is the opinion that is and may be very prevalent among contributors. Do you know if that is the general opinion of the other organizations of the Service ?—I have not discussed that phase of it. Getting back to the £300 limit, you think that that should stand ? —As I said before, the abstract justice of the removal of the £300 limit may be quite correct, but when it is included as part of a Bill which primarily has for its object the reduction of pensions and the imposition of longer service, I feel the introduction into that Bill is inconsistent at the present time, having regard to the fact that the increase of pension rights would be at the expense very largely of the lower-paid individuals, who will not qualify for a £300 pension. I feel that this is not the time to introduce such a proposal. Do you think that the proposed alteration of the £300 limit might be a serious charge on the funds ?—lt certainly will be a future heavy burden on the funds. Would that be one of the grounds ? —That would be one of the grounds—unless the place where it properly belongs is between the contributors affected and the State subsidy. It certainly should not throw any disadvantage whatever on contributors. Do you suggest, then, if the £300 limit were removed, that the load in regard to their payments to the fund should be increased upon the contributors who were going to benefit ?—Oh no, because that would throw them out of step with the others. The point lam trying to make is this : The fund is admitted to be actuarially unfinancial. That fact is due to many reasons, principally, I think solely, on account of the Government failing to pay what was expected of them. The natural effect is that the fund is down considerably, and that has an effect on all superannuitants and future superannuitants. If by this Bill we are going to increase the load on the fund we are going to decrease it elsewhere, and my point is that it is being increased in the direction of helping the highly-paid men to get higher pensions, the loading being decreased by extending the service of all a.nd reducing the pensions of men who are lower in the scheme. Do you believe in promotion ?—Yes. Supposing a man's salary were raised from £500 to £1,000, and he carried on that job for three or four years, and then retired. Do you think he should retire on the £300 ? —Provided that the fund is sufficiently subsidized and sufficiently financial to pay the higher pension, I would not grudge it to him. Of course you realize that this Bill is merely a Bill made up upon the Commission's report, it is not one that has been considered by the Government at all, practically —it has been referred to this Committee. Now, there is the question of the ten years' average salarjr, as suggested in the Bill. What have you to say about that ? The Commission's report says seven years for computing retiring pensions ; the Bill says ten years ?—Some extraordinary anomalies crop up in that. For instance, say the Bill were carried into law to-day. You would find men who were getting quite considerable salaries a few years ago and who as the result of so many cuts have had their salaries reduced very considerably ; and with the ten-year average their pensions would really be higher than with the three-year average.

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In regard to the salary cuts that have taken place, have the bulk of the employees in your Department continued paying in 011 the old rate ?—Not the bulk, I think. Would you say 50 per cent. ?—I really could not say. I know that rebates from the fund last year on account of reductions in salaries amounted to over £50,000, but just what that would mean, or how many participated in that, I could not say. You say, " There is 110 immediate cause for alarm." In making that statement you practically share the opinion of other organizations—you think that the fund should be allowed to carry on as well as it can for the next year or two ? —Yes. With the Government giving what assistance it can to help it along—is that the idea ? —That is the idea. Ido not profess to be an Actuary, but I did have a look at the figures on which I base that opinion, and I find that in the report of the Superannuation Fund for the year as at 31st March, 1932, the income for the year amounted to £462,281. During that year a rebate of contributions consequent on reductions in salary—which I mentioned a moment ago —under the Finance Act, 1931, was granted amounting to £52,079. That extraordinary reduction of income should not recur. I consider the income for future years should be approximately £514,360. The expenditure last year, including the payments of superannuation allowances and administration charges, amounted to £491,400. That would leave a credit balance in ordinary years of £22,960, but from this must be deducted any increased pensions which might happen to be paid in future years ; for that I have allowed the difference between the pensions paid in 1931-32 and the Actuary's estimate of pensions to be paid 111 1932-33. The pensions paid in 1931-32 were £395,890. The Actuary's estimate of pensions for 1932-33 according to his report is £406,900. The difference between those two figures is £11,010. If you deduct that £11,010 from the credit balance I mentioned, £22,960, you are left with £11,950 — practically £12,000 available to meet any further pension payments that might occur. 1 feel with £12,000 per annum available to meet contingencies of that sort that the fund is able to carry on, for some years to come at any rate. Mr. Gostelow.] What particular proposals in the Bill really affect your Association ? Take, for example, the ten-year average ; you have stated that the men in your Division do not get any increases in the last ten years ? —I did not go so far as to say that. I said promotions are slower: I did not say there were no increases in the ten years. Taking the staff generally, you would say the average of the last ten years would not differ very materially from the last three in your Division ? —I do not remember saying that. I ani putting that statement to you ? —The number who do get promoted is comparatively small, and I suppose one could say your statement is correct so far as it applies to the rank and file of the Service. Is not that a protection from the point of view of the rank and file —it scarcely affects them ? It makes the biggest difference to the men on the higher salaries, who are more in line for promotion, and broadening that basis, from three years to ten years, strengthens the fund —is that not in the interests of the lower-paid men ? —The lower-paid man, whether it is three years or ten years, taking that argument, is not better off by extending it to ten years, but the men further up are certainly going to be affected very considerably. But is he not better off if you have a sounder fund ? —The fund should be sound, of course, but why whittle away what the fund established as being an actuarially sound arrangement merely to relieve the Government of its obligations ? I wanted to find out how these proposals affected your Association ? —The ten-year average is of no added advantage to the rank and file, and is a serious detriment to executive officers. I thought you were not concerned with executive officers ?—Why not ? I thought you were only concerned with the rank and file ? —No, you are mistaken there; lam representing all members of my organization, who are drawn from all ranks of the Service. As far as being asked to stay on till sixty years of age with forty years' service, or till sixty-five years of age, is concerned, is that a real hardship ? —Yes, I consider it a real hardship, in that men have contributed to the fund 011 the understanding that they would retire at a certain age, and they are asked to give another five years of their life to the Service. After all, it is a whittling-away of a right that they possessed under the original Act, and I can see no reason why it should go by default. You prefer to push the Government to the ultimate limit, and risk the funds going bankrupt— risk a winding-up rather than agree to a compromise, we will say, that does not really affect the Service very much ? —Of course you put me at a disadvantage, because you are arguing now as an Actuary, which, of course, I cannot combat. But lam prepared to say that the fund will not go bankrupt if it is handled reasonably ; that it is strong enough, if the Government does what it is expected to do under the original Act. There is no reason why the fund should not be re-established over a period of years, and in the meantime it should fulfil its commitments. I suppose you have noticed the very sudden increase in retirements and pension allowances in recent years ? —Yes. Even in the last two years the number of pensions in the Public Service Superannuation Funds has increased from 1,706 to 2,165, and annual pensions have increased from £338,000 to £423,000. Taking that figure of £423,000, do you think a fair estimate of the capital value to produce that sum would be round about £4,000,000 ? —No, I should say not; I presume you would want about £8,000,000. That is for all time. Would you accept £4,000,000 as a reasonable sum to pay that £423,000 during the lifetime of the present annuitants—for ten years ? If £8,000,000 is required to pay £423,000 for ever, that would be a reasonable assumption —you would not question it ?— No. That £4,000,000 at least would be required to pay out that sum during the lifetime of the present annuitants ?—Yes.

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And yet the Public Service Fund has got less than £3,000,000 in hand.—Yes. So that you are £1,000,000 short in respect of your present annuitants. —-Yes. And on top of that you have some 17,000 contributors with contingent liabilities of £7,000,000-odd to meet. That is the position that I think the Associations possibly do not realize ? —True enough. The fact remains that the fund has been in this shockingly unsound condition presumably ever since it was set up. One minute you say " shockingly unsound," and the next minute you are quite content to carry on with it as it is ? —By " shockingly unsound " I am more or less paraphrasing your views, not necessarily ours. We quite realize the fund has never been actuarially sound from the day of its inception. But what is " actuarially sound " ?—The term that is being used pretty commonly lately with a view to showing in what a bad state the fund is. It only means " sound as certified by an actuary " —a fund is either sound or unsound ?—Notwithstanding the failure of the Government to subsidize the fund in terms of the original Act, it is still able to pay all its commitments up to date, and there is still a credit balance. lam not going to say a credit balance to meet liabilities for some unknown future period of years, but it certainly has a substantial credit balance. My argument is this : rather than pass an Act now of an extreme nature, in a very bad period of our financial history, that it would be far better to leave the fund alone for a few years until the country is in a position to carry out its obligations. At the present time we know that it is impossible to expect the State to pay over huge sums of money to the Superannuation Funds, for the simple reason that it has not got it; but surely we are going to get out of the slough of despond in a few years, and the State will then be in the position in which it has been in the past, of having money which it could pay into the Superannuation Fund. We know in the past it has not paid in, but provided that sort of thing is not allowed to continue or to be repeated in future years, I am sure that contributors to the fund, whatever experts may say, will be satisfied if the fund is allowed to stagger along for the next few years in the knowledge that the Government in the fullness of time will meet its obligations. You have noticed possibly that in the Public Service Fund, as well as in the others, the rate of pension outgo has been increasing very much faster than the contribution and interest income ? —Yes. That must have struck everybody, I think. Mr Valentine, the Chief Accountant of the Railway Department, told us yesterday, after looking very carefully into the position of the Railways Superannuation Fund, that next year he expected his fund would go down £160,000 ? —You must remember that there is an extraordinary feature about that. I am putting it to you that every one of the funds, next year or possibly the year after that, will begin to decrease —you cannot stop it; the position has been reached that the funds will decrease —they simply cannot stand up to their commitments. I want to put it to you, in taking up the attitude that the fund can " stagger along," to use your own words, w r ould you think it would be a reasonable proposition for the Post Office to take up the attitude that, if the Government was not in a position to pay salaries to its employees, you could use the depositors' money in the Post Office Savings-bank to pay salaries ? —No. You would say that the depositors were entitled to good security for all the money they had put there ?—Yes. You certainly would not say that the Post Office should use their money and rely on the State guarantee to meet the depositors' claims when they came in ?—No, that would be a diversion of moneys which were there for a specific purpose, without a doubt. Is it not the same thing in the Superannuation Fund—are you not using contributors' money at the present time to pay pensions I—Yes, there is no question about that —we all know that ; but there again, of course, we are in a different position. I think it would be totally wrong to take depositors' money to pay our salaries—we realize that; but here we have a fund made up of two parties, contributors and employer —the State. For the time being the employer is not in a position to meet his share of the bargain. Well, we are prepared to look at it in this way : we realize that the employer, through force of circumstances, or failure in the past, has not met his bargain ; but getting an undertaking from the employer that he will meet it in due course we are prepared to allow the fund as it exists, even though it is our own money we are using for the purpose of the fund. We are prepared to accept the assurance that the Government in due course will do its duty and put the fund in the sound position in which it should be. I think myself the analogy between our fund and the Post Office Savings-bank is unsound. There is no difference in principle. And as a Post Office officer you would denounce that —that depositors' money should be used to pay salaries ? —I would denounce it ? You would say it is financially unsound ? —I would say it is sheer robbery. I only want to get that analogy, that it is unsound to use capital moneys for other purposes, and I just want to say that it is just as unsound with the Superannuation Fund to eat away the capital of contributors to that fund to pay annuitants ? —You are putting up an analogy there which I cannot accept. For instance, supposing the whole of the depositors in the Post Office Savings-bank, in the kindness of their hearts, said to the Post Office, " We are going to let you pay your salaries out of our money for the time being rather than see the Post Office shut up." Ido not suggest that they would say it, but assuming that they did say that, then you might get an analogy between the Savings-bank and our fund. We as contributors are willing to allow our money to be used to pay pensions until such time as the State can meet its obligations, rather than have our future rights in the fund whittled away by this Bill. I think you are departing from what I want to bring out, and that is that as an officer of the Post Office Savings-bank, or as a bank manager, you would not use depositors' money to pay salaries ? —No. That is quite unsound ? —I said that before.

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Mr. W. Nash.] Assume that the Post Office Savings-bank had been paying out depositors' moneys for a number of years to somebody else, and then came back to the depositors and said to them, " We want you now to make up the deficiency in the deposits " —would you think that right ?—No, no more right than the present proposals. Then if the analogy of the Post Office Savings-bank being likened to the Superannuation Fund counts, is it correct ? For that is what the Government has been doing, in actual fact —they have been paying out depositors' moneys to people for years, and now they are asking the depositors to subscribe to make up the deficiency that they have created ?—Quite so. Mr. Wilkinson.] This witness puts some reliance apparently on a State guarantee. Is it a definite guarantee from the State that the fund would be kept intact, or sound ?—lt is an implied guarantee of the State behind it, and in the past that has been a very valuable asset to its undertakings. There has never been what you might call a specific guarantee given by the State that the Superannuation Funds should in the final analysis be a charge on the State. Would it not be to the advantage of the people you represent to have a new scheme established and have a definite guarantee, to compromise in the matter somehow or other, in some reasonable way, and have a definite actual guarantee for the future that would be of some value to work on ? Mr. Hargest : I think there is a definite State guarantee now, in the Act of 1908. Mr. Wilkinson.] But the witness does not say so ? —There is an obligation on the State to pay a subsidy. But not to guarantee the soundness of the fund. My point is this : would it not be to your advantage, or to the advantage of the people you represent, to get a State guarantee, and compromise in some way, so that that State guarantee could be obtained for the future ? —That would largely depend on the nature of the compromise asked for. After all, if the Government had done what the original Bill required it to do, there would be no need for this. It is a matter of sheer impossibility for Government to find the money ? —That is where I differ from you. I have not suggested at any stage that the money should be found forthwith. In the future more than the present ? —Will it be impossible in future years for the Government to meet its future obligations ? Taxation is apparently almost at its limit; to find large sums of money would be a very difficult matter ? —But the country is not always going to be in its present position. Could we not come together and have a definite arrangement made for the future, so that all these matters will be beyond doubt altogether ?—lt would be a splendid idea, I think ; but you must not expect us to give away all the rights we have had in the past. A reasonable compromise, lam suggesting ?■ —A reasonable compromise is of course a very excellent thing, but it all depends on what is a reasonable compromise. The Chairman.] You say definitely, as far as your association is concerned, that in your opinion the matter should be allowed to carry on, with the hope of the country getting out of its present state and being able to help the funds at a later date —is that the idea ? —That is so. Mr. W. Nash.] Assuming that Governments have been taking the contributors' money to pay out annuities to some one else, would you not prefer that that type of thing should stop, rather than let it drift ?—The way you have put it, I can only say that we would prefer it. You do not think that the guarantee, implied or written, should be broken in the way that it is proposed to be broken by this Bill? — That is so. Mr. Savage.] Has the fund ever been on an actuarial basis ?—I think it is a matter of history that it never has been on an actuarial basis. If it is decided to place it on an actuarial basis, would you still say the State should meet its present accrued liabilities to the fund ? —Undoubtedly. Any alteration in the basis of the fund would in no way absolve the State from its present liabilities ?—No. The present liabilities are in no way due to the fault of the contributors to the fund —I mean the public servants ?- —That is an absolute fact, because every contributor has been compelled, through the terms of his employment, to meet his obligation to the fund in full.

Rupert Samuel Wogan, Acting-Secretary, Public Service Superannuation Board. (No. 16.) Introduction : — 1. The law relating to allowances and compensation during tie years 1858 to 1907 has already been brought to the notice of members of the Select Committee of the House of Representatives set up to hear evidence on the proposals in the Government Superannuation Funds Bill, 1932, in a pamphlet entitled " Synopsis of the Law and Procedure relating to the Public Service Superannuation Fund," and also by the representatives of the New Zealand Public Service Association, Incorporated. Establishment of the Public Service Superannuation Fund: — 2. The fund was established on the Ist January, 1908. Contributors to the fund are of two classes, original and compulsory. In the first class are those who— (a) On the Ist day of January, 1908, being the date of the coming into operation of the Public Service Superannuation Act, 1907, were permanently employed in any capacity in the Public Service ; or who (b) On that date were employed in any Department and had then been continuously employed in any one or more Departments for a period of five years or more, and who within six months after that date by notice in writing to the Secretary to the Board elected to become a contributor to the fund, shall, as from the date of election be deemed to be an original contributor, and shall accordingly be entitled to all the benefits of the fund, subject to the provisions of this Act.

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Whilst in the second class are the compulsory contributors—i.e., all officers who have been permanently appointed since the Ist day of January, 1908. Section 30, Finance Act, 1928, provides that persons temporarily employed in the Public Service may be admitted in certain cases as contributors to the Public Service Superannuation Fund. Admissions under this section have been confined to female employees. Contributions 3. Contributions are deducted from each contributor's salary as it becomes payable from time to time, and are based on age at last birthday on the date the first payment to the fund is due. The scale ranges from 5 per cent, to 10 per cent. Police Provident Fund 4. This fund was merged in the Public Service Superannuation Fund on the Ist April, 1910, by the Public Service Classification and Superannuation Amendment Act, 1909, which provided that the contributors to the Police Provident Fund should become contributors to the Public Service Superannuation Fund, and that the money belonging to the first-mentioned fund —viz., £32,786 — should be transferred to and that the pensions (eighty-five ex-members drawing an aggregate annual allowance of £8,231.) should be payable by the latter fund. The Government subsidy to the Public Service Superannuation Fund was increased by £3,000 per annum owing to the inclusion of the Police Provident Fund. Qualifications for Retiring-allowances :— 5. In the principal Act of 1907 qualifications for the right to retire were as follows : Males at ages not less than 65, or after forty years' service ; females at ages not less than 55, or after thirty years' service. But there is a provision giving the Minister in Charge of the Department to which the contributor belongs power to extend the provisions of the section to any case in which the age of the male contributor is not less than 60 years or the age of the female contributor is not less than 50 years. This was further extended by section 7 of the Public Service Classification and Superannuation Amendment Act, 1909, to any case in which the age of a male contributor is not less than 55 years if his length of service is not less than thirty years, or to any case in which the length of service of a contributor is not less than thirty-five years. This amendment gives the Minister power to impose upon retiring contributors such terms and conditions as to payment into the fund or otherwise as he thinks fit. There is only one case where the Minister exercised this power. Summarized, the qualifications for retirement are : — Males— As of right — 40 years' service. 65 years of age. Minister's consent required— 60 years of age. 30 years' service and age not less than 55. 35 years' service. Females— As of right — 30 years' service. 55 years of age. Minister's consent required — 50 years of age. Lessening of Qualifications —Retrenchment Measures : — 6. In 1921, a year in which there was retrenchment in the Public Service, section 28 of the Finance Act, 1921, lessened the qualifications for retirement in those cases where the Minister's consent was required by three years, to those contributors who were compulsorily retired from the Public Service through no fault of their own. No retiring-allowance granted by virtue of this section could exceed the annual rate of £300. This limitation affected one contributor only. Forty-eight retiring-allowances were granted under the provisions of this section of a total annual liability of £7,553 55., and on the 31st March, 1932, the existing allowances were forty-three, of a total annual amount of £7,014 18s. Any legislation introduced which lessens the qualifications for retirements, without providing for the actuarial equivalent of a deferred pension, has the effect of loading the fund with liabilities many years earlier than anticipated, and also reflects in the amount required as subsidy. Military Contributors : — 7. Section 52 of the Finance Act, 1920, enables the Minister in Charge of the Department of Defence to extend the provisions of the section to the case of any contributor who holds a substantive commission in the New Zealand Permanent Forces dated prior to the Ist day of November, 1920, and whose age is not less than 55 years. To provide for the extra liability on the fund in connection with those contributors concerned, the sum of £20,000 was paid out of the Consolidated Fund into the Superannuation Fund.

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Special Provisions with regard to certain Members of Defence Department: — 8. Section 39, Finance Act, 1930 (No. 2), made special provision with regard to retiring-allowances from the fund to certain members of the Defence Department, who were compulsorily retired through no fault of their own, and who at the date of retirement were within five years, either by reason of age or length of service, of the extended provisions of section 26 of the Public Service Superannuation Act, 1927. In computing the retiring-allowances under this section, regard was had to the date on which the contributors could retire under the provisions of section 26 of the Act. Nevertheless, there is a loading on the fund as compared with those contributors retired under the provisions of the nextquoted section. Section 14, Finance Act, 1931, made special provisions with respect to retiring-allowances out of the Superannuation Funds to certain persons compulsorily retired. Here again, provided the contributor was either by reason of age or. length of service within five years of the extended provisions as set out in the Act, then he was entitled to a retiring-allowance. The Government Actuary, in assessing the amount of the retiring-allowance, is required to take into consideration when the contributor would as of right be entitled to receive a retiring-allowance—viz., 65 years of age or forty years of service. There is thus no loading on the fund on account of the early retirements of these contributors. The following table shows the number of persons retired under the extended provisions of section 26 of the Act since Ist April, 1932, grouped according to age on date of retirement, and length of service in completed years, and the total amount of retiring allowances granted : —

Note. —Eighty-five contributors have been retired under the provisions of section 26 of the Act since the Ist April, 1932. Of this number thirty-one qualified as of right to retire, while the remaining fifty-four were retired with the consent of the Minister in Charge of the Department in which the individuals were employed, but no terms or conditions were imposed. Thus the fund has to bear the load many years before it normally should. Of the 2,206 persons receiving retiring-allowances from the Public Service Superannuation Fund, 750 were retired under the extended provisions of the Act, receiving an aggregate annual amount of £143,943. Benefits of the Fund. Retiring-allowances—Method of calculation : — 10. For every year of service a contributor shall receive one-sixtieth part of his or her annual salary, and for every fraction of a year of service such contributor shall receive a proportionate part of one-sixtieth of his or her annual salary, but in no case shall the retiring-allowance exceed two-thirds of such salary. For the purpose of computing the retiring-allowance to be granted to a contributor, his salary shall be deemed to be the average rate of salary received by him during the three years next preceding his retirement, or if his service has not continued for three years then during the period of his service. It will thus be seen that the only limitation of retiring-allowances under the principal Act is two-thirds of such salary, which means that any service in excess of forty years would not be included for the purpose of computing the allowance. In 1909 the Government of the day amended the principal Act so that no person who joined the fund after the 24th December of that year will be entitled on retirement to an allowance exceeding £300 per annum, but no corresponding reduction was made in the scale of amounts to be paid by contributors for the purchase of such limited allowance, nor was any limit placed on the rate of salary on which contributions are payable. The effect of this has as yet not been experienced, but it is well understood, particularly by professional men who are appointed to the Public Service at high salaries on which they contribute to the fund in full.

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Length of Service in Completed Years. Total Amount » of Annual ® * tt i j I Retiring-allowances o" er ! 30. 31. 32. ! 35. 36. 37. 38. 39. Total. granted. i I > £ 8. d. 48 2 .. 2 549 14 0 49 6 .. 6 1,221 7 0 50 1 2 2 .. .. .. 5 1,092 12 0 51 1 3 1 1 .. .. 6 1,495 0 0 52 1 1 .. .. 2 495 11 0 53 1 .. .. 1 1 3 785 19 0 54 1 1 1 1 1 1 6 1,737 15 0 55 1 .. .. 1 237 10 0 56 1 1 1 3 968 12 0 57 1 1 .. 2 468 10 0 58 ! 59 1 -1 438 16 0 60 4 1 1 1 2 .. 9 1,287 0 0 61 1 .. 1 268 6 0 62 63 64 4 .. 1 .. .. 1 1 : .. i .. 7 1,040 2 0 I I I Total 11 1 2 4 15 7 7 4 3 j 54 12,086 14 0 I I I 1

1.—15.

The number of existing contributors to the fund on the 31st March, 1932, was 17,516, and of this number 2,368 joined the fund prior to the 24th December, 1909. These contributors will therefore not be subjected to the limitation as set out above. Widows' and Children's Allowances : — 11. The principal Act provides that if any male contributor dies, whether before or after becoming entitled to a retiring-allowance, the following provisions shall, subject to the provisions of section 114, apply : — (1) If he leaves a widow surviving him, there shall be paid out of the fund to the widow at her election either — (a) An annuity of £18 during her widowhood, or (ib) The amount of the deceased contributor's contributions to the fund, less any sums received by him from the fund in his lifetime. (2) If the said contributor leaves a child or children under the age of 14 years, there shall be paid out of the fund to or on behalf of each such child the sum of ss. per week until such child attains the age of 14 years. In 1920 the Government paid on account of widows and children a cost-of-living bonus at the rate of £13 per annum to a widow, and ss. per week to a child. Section 27 of the Finance Act, 1925, now section 114 of the Public Service Superannuation Act, 1927, made this a permanent increase to the then statutory amount, and the extra amount paid out of the fund is recovered from the Consolidated Fund. Government Subsidy : —• 12. The following are three essential requirements upon which a scheme of pensions to Government employees may be started on a sound basis : —■ (1) The sum so contributed should be used only for the purpose of meeting the portions of the current and future liabilities for which they were intended. (2) That part of the contributions intended to meet the portion of the future liability should be accumulated at interest, and not used for any other purpose. These accumulated contributions may be referred to as the contributed fund. (3) The remainder of the current and future liabilities not so provided for by the contributions should be discharged year by year as they accrue by the Government of the day, and no portion whatever of the contributed fund should be used for that purpose. Annual Contribution by Government:— 13. Section 50 of the Public Service Superannuation Act, 1927, reads as follows :— " In the month of January in every year, the Minister of Finance shall pay into the fund and out of the Consolidated Fund, without further appropriation than this Act, the sum of £86,000, together with such further amount (if any) as is deemed by the GovernorGeneral in Council, in accordance with the aforesaid report of the Actuary, to be required to meet the charges on the fund during the ensuing year." A triennial investigation of the fund is made by the Government Actuary, who reports as to the increased amount to be paid by the Government to meet the liabilities falling due for each year of the succeeding, triennium. Under the present law it is necessary to obtain an amendment of the Superannuation Act for each increase of the subsidy. Since the fund was established the original section dealing with the annual contribution due bv the Government has been amended three times. In 1909 the subsidy was increased from £20,000 per annum to £23,000 per annum. In 1912, the annual amount was increased from £23,000 to £48,000 per annum. In 1918 the amount was increased from £48,000 to £86,000 per annum, but no provision was made for the payment of shortages—viz., £25,000 for each of the years 1911 and 1912 ; £18,000 for each of the years 1914 and 1915 and 1916; and £38,000 for each of the years 1917 and 1918,' a total of £180,000. If the Government fails to pay the full subsidy recommended by the Actuary, the effect will be that some portion of the pensions relating to service prior to 1908 will be paid out of moneys which should be allowed to accumulate for the payment of annuities on account of service since that date. The continuance of this process will result in the bankruptcy of the fund. The Actuary's report on his examination of the fund as at the 31st March, 1930, discloses the amount short-paid by Government on account of subsidy as £1,301,000, which sum, accumulated at 4J per cent, to the 31st March, 1931, aggregates £1,776,357. The compensation for which the fund became liable since the initiation of the scheme totalled £559,771. To this amount must be added accretions to the date of retirement, approximately £138,000, for which the Consolidated Fund would otherwise have been liable, and the whole may be fairly set against the total subsidies paid to the fund during the period of twenty-four years, amounting to £1,820,500. Finances of the Fund. Income:—14. The income consists of : (a) Contributions from contributors ; (b) Government subsidy ; (c) fines and proceeds of sales of unclaimed property ; (d) interest from investment of the fund ; (e) subsidy from the Cook Island and Samoan Administration; (/) interest on outstanding contributions. Outgo The outgo may be summarized under the following headings, viz. : (1) Allowances to members, widows, and children ; (2) contributions refunded ; (3) administration expenses. B—l. 15.

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Income and Outgo :— In order to illustrate the rapidity with which the total outgo has overtaken the total income during recent years, the following comparative table is presented : —

It will thus be seen that the outgo of the fund has overtaken the income, and a substantial portion of existing pensions is being paid out of the actuarial reserve pertaining to existing contributors. In other words, the fund is using part of its capital each year to pay pensions. Ihis process canno continue indefinitely, and must lead to serious financial difficulties. General Reduction in Salaries of Contributors : The general reduction in salaries of contributors to the fund operating as from the Ist April, 1931, has had its effect on the fund in relation to the income received. Of the eighteen thousand public servants who were contributing to the fund on the 31st March 1931 four thousand elected to continue to contribute to the fund on their unreduced and the remaining fourteen thousand are entitled to a rebate of contributions in accordance with section 8 of the Finance Act, 1931 (No. 1). This amounted in the aggregate to £57,388 2s. 10d., and is to be adjusted by retaining the amount in the fund and applying it against future contributions due by those concerned. A further general reduction in salaries of contributors to the fund operated as from the Ist April, 1932, and consequently the income will fall considerably. 01 , , lnofl 0 ona , + A Of the 17 516 persons who were contributing to the fund on the 31st March, 1932, 3,876 elected to continue to contribute to the fund on their unreduced salaries, and the remaining 13,640 are entitled to a rebate of contributions in accordance with section 9 of the National Expenditure Adjustment Act, 1932. This amount has not yet been ascertained, but it is estimated that it will approximate £70,000. Instead of this amount being set against future contributions due by those concerned, it is to remain in the fund until the retirement or death of the contributor. Investments: — The total amount invested as at the 31st March, 1932, is as set out hereunder . Inscribed stock — £ s. d. £ s. d. 5 per cent. .. .. •• •• 46,000 0 0 5i per cent. . • • • • • 30,000 0 0 5| per cent. .. •• 236,000 0 0 51 rier cent .. 232,350 0 0 5 2 per cent. " ! 544,350 0 0 Eural advances bonds —5 per cent. .. •• n Rural-intermediate-credit bonds —5| per cent. .. 29,000 0 U Debenture securities — 44 per cent. .. • • • • 15,000 0 0 5 per cent. .. .. •• •• 34,102 12 7 5J per cent. .. . • • • • ■ ' > 523 0 0 5 | per cent 7,700 0 0 5| per cent. .. •• •• 1,750 0 0 6 P erCent 572,100 12 7 Mortgage securities — 5 per cent. .. .. •• 2,134 12 4 5| per cent. .. .. ■ • • • ? > 0 6 6 per cent. .. •• •• 1,511,782 2 6 fii rier cent •• •• 28,161 10 3 6 *P ercent 1 1,549,526 5 7 £2,931,132 8 2 This total of £2,931,132 Bs. 2d. includes £23,371 12s. 4d. invested on Stipendiary Magistrates' account. \The Chairman.] What does that mean ?—ln 1925 or 1926 legislation was brought in creating a special Stipendiary Magistrates' Superannuation Fund, and the Public Service Superannuation Board administers this account on behalf of the Treasury.] Prior to the Ist January, 1916, the fund was invested by the Public Trustee. Section sof the Public Service Classification and Superannuation Amendment Act, 1915, authorized the Board to invest the moneys of the fund in certain classes of security. As a result of the change in the method of investment, the rate of interest earned on the mean funds was £5 Is. 2d. per cent, for the year Ulb, as compared with £4 ss. 4d. for the previous year.

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Year. j Total Income. Total Outgo. Income for £100 of Outgo. £ £ £ 1909 . .. .. 108,339 25,272 429 1914 .. .. 200,737 82,840 242 1919 .. .. .. 327,412 164,920 198 1924-25 .. .. •• 490,574 318,462 154 1930-31 .. .. •• 537,286 439,190 122 1931-32 462,281 491,401 94

L—ls.

Interest earned on Mean Funds : — I set out the rate earned for the years indicated : 1921, £5 6s. per cent. ; 1926, £6 Is. sd. per cent.; 1930, £5 16s. lid. per cent. ; 1931, £5 16s. lid. per cent. ; 1932, £5 19s. 6d. per cent. Interest overdue The amount of interest overdue on mortgage securities on 31st March, 1932, was £37,351, and increased to £47,145 as at 31st August, 1932. Redemption of Inscribed Stock : — On the 31st August, 1931, the Board was compelled to request the Treasury to redeem at par inscribed stock amounting to £50,000, bearing interest at 5J per cent, and maturing 15th August, 1933. Again in the month of August, 1932, the Treasury came to the assistance of the fund by purchasing a further parcel of 5-| per cent, stock, maturing 15th January, 1933, amounting to £30,000, and £20,000 5J per cent, stock, maturing Ist February, 1936 : a total of £100,000 during the twelve months. During the year 1931-32 the fund reached the crucial period of its existence, and its retrogression can be set down to — (a) The non-payment by successive Governments of the subsidy recommended by the investigating Actuary. (b) Retirement of contributors who have not attained the age or completed the service necessary to qualify for a retiring-allowance as of right, and who have been granted allowances without regard to the burden placed on the fund in consequence thereof. (c) The allowing of rebates of contributions consequent on reductions in the salary scales. It is estimated that the approximate receipts and outgoings for the present financial year will be as follows :— Receipts. £ Outgoings. £ Contributions .. .. .. 214,690 Allowances .. .. .. 455,000 Government subsidy . . .. 86,000 Contributions returned.. .. 45,000 Interest on investments. . .. 113,500 Administration expenses .. 7,474 Sundries . . .. . . 900 Deficiency .. .. .. 92,384 £507,474 £507,474 It can be taken that the year commenced with a deficiency of £31,502. This sum must therefore be added to the estimated deficiency of £92,384 as shown in the pro forma account, and must be met by— (а) The realization of an asset such as inscribed stock; or (б) The Government coming to the assistance of the fund by a special payment of, say, £125,000 before the 31st March, 1933. I have drawn up a consolidated revenue account for the period Ist January, 1908, to 31st March, 1932, and this is attached to the end of my statement. Conclusion:— Representations on behalf of contributors to the fund will be made by the Service organizations. The Public Service Superannuation Board has given preliminary consideration to the provisions of the Government Superannuation Funds Bill, and I am instructed to inform you that while it does not wish it to be understood that the Board approves of the provisions of the Bill, nevertheless if it is decided that the basis of reconstruction is to follow the lines of the proposals in the Bill, then the Board desires that the recommendations embodied in a memorandum addressed to you, dated the 12th instant, on the various clauses be given careful and full consideration. Public Service Superannuation Fund. Consolidated Revenue Account for the Period Ist January, 1908, to 31st March, 1932. Dr. £ s. d. Cr. £ s. d. To Members' contributions — By Retiring-allowances— Under section 19 (ordinary) .. 4,348,170 18 4 To members .. .. 3,934,923 510 Transferred from other funds* .. 44,158 15 10 To widows and children .. 362,772 1 0 Interest on arrears of contributions 6,152 18 4 Contributions returned .. .. 835,774 12 7 Government subsidy— Contributions transferred to other 18,551 5 3 Statutoryf 1,756,000 0 0 Superannuation Funds (Section Section 114, Public Service Super- 100,818 6 8 120)J annuation Act, 1927 (widows Compensation, section 22 (/) .. 14,357 18 9 and children) Loss on realization of securities .. 14,024 14 2 Interest on investments .. .. 1,900,328 7 4 Interest (section 38, Public Service 2,179 5 8 Fines, fees, and sundries .. 10,715 5 2 Superannuation Act, 1927) Subsidy, Cook Islands and Samoa 9,124 19 4 Administration expenses .. 104,852 12 11 Balance as at 31st March, 1932 .. 2,888,033 14 10 £8,175,469 11 0 £8,175,469 11 0

* Includes £32,785 15s. 4d. transferred from Police Provident Fund and £2,877 16s. 7d. from Westport Harbour Board Fundi f Does not include £64,500, being portion of subsidy for period Ist April, 1932, to 31st December, 1932, to reconcile with figure of £1,820,500 as shown on page 2 of the annual report for the financial year ended 31st March, 1932. % Includes contributions of Magistrates transferred to Stipendiary Magistrates' Fund.

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The provisions of the Public Service Superannuation Funds Bill have received preliminary consideration by the Public Service Superannuation Board, and while the Board does not wish it to be understood that it necessarily approves of the principles of the Bill, it submits the following comments on certain individual clauses in case it is ultimately decided by your Committee and Parliament that no better means can be found of rectifying the present position of the Superannuation Funds : — 1. Clause 4: Computation of Actuarial Retiring-allowance.—The principle embodied in this clause has been already adopted to a limited extent in the existing legislation, but under the new legislation the application of the principle will be greatly extended. This being so, the Board is strongly of opinion that the formula on which any particular pension is actuarially determined should be made available to the Board if the amount of the pension granted is questioned by the contributor. The Board does not question in the slightest degree either the ability or the integrity of the Government Actuary, but it is obvious that it will be most unsatisfactory if a large number of contributors are compelled to accept pensions which are based on principles which are not available for their information. Although the Board believes that every care will be taken by the Government Actuary and his officers in assessing the pensions payable, nevertheless, if any error in computation did occur to the detriment of the contributor, there would be no possible remedy, unless the formula on which the computation is based is made available. The Board is satisfied that unless some provision of this kind is made, there will be a large measure of dissatisfaction amongst contributors to the Superannuation Funds. 2. Clause 4 (3): Lines 20-26.—The Board considers that this provision is at variance with the first part of the subclause, and suggests that the words " actually received by the contributor " in line 25 be deleted, and the following words substituted therefor : "on which he was contributing to the fund." 3. Clause 6 : Future Retiring-allowances. —The provisions of section 11, Public Expenditure Adjustment Act, 1921-22, section 8, Finance Act, 1931, and section 9, National Expenditure Adjustment Act, 1932, conferred on contributors a right to contribute on a higher basis than their actual salary. It is considered desirable that these provisions be expressly saved in a proviso to the clause. 4. Clause 7 (1) : Contributor Retired as Medically Unfit. —The Board is of the opinion that this clause should be amended to make it clear in those cases where a contributor to the fund is retired on the ground of medical unfitness the provisions of this clause do not apply to his case —i.e., that he will receive a retiring-allowance computed in accordance with the provisions of clause 6 (1), and not on an actuarial basis. 5. Clause 12 (1) (a) : Review of Existing Retiring-allowances. —The Board considers with respect to contributors who retired on the 31st. day of March, 1921, and whose allowances from the fund commenced on the following day that this clause should specifically state whether the cases come within the provisions of subclause (1) or subclause (2). 6. Clause 12, Subclause (2). —This subclause provides for existing retiring-allowances to be recomputed on the average rate of salary received by the contributor during the ten years immediately preceding his or her retirement, &c. The Board considers that where a contributor contributed to the fund on a salary basis as provided for by section 11, Public Expenditure Adjustment Act, 1921-22, section 8, Finance Act, 1931, and section 9, National Expenditure Adjustment Act, 1932, the rights under these sections should be preserved by a proviso to the clause. 7. Clause 12, Subclause (4). —The Board desires to point out that the provisions of this section of the Bill will create an anomalous position as between contributors to the fund who have already been retired without completing the service entitling them to the full retiring-allowance and contributors who may retire in the same circumstances after the Ist January, 1933. In the case of those contributors who have been retired prior to the Ist January, 1933, if even only a few days earlier the allowance will, as the Bill now reads, be reduced by 20 per cent., whereas in the case of contributors retiring after the Ist January, 1933—it might be a few days later —the retiringallowance will be on an actuarial basis, and consequently less favourable. The Board is of the opinion that unless both present and future retiring-allowances are calculated on the same basis a wide differentiation will result between the two classes of contributors, and that unless the same limitations are imposed in regard to both classes officers at present in receipt of retiring-allowances will benefit at the expense of the present contributors. The Board is of the opinion that there should be no differentiation between present and future retiring-allowances. 8. Clause 16 : Guaranteed Rate of Interest on Investment of the Fund.- —-The Board is of the opinion that any payment to the fund under the provisions of this clause should be statutory, and not subject to appropriation by Parliament. It is suggested that the words, " out of moneys to be approprated by Parliament for the purpose " be deleted, and the following words substituted therefor : " and out of the Consolidated Fund without further appropriation than this Act." The Chairman.] Do you wish to add anything further to your statement ? —No. Mr. Hargest.] On page 1, under the " Police Provident Fund," you say that in 1909 this fund was taken over by the Public Service Superannuation Fund. We have had evidence that there is a feeling among the police that by doing that they were unfairly treated. Is that so ? —No. I have taken out some statistics and data in connection with that point, but unfortunately I did not bring it with me as I did not anticipate that question. In my opinion the benefits the police receive under the Public Service Superannuation Fund are infinitely better than under the Police Provident Fund. As a matter of fact, in 1910 when the Police Provident Fund was taken over by the Public Service Superannuation Fund their accumulated fund had only increased in 1909 by £314 and I think the total income up to the extent of 87 per cent, was utilized in paying outgoings, therefore it only required another year or two for that fund to be in the same position as our fund is in to-day.

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Would it be possible for you to give the Committee the figures and data you refer to ? —Yes, I will send it up later. On page 2 there is a subheading " Military Contributors." Is it part of your duty to discuss that question or just purely the financial aspect of it. I understand they are coming before the Committee ? —Quite probably they are. Then I think I will leave that matter for the time being. Mr. W. Nash.] On page 5 you say " The continuance of this process will result in the bankruptcy of the fund " —i.e., paying annuities from current contributions. If the guarantee or the words of the statute were carried out there would be no trouble ? —Not in so far as receiving the proper subsidy from the Government on the report of the investigating Actuary. That could not happen ? —Quite so. In regard to the anomaly in the 1931-32 provision regarding contributions that have been paid on the higher salaries, in one case they got a credit and in the other case they are not to get it until they pass out of the fund I—That1 —That is so. Would you suggest that that anomaly should be adjusted if there are any amendments made under the Act ? —lt is going to put the fund in a worse position than to-day. Presuming that steps were taken to put the fund on a reasonable basis, would it be the right thing to let the people have their money back or have some credit for it, rather than wait for twenty or thirty years for it ? —From the point of view of the fund, as it now stands the provision of allowing the credit to remain in the fund until the individual retires or until his death is undoubtedly of benefit. We have the use of that money. We do not have to pay interest on it. You are getting £70,000 from contributions that they have paid in without paying anything for it, and the remaining contributors get the benefit of it ? —Yes, but there is one aspect I would like to point out. If any one of those individuals retires medically unfit at the end of March, 1933, the pension is not calculated on the net cash salary that he is now receiving it is calculated on what he was receiving for the last three years. Under the provisions of this Bill for a recalculation of the retiring-allowance to seven or ten year basis we would not take off the amount which he received in rebate, but he would get a retiring-allowance calculated on the amount he received in the respective years. They have paid something for which they will get nothing and they ought to get their money back, or it ought to be credited to them, rather than keeping it in the fund ? —lf the fund is placed on a a proper footing there should be no trouble about giving the people a credit. The principle underlying the provision in the Act was that if the fund was forced to pay out that money, assuming it is £70,000, we would be forced to realize securities ; and the only way we can realize is for the Treasury to come to our assistance and buy inscribed stock. Suppose we look at it in another way. £70,000 has been contributed by the contributors for which they will receive no benefit ?—That is so. The Government has taken that money from the contributors without giving them a fraction of benefit from it and they will not pay it back. For instance, say I make a contract with you that you will give me certain benefits if I pay you certain moneys and then at the end of that time you say you cannot give those benefits and you are not going to give me the money back. Would you be allowed to do that in any Court of law ? You would not be able to maintain that attitude in any Court of law ? —That is so. Is not that the effect of the legislation in 1932 ? —lt provides that the money is not to be paid out now or to be set against future contributions ; it is to be retained until they retire. The Chairman.] That was passed in the House. Mr. W. Nash.] They are putting one set of contributors at a very great disadvantage. They say they are going to keep their money until they have determined when it shall be paid out. "It is their money, we agree with that, but we are going to keep it " is what they say ? —May I point out this case in connection with a contributor who is entitled to a certain rebate and who dies while he is in the service. I have had a case of this kind already. The widow elected to accept the £31 per annum in lieu of a return of contributions. That widow received £51 which was the amount of the rebate to be allowed to that individual so, from the point of view of keeping it in the fund, if the individual is unfortunate enough to die before he is entitled to a retiring-allowance, a refund of £51 in a lump sum to the widow would be of greater benefit than allowing the amount month by month to the individual. You do not suggest that the fund should do things that are not in order on the chance of some one dying, do you ?—-These rebates should never have been allowed, in my opinion. Mr. Wilkinson.] In your table on page 7 do you include outstandings from overdue interest ? — No, actual cash receipts. The outstandings would be additional ?—Yes. Mr. W. Nash.] In the estimates for the current year you give your interest on investments as being £113,500. That is a fall of £54,952 for the year, that is what you estimate will be the fall in interest ? —As I just explained to Mr. Wilkinson, this is on a cash basis —receipts and outgoings—l have not called it a Revenue Account. It is the cash received and the cash we should pay out. You admit that your interest receipts are going to decline about £55,000 during the year ? —ln actual received cash. As compared with last year ?—Yes. That is a pretty serious thing. I thought Mr. Wilkinson's point was in connection with the rate earned—in 1932, £5 19s. 6d. ?—No, that is on the figures as they are shown in the Revenue Account on the mean funds. Then the outstandings are part of the return ?—Yes.

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Mr. Wilkinson.] That is the point I wished to make. Mr. W. Nash.] Then you explain that the amount of interest overdue on mortgage securities was £37,351 on the 31st March, 1932, so your average interest rate will decline ?—Yes. The Chairman.'] On page 6 you show the total amount invested as at 31st March, 1932. I notice that your investments on inscribed stock and so forth are less than the mortgage securities. Are we to take it that the mortgage securities would be over land properties ? —Yes, principally on broad acres. On broad acres ? —Yes, principally. Have you any idea where you are getting to with these securities ? We know that the Superannuation Funds are not affected by the 10-per-cent. reduction, but the mortgage securities there must necessarily have been some less amount in connection with them. The rate of interest would not be paid in full, would it ?—No. The securities to-day are not what they were worth three years ago ? —That is quite so. Do you think there is going to be any serious loss there ? Have you any idea ? —I think so, by the fact that I have indicated that our interest outstanding at 31st August, 1932, increased to £47,145. And that amount may increase ? —lt may. That is a possibility. Mr. Dickie.] What is the amount in arrear on account of interest ?—£47,145 as at 31st August, 1932. It is set out on page 7. The Chairman.] When the salary cuts were made certain rights were given to officers in regard to paying on higher salaries ?—That is so. How much time was allowed for them to make up their minds as to what they were going to do ? — Six months. They were given six months ? —Yes. Mr. Wilkinson.] Were they notified ?—Yes, through the Public Service Official Circular. The Chairman.] Seeing that so many of them did not elect to take advantage of that right, do you think it should be extended ?—ln 1921 it was extended by an amendment to the section. They were given about thirteen months. It was increased by another seven months by the Finance Act, 1922. In regard to the last cuts, they still had that right ?—Yes, in 1931 and also in 1932. Were they then notified ? —Yes, and I also sent out several reminders to the Departments. Did they have a reasonable time in which to make up their minds ? —Six months should be sufficient. They had six months again ? —They had from Ist April to 30th September to make up their minds whether or not they would pay on the reduced salary. And you think they had ample notice ? —Yes. Mr. Gostelow.] I would like to follow up the question about the notice. I take it you are speaking for the Board, and that what you said about people having quite long enough to make up their minds only applied to existing conditions. If the superannuation system is materially altered by any Act, should they be given an opportunity of reviewing the matter ? —From that aspect, yes. That is a different question altogether ? —Yes. I think you referred to people forty-eight years of age with thirty-five years' service being retired on the thirty-five-sixtieth basis ? —Yes. The Board fully realizes the seriousness of that, but it has not the power or means of preventing those retirements ? —That is so, the Board is not in the position to prevent it. The power is in the Minister in Charge of the Department where the contributor is employed. It is not even in the Minister in Charge of the Superannuation Office or the Board itself. I know the position, I just want the members of the Committee to realize that your Board has not the same power as the Railway Superannuation Board ? —lt has not the same power. Has the Board ever made representations that this power of granting early retirement pensions would involve the funds in a very serious liability ?—Yes. I think that the Board has brought up the question many times. You realize, and the Board realizes, that the effect of granting war bonuses as salary threw a very large burden of liability on the funds ? —That is so. Also the inclusion of house allowances. Were any representations made by the Board in respect of that aspect ? —I do not think so. Mr. Wilkinson.] I have a letter here from the Secretary of the Teachers' Superannuation Board in which he states definitely that no notification was given to contributors of the fact that they could contribute on their higher salary ?—I presume that what he means was that no notice was sent to every contributor to the fund —a specific notice. The Chairman.] A little while ago you said they were notified ? —Through the Official Circular. But every contributor might not have seen that notification ? —Also each Department was communicated with and requested to convey the contents of the Circular to the officers under their control. Mr. Wilkinson : I take it that the answer is that the contributors were not notified except through the Official Circular. The Chairman.] That is what I wanted to know. Was each contributor notified personally ? Apparently they were not. The notification was sent through the Official Circular and the Department ? —Yes. Now having got that information, do you think the option should be extended under those circumstances ? When you said every one had been notified I had to accept it, but Mr. Wilkinson has brought up a case in point —the teachers. What I want to know is whether the contributors

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received proper notice ?—I think I am safe in saying that the Departments communicated with the individuals and ascertained whether or not they intended to pay on the reduced salary. The Chairman: Perhaps Mr. Millar or one of the representatives of the other organizations who are present could enlighten us on that question. Did you send out notices to all individual members of your organization at the time 1 Mr. Millar : No, just a notification in our official publication, the Public Service Journal. The Chairman: There was no special notification sent ? Mr. Millar (Public Service Association) : No. The Chairman : What about the teachers 1 Mr. Parkinson (N.Z. Teachers' Institute) : The teachers had printed notification only, through the Education Gazette and through our own paper National Education also, but there was no personal notification. The Chairman : What about the railways 1 Mr. Stanley (Railway Officers' Institute) : In the Railway service they were notified. Each man received a notice which had to be signed. The Chairman: That gives us some information. We know that the Railway employees were notified, the others were not. Mr. Stanley : In respect of the Railway people, it was made compulsory, and the Department made them notify what they intended to do. Mr. Millar : There was no way of checking up whether each individual in the Service knew whether he could elect to pay at the higher rate or not. The Chairman: Do you, Mr. Wogan, think that the option should be extended under the circumstances ? —Yes, but not to the extent that individuals who elected should be allowed to retract. lam not suggesting that. lam talking about the individuals who had no notification ?—As far as lam concerned I have no objection. It is a matter for the Board. That is a matter for the Board ?—Yes, and for the individual to pay up his arrears of contributions. That is all right. Mr. Hargest.] In your statement of your investments you have one item " Mortgage securities," £1,500,000 approximately, and on page 6 you show that your overdue interest on mortgages is £47,000. That is roughly 3 per cent, outstanding. Have you any possibility of getting rid of some of that, or is it likely to accumulate 'Yes, it will be some years before we get rid of it, because some of the securities are being carried on under the Chamber of Commerce scheme and every possible endeavour is being made to keep the men on the land and make their position as easy as possible. There is a possibility of there being a considerable loss on those mortgages ?—Yes. Mr. Dickie.] In connection with your mortgages, about 50 per cent, are table mortgages, are they not ? The rest are flat mortgages ? —Yes. Do your arrears include arrears of principal or just arrears of interest ? —Only interest. Not principal payments ? —No. Mr. W. Nash.] What proportion of your interest has not been collected ? £47,000 out of a total estimated interest bill of £160,000. That is the amount that has not been collected for the current year ? It is the amount that has accumulated all along. That is interest overdue. Some of it will probably not refer to this financial year, but to past financial years. The Chairman.] There is a possibility that you will lose most of that ?—We may. Mr. Wilkinson.] Would it not be possible to get an amended table showing the actual net returns, not the gross returns for that period (see statement, page 7), 1921-32. We really ought to know the actual amount collected, not the amount that is owing on account of interest ? You mean the net effective return ? _ . Yes, You have given us a table of the gross returns from interest and you have included m that table the outstanding interest ?- I will get that for you. Mr. W. Nash.] You have been keeping the accounts of the Superannuation Fund for some time, or have been associated with the fund for some time ? —Yes. Could you go back to the inauguration of the fund ? Have you all the particulars from the inception of the fund ? —All except a number of statistical cards which some years ago the Government Actuary said there was no further use for and which we destroyed. Could we get a statement showing the amounts paid out of the fund on account of back service. If you have the accounts it should be possible to get that figure ?—I should say that that is a task for the Government Actuary. He will have to make some calculations, showing what the contributions would have purchased, and it will be an enormous task. The point is very important. It is the cause of this Committee being set up. We ought to know the exact amount that has not been paid in that should have been paid in, and the exact amount that the contributors are asked to carry. That information can be obtained if you have the accounts. It should be possible to ascertain what you have paid out on account of back service and also on account of special retirements, and if we could get that figure we would be able to ascertain exactly the state of the funds to-day ? —We have not the figures in connection with exits, that is persons who received retiring-allowances and who have since died. Where is it if you have paid it out of the fund I—You have to have each individual statistical record to ascertain what he actually paid into the fund. If we have not got the record, then we cannot give you the information. The fund started on a given date and you have all the records of what money has been paid into the fund ? —I have a statement here of what we have actually received.

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Ido not want the aggregate. Say, for example, you received £5,000,000 into the fund ; you have paid out of the fund £2,000,000 on account of the service of contributors 'and £3,000,000 on account of back service. Why cannot we get the actual figures. The Actuary says in every report that the fact that money has been paid out of the fund is the main reason why the funds are in their present state, ancl I think the information regarding the amount paid out on account of back service should be available to us. Mr. Gostelow will co-operate with you in getting it ? —I do not know if you understand what an enormous task it would be, even if we could get it. This is a fund which has been built for a specific purpose, and it has failed because certain moneys that should have been paid into it have not been paid, and we ought to know the amount. Does it mean that the fact is of such importance and would upset the question of the subsidy so much that we ought not to get the information ? The Chairman.'] I think the whole question is whether it can be supplied. Mr. W. Nash.] But the witness says he has the accounts. The Chairman.] When you say it will take a great deal of work, do you mean it will be necessary to put on a staff to do it ?—Yes. How long do you think it would take ? —Probably run into months. Mr. Gostelow, what is your opinion ? Mr. Gostelow.] If the information as I understand Mr. Nash's question is wanted in the form he stated, it would take three months even with a good proportion of staff. As far as I can see, I think you could get an approximation to the same result by taking the actuarial reports. They are made out trienially and show the pensions estimated to fall in for the ensuing three years and what proportion should bo paid by the State. Those reports are available from 1910 onwards. The only other alternative would be to take each pension and subdivide it into two parts, that purchased by the contributor and that in respect of back service, &c. ; but, there again, I cannot see that it would get you very far, because the contributors' part of it has been affected by so many different things since the inception of the fund. For example, the war has resulted in an average increase in salary of over £100 per member at all ages. I cannot see that you would get any particular results from all the work. Mr. W. Nash.] This back-service payment is definitely a liability of the Government. You have charged it to the existing contributors. Now you are trying to get the fund on a sound basis because of the fact that the moneys that were provided by existing contributors have been used for the purpose of meeting payments for back service. The Government is responsible for those payments for back service, and we* want to know the amount involved. Mr. Gostelow.] I think you will get that from the actuarial reports. Mr. W. Nash.] I do not care how you get it so long as we clo get it. The Chairman.] Will you look into the matter, Mr. Gostelow, and confer with Mr. Wogan on the question ? Mr. Gostelow.] I will be only too willing to do so. Mr. W. Nash.] We will get a statement from Mr. Gostelow and Mr. Wogan setting out the amount that they estimate the fund has been loaded with on account of back service ? The Chairman.] Yes.

Berkeley Lionel Dallam, Permanent Head, Prisons Department. (No. 17.) As requested, I desire to submit tie following observations in regard to the Superannuation Amendment Bill: — I do not propose to deal with the general principles underlying the proposed amendments, as these have already been laid before the Committee. As Assistant Public Service Commissioner I have seen the statement submitted to the Committee by the Commissioner, with whose views I concur. It is with one particular phase —namely, that dealing with the age of employees in relation to efficiency in so far as the Prisons Department is peculiarly concerned in common with the Mental Hospitals Department—that I desire to make some comment. I understand Dr. Gray, of the Mental Hospitals Department, gave evidence before the Committee yesterday on similar lines. Prison officers are recruited for the Prison service at an average age of 30 years. They are required to serve two years' probation, hence the average age of commencement of service for superannuation purposes is 32 years. This fact alone is not altogether unique, as despite the popular idea that the average age of entry of officers to the Public Service is comparatively young (well under 20 years) the statistics taken out four years ago showed that in quite a number of Departments the average age of commencement was fairly high. For example : —■ Age of Entry. Age of Entry. Prisons .. .. 32 Years. Marine .. .. 31 Years. Mental Hospitals.. 30 „ Lands and Survey 35 „ Police .. .. .. 25 „ State Forests .. 29 „ Internal Affairs .. .. 34 „ Agriculture .. .. 32 „ Public Works .. .. 32 ~ Printing and Stationery 26 „ With respect to Prisons, Mental Hospitals, and Police, where officers may at any time be called upon to deal with refractory persons who resort to violence, physical fitness is an important factor. Officers in the " sear and yellow " stage who are either too decrepit physically to handle a situation masterfully or too irascible in temper through mental infirmity to exercise patience and tact, are a hindrance to good order and discipline, hence not only do these officers commence their service late, but for the sake of efficiency they must retire early.

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The average age of retirement on superannuation in the Prison service since 1921 has been 57 years. I have not been able in the time available to get statistics further back. It is interesting also to note that during the last five years no less than forty-one officers have resigned voluntarily at an average age of 37 years. These officers have either realized that the conditions of service and prospect of pension are not sufficiently attractive, or they have found the strain of the work too intense, and have sought other avenues of employment. At the age of 60 most prison officers, particularly those engaged on ordinary disciplinary duties, have passed their age of usefulness to the Department. Every person who has given any thought to the matter realizes the undesirable effect on prisoners of long terms of incarceration, but few pause to think of the effect of daily contact with criminals and the monotony of the institutional atmosphere on the prison staffs. It is inevitable that as these officers get on in years their general fitness becomes seriously impaired. The proposed Bill, in so far as it provides for an actuarially reduced pension to all who retire except with forty years' service or 65 years of age will adversely affect this class as compared with their existing rights. At present, in addition to the general provision for retirement on superannuation of officers of forty years' service or whose age is not less than 65 years, the Minister may extend the benefits to an officer of not less than 60, or an officer of 55 years if the service is not less than thirty years ; or to any case where service is not less than thirty-five years. It is, of course, provided that the Minister may impose special conditions for the protection of the fund, but, as has already been pointed out to the Committee, this has rarely been invoked. The amending Bill provides for the retiring-age of males of 65 years, or 60 years and forty years' service, and for females 60 years or 55 years and thirty-five years' service, and that retirement allowance without fulfilment of these conditions be actuarially reduced. In view of the peculiar conditions of employment as indicated above in the Prison service it would be reasonable to make provision for such officers to retire without actuarial reduction after 60 years of age, notwithstanding that forty years' service had not been completed. It is a cardinal rule in connection with Superannuation Funds that special privileges to particular sections should be avoided, as a basic principle of a superannuation scheme is the bringing together of a large number of employees with a view to obtaining common benefits by paying contributions on a common basis, and any sectional privileges violate the principle of co-operation and the averaging of risks. It is therefore suggested that as the particular Department is primarily concerned, from an efficiency point of view, and as some extra compensation is due to the officers from the Department for the peculiar conditions obtaining, any additional contribution considered to be necessary should fall on the Department concerned. It is considered that provision along the following lines would meet the case equitably; would prevent the officers of the Prison service suffering any further disability through the variation of the existing conditions of retirement, and at the same time would impose no special burden on the fund at the expense of the general contributors. The provision that would meet the case would be that the Governor-General in Council may allow specific classes or groups of employees, on account of the special nature of their duties, to retire at age 60 on pension based on one-sixtieth of average salary for the last ten years for each year's service, subject to the condition that where the Government Actuary certifies that an undue strain will thereby be imposed on the Superannuation Fund such additional subsidy as the Actuary certifies is necessary in respect of such employees shall be paid into the fund by the Department to which the specified group of employees is attached. Mr. Dickie.] With regard to your contentions regarding early retirements and your remarks in regard to the Police Force, is it not a fact that when there were disturbances last year certain retired officers of the Police Force were taken on temporarily because of the bad state of affairs, on account of their steadiness, age, and service being more valuable ?—I am not in a position to answer that question. Ido not control the Police Department. The Police are referred to in your report, and that was why I asked the question. However, I will get that information from them when they appear before us ? —With regard to the Prisons Department we would not take on old men, as we realize they could not cope with the situation. Mr. Hargest.] Do you consider the present age limit is sufficiently high for men in the Service ? Do you think 65 would be too high ? —Yes. In your Service ? —Yes. Mr. Wilkinson.] You do not suggest that the people employed should pay any additional contribution in order to get out of the Service earlier. You suggest the Department should pay the whole of the difference ? —I consider it is the peculiar nature of their duties which renders the men inefficient when they get old, and the Government should pay the difference as an added compensation for service.

William Fulton Abel, President, New Zealand Educational Institute. (No. 18.) Mr. Chairman and Gentlemen, the statement which the New Zealand Educational Institute puts before you in connection with the Government Superannuation Funds falls naturally into two parts —(a) General, (b) Special. By this is meant that a large part of what has to be said could be

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said equally well for and on behalf of all the other State services, while there are certain particular facts and considerations that have special reference to the Education service and those engaged in it. Under the heading " General," attention is claimed for the following : — Superannuation an Accepted Feature of Social Life. It should be said at the outset that superannuation is now an accepted and growing feature of modern social life. Government's, municipalities, business firms, have all found the advantage that is derived from joining with their employees in establishing a form of thrift that provides against the proverbial " rainy day " and the inevitable approach of age and infirmity. A superannuation scheme affords security, economy, and stability. The employer may rest confident that his staff will be permanent and that the efficiency of his undertakings will accordingly be enhanced. A regular, contented, and efficient staff will produce the largest possible return for the capital invested in property and plant, while the ease of mind and reliance upon an assured future leaves the employee free to devote liis whole mind and energy to the interest of the undertaking in which he is engaged. Superannuation is thus in very truth an illustration of the principal of co-operation and mutual help. The great gain that a system of superannuation brings to the employer is in the permanence of his staff. He knows that as the result of a considerable stake in a superannuation scheme members of his staff will not readily leave him. The contribution that he makes to a superannuation fund is as nothing compared to the increase that he would have to make in his salary bill if he had to secure an efficient staff in competition with the rest of the employing world. On this point, Mr. H. W. Manly, past-president of the Institute of Actuaries, London, a world-wide authority on pension funds, says, " A fund maintained in a sound financial condition is, in my opinion, a blessing to both employer and employed. The employer secures a continuity of service, for the employee will think twice before he leaves a service where he had a number of years to his credit for pension for a small additional income ; and if he (the employer) makes a proper contribution to the fund, in addition to guaranteeing a good rate of interest, he secures efficiency in the service by superannuating his servants with a reasonable pension when they are no longer useful." An Agreement between the State and its Servants. The superannuation scheme was based on an agreement entered into between the State and its servants for their mutual benefit. Briefly put, the agreement was that the servant should serve for certain years and pay in prescribed contributions, in return for which the State gave its assurance that the servant should receive a certain allowance for life. There is no need to enlarge upon this point nothing could be simpler or more direct. Nearly all of what has to be said in what follows is in effect nothing else than an appeal to that agreement and a claim that it should be honoured on the one side as it has been on the other. The tacts on which reliance is placed in support of the claim are these: — Compulsory Entry. There are certain elements in the matter of the teachers' superannuation scheme that are sometimes overlooked and that ought to be borne constantly in mind when this subject is discussed. One of these is the fact that membership in the fund is compulsory on all those who enter the service except in the secondary and technical schools. This compulsory entry is complementary to a definite contract. Plainly the Government said, " You shall enter this fund, you shall pay in a definite contribution, and you shall receive a definite benefit." Now the Government is saying, "We find ourselves in financial difficulties and we are not able to carry out our contract in full." The Government had undertaken to see that the fund was kept sound under the terms on which its members are obliged to join. Now, apparently, the Government proposes to repudiate its contract. What does this in actual fact mean ? It means that the Government, by compelling its servants to pay contributions to the Superannuation Fund, and by neglecting to pay in the contributions that itself had undertaken to pay in, has placed itself in the position of a defaulter, and apparently has the intention to place most of the burden of that default upon the public servants instead of discharging its own liability. State Guarantee. A wider question that the question of superannuation is involved in the present discussion. The Superannuation Funds enjoy the benefit of a State guarantee —that is to say, the State compels its servants to join the funds and pay in contributions, and it assures them that it will maintain the stability of the funds. Now it appears that it is going to say that it will not maintain the stability of the funds in the terms prescribed. What, then, is the value of the State guarantee to other funds ? The Public Trust Office, the Government Life Insurance Office, the State Fire Office, the National Provident Office, and the Post Office Savings-bank are all guaranteed by the State. What will be the value of the guarantee if circumstances get a little worse than they are to-day ? If a State guarantee means anything it means that the whole resources of the State can be called upon in time of necessity. Indeed this was expressly provided for in a particular clause in the Act relating to the Kailways Superannuation Fund. This provided that no alteration to the Act shall have any effect on an original member. There could not possibly be a more explicit State guarantee than that, and yet the Bill now under discussion is evidence that the guarantee will not be honoured. What confidence could there be that other State guarantees will be honoured if circumstances render such inconvenient to the Government of a future day ?

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Propaganda and the Public Mind. A great deal of misunderstanding concerning superannuation has been produced in the public mind by continued ill-informed criticism in many newspapers. For many years the public has been used to reading such expressions as " Superannuation of public servants at the expense of the public " The crushing burden of the superannuation funds upon the public." This last has been a favourite line of criticism by newspaper correspondents. What are the real facts 1 Superannuation in the State services of New Zealand has saved the country many times its cost. Without a superannuation scheme the State could never have retained in its service the most valuable officers m its Departments except by paying much higher salaries. In the absence of a superannuation scheme the most efficient of the public servants would, as their efficiency became evident, have been drawn off into the commercial and professional walks of life where their qualities would be recognized and adequately rewarded. The high standard attained by this nation in the world's eyes is due more than anything else to the ability, assiduity, and fidelity of its public servants. _ The steadying influence of the heads of the State Departments has been of incalculable value, and it is because of the superannuation scheme that they are willing to remain in the Public Service at salaries greatly inferior to what the business world is ready to offer them. No Real Need for the Bill. There is no real need for the Bill. The funds are not in so healthy a condition as they should be, or as they would be if the State had fulfilled its obligations. All that the Government needs to do meanwhile is to pay a pound-for-pound subsidy, as it proposes to do under the Bill. Responsible Ministers have stated from time to time all that is required of the fund is that it should meet current liabilities. The following figures show that our proposals would have this effect for some years at least, perhaps until such time as the present depression passes by : —

Hon Sir Amrana Ngata: What was the actual subsidy paid ? Mr. Verschqffelt: In 1930 and 1931, £68,000; in 1932, £43,000. Mr. Abel: Had the Government done under the old Bill what it proposes to do under the new Bill things would not have been in a bad state at all —there would have been some balance, at any rate, left at the end of the year to meet the extra liabilities that the fund would have to carry in future years. It should be recognized that the present condition of the funds is not due to the prevailing financial depression. It is coincident with it, but not a consequence of it. It is a consequence of the failure of the Government to keep its side of the bargain. The members of the funds have done their share, but the Government has not. The National Expenditure Commission gives the following figures in support of this statement: — £ Teachers' contributions .. .. 1,967,000 State contributions .. .. . • 990,000 To make the position worse it is to be noted that practically the whole of the State's contribution has been used to meet liability for non-contributory service, and therefore the subsidy to supplement payment of present contributors has been negligible. The executive regards the Government's proposals as panic legislation, and it is of the nature of panic to be reckless and unreasonable. Freedom from Political Influence. The National Expenditure Commission says, " With a full sense of responsibility, we urge that payments be never again allowed to fall into arrears ... A. second failure of the State to meet its obligations would shatter all faith in Government superannuation schemes." In direct conflict with this declaration the Commission itself recommends that the necessary payments be made by annual appropriation, thus bringing them every year within the danger zone of political expediency. Against this the executive would urge strongly that means be taken to remove the funds altogether from political influence. Some independent governing authority should be set up which should have the same freedom from political influence as is enjoyed, say, by the Post Office Savings-bank. Before proceeding to deal with particular points affecting the Education service, the executive desires to recapitulate and summarize the general considerations that have been mentioned. It has to be borne in mind that the superannuation scheme has been regarded as a definite and permanent feature of the Service. It must be so regarded, since it is one of the conditions under which members enter the Service. They are compelled to join, the scheme, and they are not allowed to withdraw from it until they leave the Service. It has thus become one of the features of their life work. It is a form of thrift which has been prescribed for them from the beginning of their service, and has been regarded

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Members' Pound-for- j nterest f rom Total Credit Year. Contributions.! subsidy Investments, j Income, ,g g ' Balance. I I ! ££££££ 1930 141 094 141,094 70,144 352,332 222,423 129,909 1931 .. 143,392 143,392 73,105 359,889 235,902 123,987 1932 .. .. 136,693 136,693 72,682 346,068 254,927 91,141

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as an important element in the foundation on which their careers have been shaped. Now, through no default on their part, they are threatened with a severe loss in the very part of their prospective income that they had regarded as the most secure. They had assumed, and they had a right to assume, that provision for their future, to the limits prescribed by the scheme, was assurred. Whatever other provision for the future they have made has been made with the solid fact of an assured superannuation allowance as a foundation to build on. Hence the changes threatened in the Bill assume for them a very alarming character. Alarming Changes. How alarming these changes are will be seen from the cases, selected at random, set out in a separate paper. The first of these shows that a teacher who is to be called on for 4£ years' additional service will suffer a loss of £1,358 in the present value of his pension rights. When to that is added the fact that he has to continue paying contributions for a further period of 4| years at a rate of, say, £30 a year instead of drawing his expected pension, the severity of the impost becomes apparent. To sum up, four years more of service, four years more of contribution, a loss of £1,200 in actual receipts, and a large sum representing interest-earning value, is an unreasonably heavy infliction to impose on a servant who has carried out his contract to the full. Even when all these items have been estimated and allowed for there is still to be added the further consideration that the annuitant, by reason of the added stress of the last few years of duty, may retire with health so impaired as to definitely reduce his expectation of life. The condition of members who have already retired is affected to a smaller, but still serious, degree. They had before retirement performed their service under known conditions and had retired on an allowance guaranteed by the State. It was known that the State had not kept up to date with its share of the contributions, but no one had anticipated that it would ever say, in effect, " We do not intend to pay our share for the Superannuation Funds ; you will have to do it yourselves." Thus the retired servants are threatened with a weakening of the position that they had every right to rely on as secure. They are in danger of finding that the sure confidence that they placed in the word of the Government has been falsified. Effects on the Education System. The executive claims that intimate knowledge of the education system enables it to speak with authority on the inevitable effect the Bill will have if it becomes law. There will certainly be a definite falling off in the efficiency of the schools. Not many men teachers retain their full efficiency to the age of sixty-five years, and a considerable number of them will, under the provisions of the Bill, have to continue in the service to that age. Even at sixty years most men have passed their prime, and their retention at and after that age will mean that in many cases they will be occupying positions that could be better filled by younger men. But the Education service is different from the other services in that about two-thirds of its members are women. The executive asserts, with a due sense of responsibility, that for the majority of women thirty years' service is as much as the conditions of their service enable them to give if efficiency is to be maintained. Some are able to go on a few years longer, but if all are required to continue in the service till age 55 it is certain that many of them will be carrying on under stress that will be reflected in the quality of their work. The work of the teacher is at all times of an exacting nature, demanding a large expenditure of nerve force. Breakdowns are frequent, and if the present tendency to increase the size of classes continues they will become more so. Hence there is a risk of impaired energy prejudicial to the welfare of the schools and the children. The exhaustion that comes of duty too long continued, combined with the fear of broken health, will certainly be reflected in the work of the schools. Some striking figures illustrating this subject were compiled in 1930, and a summary of these is included here :—

Total Number of Teachers on Sick Leave and Special Leave during Year, June, 1929, May, 1930.

Mr. Dickie : What was the total number of teachers, and what percentages do vour figures represent ? Mr. Parkinson: About six thousand teachers.

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(Only periods of one week or over are included.) 1929. 1930. Kind of Leave. —* j ■ : June. July. Aug. Sept. j Oct. j Nov. Dec. Feb. March. | April. May. Totals. I I I Sick .. S 241 299 175 149 179 154 106 132 140 122 133 1,830 Special .., j 34 32 32 41 54 40 24 27 34 39 48 405 ——- 1 Total .. | 275 331 207 190 233 194 130 159 174 161 181 2,235 1

L—ls.

Cessation of Promotion. Two of the principal seasons that led to the establishment of the superannuation scheme were, first, that teachers who had reached the age when their service was no longer at its highest efficiency might be retired without hardship, and, second, that younger teachers of ability might be encouraged in their work by the assurance that their rise in the Service would not be hindered unduly by the retention of their seniors who had passed their period of full usefulness. If the Bill is passed both of these objects will be largely defeated. It has already been pointed out that the retention of elderly teachers who have passed their prime will react injuriously on the work of the schools. As far as can be seen, the passing of the Bill will stop all promotions for a period of approximately five years, for the obvious reason that there will be no vacancies to be filled except those due to death or other unavoidable causes. Generally speaking, the whole Service will have to mark time for the period named. This will be a severe infliction to the men teachers, but doubly serious to the women. Women not only constitute a large majority of the teaching service, but their range of promotion is much more restricted than that of the men teachers by reason of the fact that all the higher positions in the Service are in practice reserved for men teachers. The result will be that by the time the suspension of promotions comes to an end numbers of women will have approached so near their retiring-age that they cannot hope for promotion at all. Another aspect of the subject that calls for serious consideration is that delay in promotion entails delay in salary increase, or, in other words, an additional financial detriment added to those already enumerated, and arising not from any default of the teachers in discharging their share of the contract, but from default by the State. The delay in promotion referred to above is accentuated by another feature that is peculiar to the Education service and is not generally recognized. The peculiarity of the Education service is that payments are based on the average attendance at schools, and salaries are allotted to positions and not to the teachers personally. There is an elaborate system of grades and subgrades of position for which teachers have to apply and for which the increase of salary is small. Promotion from position to position usually involves removal from place to place, and in the Education as distinct from the Public Service, the expense of removal has to be paid by the teacher except in a few special cases. As a result it not infrequently happens that a teacher cannot apply for promotion because he cannot afford the expense of removal. The obvious consequence is that he is often obliged to remain in a lower position than that to which his efficiency entitles him, and suffers in superannuation allowance for the rest of his life. Returned Soldier Teachers. The executive emphasizes the hardship the passing of the Bill would have on a particular section of teachers who are specially deserving of the consideration of the State. The teachers referred to are the returned soldier teachers. It is beginning to be recognized that the men who returned from active service and resumed teaching are feeling the effects of war service, and that the requirement that they should continue in the service till age 60 will inflict hardship. Superannuation for Retrenchment. Occasions sometimes arise when Governments, as well as private employers, have to reduce staffs. It is an ungrateful task, and it is easy to find excuses for the use of expedients to soften its operation. To retire servants on superannuation is one expedient that has been freely used, and this is one of the causes of the present difficulties that the funds are faced with. The result of this has been that the onus of maintaining the displaced servants has been thrust upon the contributors to the funds instead of being borne by the community at large. The executive, while it admits that the Education service has suffered very little from this cause in comparison with the other services, makes common cause with them in entering a strong objection to the practice. It is no part of the duty or responsibility of the funds to provide for the maintenance of servants the State may no longer require. The Superannuation Funds are for the purpose of providing for the old age of those who spend their working-life in the service of the State. If provision has to be made for others it should be done by some other agency than these funds. Actuarial Deductions. The actuarial deductions proposed in the Bill require careful consideration. It is understood that a new scale of deductions will be constructed, and that it will be much more drastic than the existing one. This becomes a serious matter for those members of the Teachers' Fund who are concerned, and will inflict serious hardship on some of them. In the teaching service, when members retired under the " extended provisions," deductions, sometimes at full actuarial rates, I think I can say were very, very often made. That was not done, at least not generally done, in the Public Service. Hence it follows that these teachers are receiving smaller allowances than members of the Public Service Fund. Their allowances, already reduced, are now threatened with a further reduction equal to 20 per cent, of the reduced allowance. Teacher members will thus be subjected to a loss of 40 per cent, of their allowances, as compared with 20 per cent, in the Public Service, and this because the Teachers' Superannuation Board did its duty, while the deductions were not made in connection with the Public Service. Another class of case comprises those of teachers who retired a very short period before the completion of their service. This was done in order to assist Education Boards in making appointments at the beginning of a year or a term. They retired perhaps a month or a few months before completing their service, and thus were subjected to a reduction in retiring-allowance. Because they gave this assistance to the Boards their allowances are now to be reduced by an amount as great as 20 per cent. There is neither reason nor justice in this.

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One point that I think ought to be emphasized is that the Government's contributions to the fund are very considerably less, as our table shows, than the members' contributions to the fund. That is a very serious thing. And what makes it worse is that by permission of the Minister something like £100,000 of our capital a year now has had to be sold in order to meet our outgoings and of course that could not have happened without the permission of the Minister. I dare say the Minister felt itvery hard, having to allow that to be done, but it has been done. What makes it hard is that our own capital, most of it contributed by our members of the fund, is now being realized to pay the outgoings moneys every month. That is a point that I think ought to be kept very much in view. Mr. Dickie.] You say, " The executive would urge strongly that means be taken to remove the funds altogether from political influence." Does that mean that the teachers would like to over the fund and administer it themselves ?—No, it does not mean that. If you are asking me the question " Would the teachers be prepared to take over the fund ? ' I would say, Provided the fund is first put in an actuarially sound condition, they would tackle the job of managing their fund. If all the shortages in the Government contribution of £1 for £1 were met, would you take it over then ? If the Government paid up all the shortages, £977,000, and brought it up to £1 for £1, would you be inclined to take it over on those conditions ? —My answer to that is Yes. The Chairman] : Provided you still got your £1 for £1. Mr. Dickie.] Yes I—Yes.1 —Yes. Your statement is largely on the lines of many others that we have had —simply a suggestion that the State should keep strictly to its bargain. You realize that if the Government —if the country —arrives at a state of collapse, you become as ordinary creditors, do you not ? —lt sounds very bad. It does sound bad, but we have to face the future. Would you suggest that the Government should be driven to the absolute letter of all these agreements, with things in the country even to the point of repudiation ? —We do not know what the financial efiect of some of these proposals is, that is the point. We have no actuarial figures, for instance, to show us what the efiect of recalculating the allowance over ten years will be, or the efiect of making men work five years and some women ten years longer. We are short twenty-five millions—We do not take that very seriously. I notice you say that at age 60 most men are past their prime. Would you say that is so in the case of a schoolmaster —that he is past his prime at 60 ? lam 60 years of age. lam going on my contemporaries who left school with me and are in the teaching profession —You are not so efficient as you were between 55 and 60 years of age. From the point of view of the headmaster, do you think 60 years is too old ?—I would hesitate to say that 60 was too old. I would certainly say that between 60 and 65 he is giving less efficient service than between 55 and 60. Could you tell me how many teachers leave before serving their full forty years ?—I can give you the percentage of those who leave after having served the minimum amount of time. But I mean the number that leave before serving their full amount—forty years in the case of men. Do you know the percentage of men who leave before serving the full time ?—I know about 50 per cent, of the women leave when they qualify for the minimum allowance, and 29-B—say 30 per cent.— of the men. It is really the men we should base it on, because so many of the women leave on account of marriage, and so on. —No, I am not taking those who leave on account of marriage , I am talking about those who stay in the Service. What is the percentage of teachers who leave before serving the maximum period of forty years ?— I cannot give you those figures. I know that 50 per cent, of the women leave —or have been leaving— when they completed their minimum time, and that 30 per cent, of the men do that. Seventy per cent, of the men stay in, and 50 per cent, of the women stay in. Mr. Savage.] On page 3 of your statement you emphasize the importance of the State guarantee. It is correct to say that that was the basis of the fund from the beginning —I think that is right, that the various Superannuation Funds were based upon the State guarantee ; they were never on an actuarial basis ? —They were subject to a State guarantee. In that respect the position has not altered. It has got a bit worse—a good deal worse—through the State's default, and for no other reason. Then on page 4, under the heading of "No need for the Bill," you say the funds are not in so healthy a conditions as they should be, and so on. You seem to indicate there that it would be possible, by the State supplying a pound-for-pound subsidy, to keep the fund in a comparatively healthy condition until such time as the financial basis of the whole thing can be rearranged. I mean by that that the State would have had an opportunity of furnishing its part of the whole thing. Suggestions have been made to me, for instance, that the Bill might be passed in a modified form—the State could not afford to allow the thing to drift—that they might take immediate steps to prevent the drift during this session, and before Parliament met again they would have the opportunity of having gone into and furnished a new basis for the whole thing, so that public servants generally would not be sacrificed. Would you say that was practicable ? Because we are faced with this : the opponents will say, " Well, it is all very well to talk, but we have to find the money. Supposing that we supplied a pound-for-pound subsidy. That would put the fund in a comparatively good position, and the State meanwhile would have the opportunity of going fully into the financial foundation of the whole thing.—That is exactly the position.

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Mr. Hargest.] There is this aspect of it, that I suppose you have thought of : The Government Actuary tells us in his evidence that a pound-for-pound subsidy is going to take a million pounds a year ; and that in ten years' time that will have grown to two millions a year. You can see how very dangerous the position is. Is your Institute prepared to let it go at that ? —This table was set up for the purpose of showing that it was felt by a pound-for-pound subsidy the thing could be steadied for two or three years, when it is hoped the Dominion will have got out of its present depression, and the Government will be more able to tackle the position then. We may be getting into a bigger depression —we do not know. The point is, are the Civil servants by and large prepared to let things drift for another year or two in the hope that it will get better, or are they prepared to get the thing settled now one way or the other ?—That of course raises a very difficult question. We are all optimists, more or less, and we hope by steadying the fund that in a year or two it will be possible to put it right. On page 5 you show " Interest from investments." Are these investments invested in the Teachers' Superannuation Fund ?■—That is the income from the money invested by the Public Trustee on behalf of the fund. On behalf of the Teachers' Fund ? —Yes. In the case of the Public Service Fund, their annual income is 5 per cent, on millions, which would be roughly about £80,000, and the mortgagors are £47,500 in arrears to-day, which reduces it from a 5 per-cent. income to 3 per cent. That is the position of the mortgagors of the Public Service Fund. The Chairman.] I think it is only right to say that the Teachers' Superannuation Board will be coming before the Committee, and they will be giving those facts. —I am a member of the Teachers' Superannuation Board, and although we know quite well that the interest is not coming in, it is not as bad as indicated by you in the other fund. Mr. Hargest: We had a statement about the other fund, and I know it happens to be right. The only point I wanted to make is this : If the teachers took this fund over, there is a liability in the nonpayment of mortgage-moneys that has to be faced by some one. Mr. Dickie : That £47,000 of arrears of interest is on account of investments in flat and table mortgages, in which £800,000 is invested. Mr. W. Nash.] You consider if the State had met its liabilities when it had the money to meet its liabilities, the fund would not have been in its present position ? —Yes. Have you seen the Government Actuary's report with regard to that, up to 1930 ? —Yes. It states that there is £1,023,000 due to the fund from the State in accord with the statute provisions. You have seen that ? —Yes. And that is what you are basing your contention on —that had the State paid its contributions when they were due and when it had the money the fund would now be solvent ?—Yes. And that in the meantime they have been using the money that they have collected from the teachers to pay up pensions that they were liable for ?—Yes. And that is unfair at the present time to ask the teachers whose money has been used to pay some one else's pension to bear the loss of the deficiency in the fund ? —Yes. On page 5 you give the figure for 1932, " Members' contributions, £136,693." That looks to be about £20,000 more than the actual figure, £20,000 being the amount of the deduction allowed. —That is correct. Then the figure is again wrong if the report is right. The figure in the report is £136,693. The actual figure is £155,000-odd. The Government Actuary in his last report for the three years that we are in now, 1931-32-33, says that £214,000 is necessary to meet the liabilities of the fund and keep it solvent. You have taken £136,000-odd on a pound-for-pound basis. Do you think you would sooner have the Actuary's figure ? Or would you take the figure you have there, and take the chance of the position being worse at the end of another three years ?-—lf the Government would do all along what the Actuary wants the Government to do we would have been in a long way better position. You say the Actuary says £214,000 is necessary ? For those three years to keep the fund solvent. —Of course we would sooner have that. One point is that you are paying on account of back service—the liability of the Government for back service is one of the things that has put the fund in a bad position. Secondly, there are the special retirements, by permission of the Minister, which have been a liability on the fund and a charge on the existing contributors. That means, over and above the amount provided in the Act, even by consent of the Minister or on account of back service, that the Government have taken the money of existing contributors to pay their own pensions.—There is no other interpretation to be put on it. Would you sooner have the fund or a guarantee ? You have State guarantee according to the statute. Which would you prefer—to have a fund in which the moneys were lodged and controlled by a Superannuation Board, or would you rather have the guarantee of the Government behind it? — I would rather have the money, every time. You give certain arguments here. I notice a decline in the income of £107,042 for 1931 ; you did not make provision for that. The income for 1932 was £235,560 ; the income for 1931 was £342,603. —What are you quoting from ? From the Teachers' Superannuation Fund report. £28,000 of that is due to a fall in contributions, and £80,000 is due to a fall in the Government subsidy ; instead of paying in the same amount as was paid in in 1931 they only paid £43,000. Is it worth while emphasizing, do you think, the fact that it is not the shortage of the subsidy for the existing contributors that is causing the difficulty, but failure to pay the subsidy means that the existing contributors are paying back-service pensions ? — They are.

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One other point, in connection with those that have elected to contribute on the higher rate when the first cut was made. Within your knowledge did any individual assume that, having so elected to contribute on the higher rate, when the second cut was made they would still be kept on that rate ? —Yes, that is the case. I know of one or two specific cases where that was assumed, and assumed wrongly ; they did not make the election in the second case, assuming that the election in the first case stood. You think that ought to be remedied ?—I think so. There was a legitimate cause for their thinking that. Of course it is a fact that every teacher gets the Gazette, and it is part of his duty to read the Gazette ; but it is a fact that there are those that do not see the Gazette. Might I instance the case of an architect who neglected to make the election. His excuse was that he never saw the Gazette, it was not within his province, it was not necessary for him to see it. That could be understood. As regards the efficiency of the Education service, you are of opinion that a female teacher cannot competently handle children after the age of fifty years ? —No, I am not going to say that I know women teachers who can ; but taking it by and large it becomes a very great strain on them to do so. The general tendency would be for their value to decline ?—Certainly. From a teaching point of view ?—Yes. The same in regard to sixty to sixty-five years ?—Yes. Would you say that there is a special strain on returned soldiers owing to the fact that the war service broke their nerves to a certain extent, and the effect of that would come out in later years, to a greater extent than with the men who did not go to the war ? —That is the general opinion held by the Service. The Chairman.] In your statement you say that there is no need for the Bill. You go on to say, " Responsible Ministers have stated from time to time all that is required of the fund is that it should meet current liabilities." What Ministers have made that statement ? Ihe Hon. Mr. Downie Stewart has made that statement. . On page 6 you refer to the loss that would be suffered because of the service. But would the teacher not be drawing his salary ? How then do you arrive at the " loss " ?—Under the old Bill he was entitled to retire. He would not be drawing the same rate of salary after he retired ; he would only be getting two-thirds. Ido not think that is a very strong argument. lam not urging that he should work on to 65, but I do not think that is a very strong argument about what he would be losing, because I think he would be gaining.—Mr. Parkinson, I think, could answer that question. You refer to the removal of teachers. Teachers as a rule, we know, have to pay their expenses, except in some cases where they are removed. But in the majority of cases they get an increase in salary, do they not ?— In many cases they do not get any increase in salary ; they go from the maximum of one grade to the minimum of another, and very often they do not get a rise at all. They are not compelled to move.—They have to go if they want grading-marks—they must go in order to get grading-marks. Mr. Gostelow (Government Actuary).] You say, " The executive asserts, with a due sense of responsibility, that for the majority of women thirty years'service is as much as the conditions of their service enable them to give if efficiency is to be maintained." I would like to take some figures from my 1927 report, where I extracted the total number of retirements in the fourteen-year period from 1914 to 1927, and of those, that is after excluding all medical unfits, 454 female teachers retired during that period ; 126 retired under age 50—that is 27-8 per cent. ; 124, or 27-3 per cent., retired between ages 51 and 55 ; 164, or 36-1 per cent., retired between ages 55 and 60. Do you seriously contend that female teachers should retire before age 50 ? —Of course those figures show the actual thing, but they do not show the relative efficiency of the women who hung on to the finish. But do you not think those figures indicate "that the conditions ought to be tightened up a bit, when 27-8 per cent, of the total retirements take place under age 50, physically fit ?—I do not know. I can say that the conditions of the service make the job for women teachers getting about that age very difficult indeed. I doubt whether they can teach efficiently, many of them, after 50. What about the conditions in other countries ? I received this week the actuarial report of the South Australian Superannuation Fund. I meant to bring it along this morning, but I remember it pretty well. The Actuary referred there to the fact that the compulsory age for retirement wa,s 70 when the scheme was started. It was later altered to 65. He drew attention to the increased liabilities thrown on the fund. He points out there that the age of retirement both for the Commonwealth and for the South Australian State is 65 for males and 60 for females —that is the basis operating there, and apparently it does not interfere with the efficiency ? —But conditions like that will not make for efficient service. . . , There is a big difference between that and 27 per cent, of the women retiring before age ŌU— tiiat is the main point I want to stress. There is another statement that you have made, that you do not take the deficiency of twenty-three millions in the total funds very seriously ?—No reflection on the Actu i y l3elieye tl)e figure ? _j do not gay t b at a t all. But I know that is putting absolutely the worst construction upon the fund. Just looking at it from the point of view of the actual figures, there are 5,823 annuitants, drawing pensions of £1,100,000. Now the valuation of that, say, on a ten years' purchase—that would not be an extravagant assumption, would it ?—that would be eleven millions' liability for the presen annuitants drawing a million a year, And yet the total funds are only £5,600,000, so that you have a

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deficiency of the best part of six millions for your existing annuitants, in spite of the fact that there are forty thousand contributors still left unprovided for ? —I find difficulty in answering your question; I am not an actuary by any means. But that is the position I think that the Service associations should realize: that the superannuation funds are in such a parlous position that they have to consider whether it is worth while trying to keep the present conditions, which are too liberal, or whether it might not pay them to accept a compromise.—lf it becomes a question of accepting a compromise, that is another matter. For instance, do not know yet what financial gain is going to result to the fund from the distribution of the retiring-allowance over ten years ; and we do not know what the fund is going to gain by making the men serve another five years, and the women, many of them, another ten. You know it is going to make it more solvent ?—We have a shrewd suspicion that the thing is too stringent, that things could be met by spreading it over seven years instead of ten, for instance, or making the men, instead of five years, do another three years. But it must make things immeasurably better than they are now ? —We do not want to take a leap in the dark and agree to something we have not seized fully. Take your own superannuation fund—take the 1930 report, the latest actuarial report, and measure up your liabilities and your assets. You will find that the ratio of solvency of the Teachers' Superannuation Fund is 7s. in the pound without the State payment, and with the present subsidy of £43,000 which was paid last year, only 9s. 3d. in the pound. Those figures alone would almost suggest that a reconstruction of the scheme is necessary, in your own interests I—l1 —I think you can take it from me the teachers are very anxious indeed to see the fund put right. Mr. Verschaffelt.] When the Public Service Association were giving evidence they suggested that there was no need to bring the Bill in at all. It was suggested that the permissive points be wiped out that all those conditions under which the Minister could grant permission to retire earlier be wiped You not, then, agree with their retiring earlier, where the officer is entitled to go as of right with the Minister's consent ? —You are asking me whether I think some should be allowed to go out under the optional clause of the Act ? Yes, without any further deduction than what has been done in the past ?—No ; I think if they go out an actuarial deduction should be made. lhe Chairman.] Mr. Dickie asked you a question in regard to sick leave. Have you any idea what is the percentage in the case of women as against men ? Would the women not be much greater ? —Mr. Parkinson will give you those figures. Mr. Parkinson: I cannot give you the figures, but I have a recollection that the figures showed there was a greater preponderance of women. Mr. W. Nash.] Assume for the time being that the fund is not solvent—that is agreed, I think, it is not solvent ? —Yes. And you want the fund to be solvent ? —Yes. Assume the State having kept its agreement, that the fund is still insolvent, which would you prefer that the retiring-age should remain as it is and the contributions increased, or the contributions remain as they are and the retiring-age increased ? —That has not been discussed by the executive, and I hesitate very much, without further consideration, to answer that. There is a very strong feeling amongst teachers, a strongly expressed opinion, that with very great reluctance would they agree to the raising of the rate of contribution. They would look upon that as an additional tax. Speaking personally, if that came about I would prefer that the age of retirement were raised —I do not say raised to the extent the Bill provides. You said in your evidence, in connection with the women teachers in particular, that it would be impossible for them to be as competent after the age of fifty years as they were from 45 to 50 ?— I stick to that. Would it not be better at that point to increase the women teachers' contributions and allow them to retire give them the choice ? That wants a lot of consideration. lam not seized of the full bearing of that. You would argue all the time, as chief officer of the New Zealand Educational Institute, that the child is the first consideration ? —Yes. Mr. Hargest.] What is your view on the £300 limit retiring allowance ? —My own opinion is that the £300 limit should be abolished. Ido not say there should not be some limit, but there should not be a limit of £300 £300 is not fair ; it is grossly unfair. lam strongly of opinion, and I think the executive agrees, that contributions should not be paid on anything in excess of an allowance of, say, £450 or If a limit is to be fixed, then contributions from salary above that should not be paid. lhe Chairman.] Have you in your experience found that some officers would prefer to remain rather than retire on superannuation ?—That is to say, after they reach the age of 65 ? lam talking of forty years service. The tendency has been, all through the evidence, that a teacher wants to get out as soon as possible, as soon as the time arrives ; but I have known of cases where they would prefer, even at 65, to stay on.

Henry Ainsley Parkinson, General Secretary, New Zealand Educational Institute. (No. 19.) Depreciation in Pension Rights. The Executive of the New Zealand Educational Institute submits for consideration some points related to the threatened depreciation of the value of the pension rights of teachers. Members now m the fund have certain definite pension rights, and these have to-day a definite value. If the Bill is passed the lights will be altered, and the altered rights will also have a definite present value. The figures given below illustrate the loss that teachers as a body will suffer by setting out an estimate 9—l. 15.

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of the cash value of the pension rights as they will be affected by the Bill. In compiling the figures no allowance has been made for possible increase of salary before retirement. That means that the figures have been estimated as if the present rate of salary was going to be continued. The cases are numbered for reference if it is desired to test them. (1) Average salary for three years prior to attainment of forty years' £ a. d. £ service .. • • •• • • • • • • ®57 0 0 Two-thirds .. . ■ • • • • • • • • 371 0 0 Present value of annuity of £371 .. .. •• •• 4,162 Average salary for ten years prior to attainment of age 60 .. 554 0 0 Two-thirds .. • • • • • • • • == 369 0 0 Present value of annuity of £369 .. .. .. .. •• 2,804 Difference .. .. • • • • • • • • £1 '358 (2) Average salary for three years prior to attainment of forty years service, say . . .. ■ • • • • • • • 0 0 Two-thirds .. • • • • • • • • • • 283 6 8 Present value of pension of £283 6s. Bd. .. . •• •• 3,257 Anriroximate average salary for ten years prior to attainment of age 60 . 415 0 0 Two-thirds .. •• •• •• •• — 277 0 0 Present value of annuity of £277 .. .. .. •• •• Difference .. .. • • ■ • • • • • £812 (3) Average salary for three years prior to attainment of forty years service .. • ■ • ■ • ■ ■ • • • 394 0 0 Forty-sixtieths .. .. • • • • • • = 263 0 0 Present value of annuity of £263 .. .. • ■ • • • • 2,682 Average salary for ten years prior to attainment of age 60 .. 394 0 0 Forty-sixtieths .. .. • • • • • • = 263 0 0 Present value of annuity of £263 .. .. • • • • • • 2,243 Difference .. .. • • • • • ■ • • Mr. Dickie : How do you arrive at these figures ? The annuity in both cases is £263, yet the difference in value is £439. Is that on account of the extra five years ? Mr. Parkinson : I think it is because the period of service is incomplete. I will, however, refer to my papers. These figures have been compiled to illustrate the loss in the capital value of the teachers' pension rights as they at present exist and as they will exist under the Bill. I have not shown the names, but I have them named and numbered, so that they can be referred to for investigation if desired. £ s. d. £ (4) Average salary for three years prior to thirty years' service .. 375 0 0 Thirty-sixtieths .. .. • ■ • • • • = 188 0 0 Present value of annuity of £188 .. .. •• •• 2,785 Average salary for ten years prior to attainment of age 55 .. 375 0 0 Thirty-eight sixtieths .. .. • • • • = 238 0 0 Present value of annuity of £238 .. .. .. •• •• 2,048 Difference .. .. • ■ • • • • • • £737 (5) Average salary for three years prior to age 55 .. .. 350 0 0 Twenty-five sixtieths .. • • • • • • = 146 0 0 Present value of annuity of £146 .. .. •• •• •• 1,631 Average salary for ten years prior to attainment of age 60 or thirty years' service .. .. • • • • • ■ 350 0 0 Thirty-sixtieths .. .. • • • • • • ■ • 175 0 0 Present value of annuity of £175 .. .. .. •• •• 1,335 Difference .. . • • • • - • • • ■ £296 (6) Average salary for three years prior to attainment of age 45 .. 200 18 6 Thirty-sixtieths .. .. • • • • • • — 100 0 0 Present value of annuity of £100 . . .. • ■ ■ • • • "59 Average salary for ten years prior to attainment of age 55 .. 200 18 6 Forty-sixtieths .. •• •• •• = 134 0 0 Present value of annuity of £134 .. .. • • • • • • 452 Difference .. • • • • • • • • • • £207

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Additional Points. 1. The Election to pay at Unreduced Rate. —Under the Finance Act, 1932, which made the second reduction in salaries, teachers were given the option of electing to continue to pay contributions on the unreduced rate of salary. The Chairman : What happened when the cut took place —what notification was sent out to the teachers ? Were they all individually notified, or what was done ? Mr. Parkinson : Not in our Service. There was a general notification through the Education Gazette. The Chairman : You did not notify the teachers individually ? Mr. Parkinson: No. Mr. Dickie : Every teacher gets the Gazette. Mr. Parkinson : Every teacher got it. Whether every teacher read it or not is another matter. Before the period of the option had expired the report of the National Expenditure Commission was issued, in which the changes embodied in the Bill were indicated. This made the exercise of the option a very difficult matter to decide, as it made a radical alteration in the conditions of service. In efiect, the option has to be used under one set of conditions, and it would operate, if the Bill were passed, under quite different ones. The Prime Minister was asked that an extention of the time for making the election might be granted. His reply was that that could not be done in the Bill, but that the point would be carefully considered. The request for consideration is laid before this Committee. There are two aspects of it that claim attention : — (a) That further time should be given for making the election, in view of the altered conditions ; and (b) That those who made the election before the change of conditions became imminent should be allowed an opportunity of revoking the election. The first of these requests appears so reasonable that there is little need to elaborate it. But there is a particular aspect of it that ought not to be overlooked. When the first reduction in salaries was made, many teachers elected to pay on the unreduced rate. When the alterations in the conditions were proposed after the making of the second reduction the question of making the election or not was so difficult that in many cases the time was allowed to pass and no election was made. The result was that the first election was voided and these teachers will suffer permanent loss through being called upon to make a decision under uncertain and changing conditions. A particular case will illustrate the difficulty teachers were in and the hardship they suffer. A lady teacher was in a special position with a salary of £385 a year. On the first reduction she elected to pay on the unreduced salary. Before the second option could be decided on her position was abolished, so that she was not in a position to use it. She thus lost the benefit of the first election as well. [Mr. Parkinson : This section was put in when it began to be believed that there was an intention to go on with the Bill. At first there was an idea that the Bill might be dropped, but when it came to be considered that this Bill would go on, then it was thought necessary to put before this Committee a few amendments that the Institute has been urging and asking for for many years past.] 2. Excluded Service: Option of joining.—For many years the Educational Institute has been endeavouring to secure for several groups of teachers the inclusion of service for superannuation that is now excluded ; and the Executive takes this opportunity of bringing these cases before the Committee. They are not related to any of the clauses of the Bill, but the Executive hopes the Committee will see its way to insert the much-desired amendment. The groups of teachers referred to are— (a) Pupil teachers and probationers : These had the option of joining the fund within six months of their appointment ; if they missed the opportunity they could not join until becoming permanently employed. Many of them were not informed of their right, others did not appreciate its value, and in one education district at least the Education Board actively opposed their using it. The consequence was that they lost several years —in some cases seven or eight years —of service that might have counted towards superannuation. The request now made is that they be allowed the option of joining as from the beginning of their teaching service, all arrears being paid up, together with compound interest. (b) Teachers with broken service : It is desired that teachers who had left the Service and later rejoined should be allowed to count back service, on condition of paying all arrears with compound interest. (c) Old servants excluded : A number of teachers —not a great many—were not in a position to join the fund when it was started in 1906. When the later opportunities were given in 1908 and 1912 they were still unable to take advantage of them. They now desire to have the option opened to them, and the Executive presses their claim for consideration, on the same condition as to payment of arrears with compound interest. (d) Unemployed young teachers : Unfortunately, a number of young teachers, after leaving training college, have been unable to secure permanent employment, and thus become enrolled in the fund. On their behalf it is requested that they be allowed, when they get a permanent appointment, to join as from the date of becoming certificated, the same conditions as to arrears and interest to apply. You will, I think, give us the credit for cutting down our statement to a minimum. We have not illustrated our statement with nearly as much argument as might have been used. It was desired to make the statement as concise as possible, and this section is only put in because the Executive felt that, if this Bill goes through, it will be many years before there is any further hope of any amendment being obtained in the Superannuation Act, and it was decided to bring it forward now. Mr. Dickie.] Referring to cases Nos. Ito 6 quoted in addendum : How were your figures arrived at ?—They were arrived at as the result of a short questionnaire that was sent to a few typical teachers around Wellington. From the figures they sent in, our figures were compiled. 9*

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Not on any insurance company's table ? —No. Mr. Hargest.] These are actual cases I—Actual1 —Actual cases within Wellington. Mr. DicJcie.] In regard to teachers on probation, that refers to the system when you had cadet teachers ?—They were not often called " cadets " in the teaching service ; they used to be called " pupil teachers " until the last few years, when they have been called " probationers." This section, although it uses the word " probationer," applies to pupil teachers. Their term of occupation was not allowed for for superannuation purposes ?—No person could join the superannuation fund until permanently employed ; except that pupil-teachers, when they joined the Service, had the optional right of joining within six months. What maximum period would be involved in connection with probationers or cadets ?—The longest case quoted ran up to eleven years. Eleven years ? —Yes, through a peculiar course of circumstances in that particular case, being employed as a relieving teacher in one school and then another ; with the four-year pupil-teachership— I think it was four years —then a training college course, then broken relieving service ; it was eleven years before she became permanently employed. You say one Educational Institute was actually opposed—what Board was that ? —lt was the Wanganui Board. For some reason or other the Board took up the attitude, "We are not going to allow these young people to join the fund." Why it was done I cannot say. The Chairman.] For how long did that go on ?—That I cannot tell; until pretty late in a certain regime. Mr. Dickie.] You also raised the question of the teachers who missed the two opportunities to join. That has been threshed out, as you know, very often ? —Time and time again, yes. We have nothing to ask except mercy and favourable consideration. The Chairman.] I am afraid that is rather a policy matter ?—There are not many people affected by it now, but there are a few, and they are very earnest that they should be given the opportunity. My executive is very earnest in asking it for them. Mr. Savage.] What do you think of the suggestion that it might be better to accept a compromise and save something—-do you think we have arrived at such a stage as that I—We1 —We do not think so at present —as I read the signs of the times, I do not think there is any need for it yet. You have given us a statement here, I take it, to the effect that the Superannuation Fund statements in no way represent the present-day condition of the fund ? —That is quite definitely so. We had all those papers under consideration. You suggest a pound-for-pound subsidy for a year or two, until the Government has had time to consider a suitable foundation for the whole thing ? —Exactly. If you pay a pound-for-pound subsidy this year, and next year, and the year after ; by that time it will be pretty well decided what the financial condition of the country is, and it will be time enough then to consider whether an amendment should be made or not. Mr. Hargest.] Do you say that you do not want amendments ? —We do not think that the present time is the time for making amendments. If amendments are to be made, there are other things to be considered. Personally, I would prefer to see an all-round amendment made, and the whole period of service counted with corresponding adjustments in other directions; but that is my own opinion, and I am not giving that as authoritative. In connection with the notification about the " cuts," do you say that your members were officially informed ? —Yes, they were officially informed. There. is no question about that. It appeared twice in the Education Gazette, and I think twice in our own paper, so that all those people who read their official communications had the information. You did not regard it as a very serious matter ?—No. We took care to inform our own members, to the extent of inserting a notice in our own Gazette. We did not send a letter to each of our members. It was not compulsory that they should acknowledge the information ?—No. Of course, as I understood the evidence given by the Railway people the other day, they not only required an acknowledgment, but members had also to make an election. Mr. McCombs.] Is it not a fact that when these funds were started, it was definitely stated that they were not to be on an actuarial basis ? —I have read that it was quite definitely stated so in regard to the Railway Fund, that it was to be kept going by the Government with all the necessary contributions to keep the fund secure ; and that is quite clearly stated in our own Superannuation Act, section 112. It is quite definitely stated there that the Minister of Finance shall pay £43,000 per year, and as much more as is necessary to meet the charges for the year ; and of course if that were done for the years 1930, 1931, and 1932, and so on indefinitely, that becomes a permanent guarantee. There would be no necessity to provide a subsidy ?—No. I believe that the claim for £23,000,000 is ridiculous. It is a most ridiculous and extraordinary claim. If you had this sum given to you you would have interest enough out of it to save contributions from every other direction. The money would be put out at interest, and the interest would pay your superannuation ? —Yes. All the Government has to find is the interest ? —That is so. The interest is the only thing that matters ? —That is so. I may mention that one of our Superannuation Board members, Mr. Garry, interviewed the Hon. Mr. Downie Stewart about superannuation matters, and Mr. Stewart said, " All you need is that we should pay the subsidies every year as required." Hon. Sir Apirana Ngata.] You have a fund to-day, but it is insolvent ? —lt is only insolvent if the country is insolvent. But the fund itself will not meet the demands on it without a fixed guarantee ? —That is so. We have an insolvent fund that we might, guarantee, or we might get a solvent fund by finding £25,000,000 ? —That is so. If we find £25,000,000 we have to raise £f ,000,000 by way of taxation to pay interest to the fund at 4 per cent. ?—Yes.

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And if we do not do that we will have to find £1,000,000 to pay the interest ?—Yes. But I think there should be some financial way of getting the money, either by bonds or by loan. Mr. W. Nash.] It comes to this, you consider that people would pay taxation on money that is State-borrowed rather than pay taxation for the purpose of paying it direct to the superannuation funds ?—That is so, and for this reason ; There has been going on in this country for some time a continuous propaganda against the superannuation paid to Civil servants, and a considerable section of the people have been embittered against the highly paid public servants, with their long holidays and big superannuation, quite forgetting that the teachers have paid largely for their own superannuation, and the other public servants too. In this country we have never, as has been the case in England, had our Civil servants getting a fine big pension without any contribution at all. You are not suggesting that ?—No, lam not suggesting that. But Ido not believe the general public, without some education would be willing to pay taxes for superannuation, and therefore I would like to see the guarantee acted upon. It is a very cheap investment of Government money. You would sooner have the fund made sound, rather than the State paying superannuation through taxation ?—Yes. I would rather see the State pay as they do now, through the fund. The Chairman.'] I find it rather difficult to follow your statement. You say, " How alarming these changes are will be seen from the cases selected at random, set out in a separate paper. The first of these shows that a teacher who is to be called on for four and a half years' additional service will suffer a loss of £1,358 in the present value of his pension rights. When to that is added the fact that he has to continue paying contributions for a further period of four and a half years at a rate of, say, £30 a year instead of drawing his expected pension, the severity of the impost becomes apparent. To sum up, four years more of service, four years more of contribution, a loss of £1,200 in actual receipts and a large sum representing interest-earning value is an unreasonably heavy infliction to impose on a servant who has carried out his contract to the full." How does that come about ? —That is what it means when it is actually compared with his present prospects. He has to work those years for nothing, or almost nothing. Would he not have a higher rate of salary than pension I—His1 —His rate of salary would be very little higher. There is one other point, Mr. Parkinson. Do you think the notice given by your institute was sufficient, or do you think you should have done as the Railway people did and notify every individual member ? —I think that whatever notice you give some people they will miss the import of it. But do you think that your institute did all that was necessary ? —Yes, I think so. But Ido think it is very urgent that these people should be given further time to consider the altered situation. Notwithstanding the fact that you think they had ample notice ? —Actually they did not know. None of us knew. When the Bill came in it fixed the option on a totally different basis. Mr. Gostelow.] I am afraid your figures are not of much value unless the Committee is supplied with fuller details as to age attained, &c. For instance, take Example No. 6. You say the present value of annuity of £100 (presumably from age 45) is £659. That is surely wrong ?—I do not think it is likely to be wrong. We have had all our figures worked out by what I can describe as a competent authority. I can give you the actual figures. They are as follows : " Taking service in this case as twelve years, then thirty years' service will have been attained at age 45. Average salary for three years prior to attainment of age 45, £200 18s. 6d.; thirty-sixtieths, £100 ; present value of annuity of £100, £659. Average salary for ten years prior to attainment of age 55, £200 Is. 6d. ; forty sixtieths, £134; present value of annuity of £134, £452 : difference, £207."

Cecil Gostelow, Government Actuary (recalled). (No. 20.) Mr. Gostelow : Mr. Wogan and I were to look into some figures for Mr. W. Nash about back service. We went through, his records, and we found that those earlier records had been definitely burnt, so that we cannot get the information in the form required by Mr. Nash. The actuarial reports show the indebtedness of the State in respect of back service, and the shortage in contributions. As you know, a good superannuation scheme is designed so that every man should get at least what he pays for, and there is a little margin over and above the scale of contributions which the State undertook to pay, so that statement X in the last actuarial report (parliamentary paper H.-26 for 1932), which you have, shows the total past indebtedness of the State in respect of those two factors —back service and shortage in contributions —but unfortunately we cannot separate them. Mr. W. Nash : That is not a very happy position —I think it is entirely wrong, to think that any records that are necessary for ascertaining a certain position have been destroyed. One does not question Mr. Gostelow's bona fides in any way that those records are not there, but if they were there we could get the exact figure that the State should have paid in on account of back service, and then the other would have been separate from that. If we cannot get it we cannot, that is all. Take the teachers—l understand the position now is that there is £1,023,000 deficiency as far as the liability of the Government to the fund is concerned ; that is made up of two sums, on account of back service, plus the amount of the State's contribution to make the pensioners' payments adequate. Mr. Gostelow : Plus interest. Mr. W. Nash : And it is not possible to ascertain the exact sum of each of those two amounts ? Mr. Gostelow : That is the position. Mr. W. Nash: Could you give us an approximate idea ? Assume a capital sum of £850,000 paid in, omitting the interest figure —could you say there is approximately £650,000 for back service and £200,000 for making up ? Mr. Gostelow: I would not like to make an estimate like that; it would be purely guesswork, that is the trouble. Mr. Verschaffelt: Take our own Service —a classified Service. When our Act came in, in 1913, the records prior to 1912, even if you had them, are quite unreliable. In regard to the men even in the permanent Service, there was never any real record taken of them. Take the men on public works, paid out of loan-moneys, who had been there for years and years —in many cases a declaration had to be made, either by the head of the Department or some local officer.

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Mr. W. Nash: But they are reliable to this extent, are they not: that you are paying a certain annuity, and that annuity is based on a certain period of service ? if IS Mr. Versohaffelt: It is now —there is no difficulty in our Service since 1912, but prior to that we could not give the figures. W p Mr. W. Nash : In 1912 certain persons came on the fund at that point in the first year, without any payment whatever. Mr. Versohaffelt: You could go back probably to 1908. Mr. W. Nash : All the moneys paid out to those people were a liability on the Government, and nothing to do with existing contributors. Whether they had had twenty, thirty, or forty years' service it does not matter —you know how much you are paying them, and that has been a charge on the fund up to the present, and should have been a charge on the Consolidated Fund and notjon the Superannuation Fund. We ought to be able to find that out,. If there is some shortage records that will not allow us to find the exact sums, we ought to get as near as we can so that we can find it. Mr. VerscJiaffelt: You could only make an estimate of it, and it would be very rough and ready. Mr. Gostelow : It was never anticipated that information like that would be wanted ; the State's share of the liability is defined in the Act as " the probable annual sums required by the fund to provide the retiring and other allowances falling due within the ensuing three years without affecting or having recourse to the actuarial reserve appertaining to the contributors' contributions" — that includes the two factors, not only back service but also shortage in contributions. Mr. W. Nash : I am not questioning that, except that I think it ought to be possible to get the figure. We can, however, discuss it at a later date.

Miss Elsie Andrews, President, New Zealand Women Teachers' Association. (No. '21.) Gentlemen, I have the honour, by direction of the executive of the New Zealand Women Teachers' Association, to submit for your consideration the following points : — (1) Members of the parliamentary Committee are aware of the causes which have brought about the unsafe state of the Superannuation Funds, and of the grave responsibility which lies on the shoulders of the Government to deal with the present situation in such a manner as to maintain an unimpeachable standard of national equity. (2) This Association does not propose, therefore, to traverse any general grounds of opposition to the suggested amendments to the present Superannuation Act. We are in complete agreement with the evidence tendered by the New Zealand Educational Institute, but we are desirous of making particular reference to those paragraphs of the Bill with which women teachers are especially concerned. Summarized briefly, these paragraphs provide that the length of service necessary for superannuation shall be increased in the case of women from thirty years to a minimum of thirty-five years, and that no women unless medically unfit shall be permitted to retire on full pension before reaching the age of fifty-five years. (3) Women teachers are strongly opposed to these proposals. The collective mind of the National Expenditure Commission concerned itself solely with the financial aspect of the questions submitted to it for investigation, and its recommendations must lose weight on that account. The present and future efficiency of the Service has an important bearing on the situation, and legislation which fails to take cognizance of this vital factor cannot fail to react unfavourably. (4) Women teachers feel that the option allowed by the present Act, of retirement after thirty years' service is fair and not unduly generous, bearing in mind the present harsh conditions under which primary women teachers work in New Zealand. The handling of large classes of children as a matter of daily routine for thirty successive years constitutes a strain sufficiently severe to take serious toll of any women unless of exceptionally robust health. (5) We know that under the provisions of the existing Act women can, and some do, remain in the Service until fifty-five years of age, and it is right that those who are fit and able should have the choice of doing so ; but it is surely extremely doubtful whether a law which seeks to compel every woman to teach until at least fifty-five years of age is likely to prove in the best interests of the efficiency of the whole Service. We know, also, that in the past some women have completed thirty-five years' service, but would point out that whereas in earlier days it was quite common for girls to enter the profession at twelve or thirteen years of age, the usual age of entry now is seventeen or eighteen. If the proposed legislation is put into effect, the result will be to place on the shoulders of women teachers a burden of from five to ten extra years of particularly trying work. This, we submit, would be undeniably harsh and not in keeping with the consideration due to women who have devoted the best years of their lives to the service of the State. (6) Already serious congestion exists in all grades of the profession at present open to women teachers. If all women are to be forced to remain in the ranks for a further five to ten years, this problem of congestion must inevitably be accentuated to a marked degree, and experienced women will be forced to remain for a disconcerting number of years in positions of the lowest grade. (7) The widely spread theory that women teachers are a drain on the Superannuation Fund demands careful investigation. In this connection we do not know that cognizance has been taken of the fact that a considerable proportion of women leave the profession after varying lengths of service, receiving back only the amounts contributed to the fund, without interest, thus benefiting the fund to a degree worthy of recognition. In connection with paragraph (1), we would like to say that contributors have done all that was deemed necessary by those who laid down the conditions of the original Act. There cannot be, we think, a different standard of conduct for the State as compared with the individual, but this Bill contemplates such a different standard, for, if put into effect, it will means that the Government will

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countenance an action which would not be permitted in an individual. We think it is somewhat on the same lines as the estate of a man who has to declare himself bankrupt because he cannot pay his past liabilities. In that case his estate is shared among his creditors, but in this case it seems to us that the action contemplated by the Government consists really in making the creditor pay so-much of the liabilities. He is not only not going to get anything out of the estate, but he is actually going to shoulder the liabilities of the bankrupt. It also may be argued that the matter will affect Civil servants alone—that it is purely a local matter, and cannot have any repercussions outside New Zealand. But if you consider the analogy of a stone thrown into a pool, we feel that there may be no bounds to the eflect of such an action by the Government. It will be felt in all kinds of directions, quite apart from the immediate ranks of the Civil Service, and quite outside the bounds of our own country. Even here in our own country we feel quite sure that the effect is going to be found in connection with every Government undertaking, such as the Government Insurance Department and the Post Office Savings-bank. We are here to-day because we feel that, when such a momentous decision is about to be made, it is the duty of every citizen worthy of the name to make a protest against an action which is contemplated by the State if it is incompatible with the accepted canons of justice. In connection with paragraph (2), that provides that we are going to teach for thirty-five years, or until we are fifty-five years of age : Now, in actual fact that is going to mean that we are not going to stop at thirty-five years' service, but that all those who entered the Service comparatively early in life are going to have to teach for thirty-eight or thirty-nine or perhaps forty years. And, further, those who joined late in life, or who have broken service, have to go on teaching until they are approximately sixty years of age. So that in one bound there is going to be an increase from thirty to forty years' service—not from thirty to thirty-five. Teaching is a strain, as is evidenced by the evidence placed before you yesterday, and also by the fact that a proportion of men retire medically unfit —it is quite sufficient to show that even men find forty years' teaching a strain. You are going to raise the compulsory age for women from 55 to 60, because teachers who enter late in life caunot retire at 55 because they will not have served their thirty-five years ; and this is in defiance of the fact that women teachers are, generally speaking, considered to have reached, their maximum efficiency before fifty-five years of age. I say that because of the common action of Education Boards in dismissing women —almost all Education Boards in New Zealand, as soon as a woman reached 55, say to that woman, " Go," and the inference is that the Boards consider that her maximum degree of efficiency was reached before she attained fifty-five years of age, otherwise they would have retained her services. Paragraph (3): The efficiency of the Service is stressed. You know quite well that if we teachers had followed the ordinary avocation in the ordinary course and had married, by the time we were fifty-five years of age we would in the ordinary course of events have been grandmothers. It is a commonly accepted fact that grandmothers are liable to spoil their grandchildren, and you are going to place the training of young children, and particularly the very young children —you are going to compel women who have reached the age of grandmothers to handle those young children. The inference is that those children are going to be spoiled. Although the proposed Act provides that women should retire at fifty years of age, if necessary, we presume their pension is going to be actuarially reduced. Now, women get such small salaries at any time that their pension is commensurately small, and because they will not be able to live on the pittance they would get by an actuarially reduced pension they are going to be forced to stay on in the Service when their inclination would make them retire. Either they are going to be forced to keep on, or the Boards are going to force them out on an actuarial pension. In paragraph (4) I refer to the present harsh conditions under which women teach. In theory they do not teach under harsh conditions. In practice they do. In theory there is no such thing as a headmaster —there are head-teachers. In practice head-teachers are men. That is to say, the theory breaks down in favour of the practice. I would like to refer you to the typed sheet which has been circulated, and which shows that a man teacher spends on an average eighteen years as an assistant.

Number of Years in 1923 Grade of Position. CERTIFICATED MEN.

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Years in Grade 1. Grade 2. Grade 3. Graded. GradeS. Grade 6. Grade 7. Position. j 1 .. 3 1 2 4 1 5 2 .. 1 1 1 1 1 1 3 .. 1 • • • • 1 3 .. 4 4 ...... 1 5 .. 2 5 .. .. .... 2 3.. 1 6 .. .. .. •• 1 7 .. .. .. •• 1 •• 1 8 .. .. .. •• •• 3 9 .. .. .. 1 10 .. .. •. •• • • 1 5 .. 3 8 21 2 14 Average, Average, Average, Average, Average, Average, 2 years. "' 4 years. 3 years. 4 years. 2 years. 3 years. Men. —Average number of years as an assistant, 18.

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CERTIFICATED WOMEN.

Women.—Average number of years as an assistant, 27. Notes. —Number of certificated assistant teachers in Wellington Education Board, December, 1923 : Males, 75, females, 367 —total, 442. Number of certificated assistant teachers taken in Wellington Education Board! November, 1923: Males, 53; females, 308 —total, 361. Difference, 81. Certificated teachers omitted : Relieving teachers and normal-school teachers. A woman teacher spends on an average twenty-seven years as an assistant. When you add to that the two years as a pupil-teacher, and presumably her two years at training college, then you can see a woman would be teaching for thirty-one years and would still be an assistant. There is also a printed list here which shows the relative grading-marks of the men and women teachers who were appointed in the Wellington Education Board District from March, 1927, to May, 1928.

Positions on Grading-lists of Appointees, Wellington Education Board, March, 1927, to May, 1928. RATE OF SALARY PRIOR TO "CUTS."

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Y*03,1*0 Position. Grade 1. Grade 2. j Grade 2a. Grade 3. Grade 4. Grade 5. Grade 6. 1 .. 34 10 12 8 8 4 2.. 12 .. 8 7 5 4 3 .. 15 13 7 10 6 11 5 4 17 8 .. 7 6 5 .. 5 7 .. 3 6 3 2 6 .. 3 1 2 3 1 1 V • • 2 .. 1 4 5 .. 3 8 .. 4 1 .. 3 1 13 9 .. 1 1 1 3 1 3 1 10 .... 2 3 11 •• 1 •• 1 1 12 94 49 34 48 . 41 27 15 Average, Average, Average, j Average, Average, Average, Average, 3 years. 3 years. 3 years. I 4 years. 4 years. 4 years. 6 years.

Head Teacherships. Sole Teachers. Assistantships. VII. VI. V. I IV. III. II. I. 1. 1A. 2. 2A. 3. £435- £405- £300- £325- t „ nn £140- £160- £165- £205- j £230- £235- £285- £300£465. £425. £405. £355. fc265 £325 ' £210-£270. £170-£200. £176 _ £20g £2QQ £260 ! £2g(| £2 ™ 30 I 31 ! 37 40 .. . I 44 46 48 | ; !.'!!! !! ! ! .. .. i .. 64 !! I 67 • • j 68 I .. .. 77 i ! .. 82 82(2) •• • • I • • ! • • • • •• •. .. j .. .. 84 86 • • •• • ■ • • • • ■ • • • .. .. .. ! .. 86 (2) .. i • • !! 88 • • .. | . .. 89 ■ • • • • • • • • • .. .. .. j .. 95 ! .. loo !' j 101 Positions of women shown in roman type. Positions of men shown in italic type.

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Positions on Grading-lists of Appointees, Wellington Education Board, March, 1927, to May, 1928—Continued. RATE OF SALARY PRIOR TO "CUTS."

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Head Teacherships. Sole Teachers. Assistantships. VII. VI. V. IV. ! III. II. I. 1. 1A. 2. 2A. 3. i ' ! £435- £405- £360- [ £325- ioin-f97n £14 °- £16 °" £165 - £205 ~ £2 30- £235- £285- £300£465. £425. £405. j £355. " 00 fcfliu-fca/u. ii/u £iy5> £20g _ £2Q() £280 £2ga £29Q> £gl5 £83Q 104 107 .. .. . . .. . . .. 108 .. .. .. .. .. .. 114 118 118 119 121 .. .. .. .. 122 .. .. 124 1 .. .. 125 (2) .. .. .. .. .. .. 128 .. 128 .. .. .. .... .. .. .. 129 130 130 .. 132 136 .. .. .. .. .. .. 137 .. .. .. .. .. .. 139 .. .. .. .. .. .. 141 143 143 (2) .. .. .. .. .. .. 144 145 .. .. .. .. .. .. .. 145 .. I .. 146 j 147 147 I .. .. .. .. .. 148 149 151 :. 151 152 154 .. .. .. 157 .. .. 159 .. .. .. .. .. .. 164 .. .. .. .. .. . . 165 .. .. .. 165 .. .. 166 166 167 168 .. .. .. 169 .. .. 170 (2) .. 170 .. 170 171 (2) 173 (2) .. .. .. 174 .. .. 175 175 176 (4) .. .. .. 177 .. .. 178 178 .. 179 .. 179(5) .. .. 182 182(2) 183 183 .. .. 184 184 .. .. 186 186 .. .. .. 187 .. .. 188 (5) 189 (3) 189 189 190 (2) .. 191 .. 191 .. 191 192 192 192 (2) .. 192 192 .. j 193 .. 193 (5) .. .. ! .. 194 194 (2) .. 195 .. 195 (2) 195 .. 196 (2) .. 197 (2) .. 197 (2) .. .. .. .. .. 198 .. .. 199 (2) .. 199 (5) 199 (2) .. 199 200 (2) .. .. 200 (6) 200 .. 201 (2) 201 (4) 201 202(2) .. .. 202 .. 203 (2) .. 203 203 .. 204 204 (2) 205 206 207 208 208 209 .. .. .. 210 .. .. .. 210 211 214 .. .. .. 217 .. .. I Positions of women shown in roman type. Positions of men shown in italic type.

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If you study them you will find, that the relative grading of women teachers (in Roman type) as compared with men teachers (in italic type) shows that no one can impugn the efficiency of these women teachers, nobody can deny that they are giving as good service as man ; and if you look at the grading-marks they are giving better service. I would like, too, to refer to a report which was prepared some five years ago by a Canterbury committee. I would point out that the findings are of a committee composed of twelve members, nine of whom were men —that is to say, only one-quarter of the committee put forward the point of view of the women teachers. Being shut out from senior positions, including in practice all important headmasterships, and thereby crowded in Grade I, from which it is very difficult to emerge, women are not afforded the opportunity of doing work which carries high grading-marks for such matters as organization. This disadvantage starts early in a woman teacher's career, and is cumulative, so that before long she is hopelessly outdistanced by a man who started from the same mark. That is the finding of that committee, which as I say was composed of nine men and only three women. In effect, the women teachers do thirty years of hack work. They take large classes every day throughout their whole teaching career. It is the same as if you had to face the same diet — a steady diet of the same food every day for thirty years —you know that that would produce physical nausea. We contend that women teachers have the physical strain of that hack work—of being in the traces continuously for thirty years. On top of that they have mental nausea engendered by the endless repetition of the same work; and again you have to add on to that the natural resentment which they feel by being debarred from promotion. There, I believe, you have in a nutshell the causes of women retiring from the Service as soon as they possibly can. It is fair to assume that the original Act took into consideration these factors, took into consideration the steady, endless task of the women, their small salaries, and their small retiring-allowances ; and those factors have not improved. As regards paragraph (5), things have been made easier from time to time for many contributors to the fund. We have had various amendments, and even now it is proposed to remove the £300 barrier —and it is perfectly right that that should be removed if it constitutes an injustice ; but we who have been in the Service for so long, who have done everything that should be done, apparently are going to be made pay the piper by having additional years of service put upon us. There is this point: originally many teachers entered the profession at twelve or thirteen years of age, but you cannot compare five years' service from, say, the ages of 13 to 18 with five years' service when you are about the age of 50 to 55. In paragraph (6) we refer to the congestion in all grades of the profession at present open. When I tell you that, of the four thousand women teachers according to the Year-Book, in 1932, you have over three thousand of them who are assistants, that is sufficient to show that there must be tremendous congestion in the lower ranks. And it is borne out by that printed list that you have, where you see the number of women occupying Grade I positions, and the number of years that they have occupied them. That congestion obviously is going to be very much accentuated if we who are in the present positions have to continue for a further five to ten years, as we are going to have to do under the new provisions. Many of us are going to reach, under the new conditions, the age limit of 55 or 60, and never will be able to obtain even the slight range of promotion that at present is possible. Regarding paragraph (7), I do not want to question the Actuary's figures when 1 say that there is a widely spread theory that women teachers are a drain on the Superannuation Fund that demands careful investigation. lam only trying to balance it against the harshness of the new conditions, and against the repercussions so far as the efficiency of the Service is concerned. We think the investigation must take efficiency into consideration, and it must take into consideration humanity. I have given you the reasons why women teachers retire early, as I see them—it is a protest against the harsh conditions under which we teach. The life expectancy of women is 75, I understand. I would point out that there is a great difference between living and merely existing, and I would not say that women teachers who have to go on teaching until the last drop of vitality is drained from them would view with any great feelings of delight the possibility of existing until they are 75 or 76. I feel that if we are made to do it, then the tables of life expectancy are going very soon to need revision. We cannot enter the Service now as young as women were able to thirty years ago, and there are going to be in the future no women who can possibly retire at an age of 45. Finally, we consider that the present scheme has not had a fair trial. It cannot be branded as a failure unless it has had a fair trial. If it had had a fair trial, if the Government had done what it set out to do, as the contributors have done —if any one could stand up to-day and say that everything had been done that should have been done but the country could not stand it, the original basis was too generous, and that basis must be altered, then, gentlemen, I can assure you that the women teachers of New Zealand would not be unwilling for that basis to be altered ; but we consider that nobody can prove the Superannuation Fund to have been a failure because conditions were not kept. I think that if the country could not stand the scheme as it was set up, the women teachers would be the first to come forward and be willing to give their views as to what new conditions might reasonably be laid down. Mr. Wilkinson.\ You state that not only were the contributors not to get anything out of the fund, or the estate, but that they would have to pay the liabilities as well. What is meant by that statement ? —I understand that the State shouldered entirely the liability for past service of those teachers who entered the fund in 1906 and who were about to retire. The State has not paid that— they make no provision for payment, but they are going to alter our conditions so that we shall have to pay a share of that back liability to save the fund. You made the statement just now that if the women teachers were convinced that the present position could not be sustained, they would be willing to meet the situation in some way ? —I did not say quite that. I said if the fund was originally constituted had been given a fair trial, and then it was found that the country could not meet the situation-

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11l view of the statement made by the Actuary that the funds are hopelessly insolvent, and that a very heavy contribution would have to be made, and in view of the present situation of the country generally regarding taxation, do you still insist that the country is able to carry out the original arrangement ?—I am not in a position to insist that the country is able to carry it out, but I do insist on the principle that the Government should do its share, and should not load it ail on to the contributors. You, of course, are aware, just the same as are other people, that the country is not able to balance its Budget to-day ; and to pay a further heavy contribution would have to be met out of taxation. You of course understand that ? Yes. Do you suggest that heavier taxation should be imposed to make good the amounts that are required to make the funds sound ? —I do not know that my Association has considered officially just exactly what the Government should do to meet the case. What we are concerned with is pointing out the incidence of the present suggestions. . ~ You have also to consider the other side of the case as well, 1 take it; to be fair you should have considered the other side of the case as well ?—I understand that the amount required from the Government per annum to keep the fund going is a matter of some £214,000. I cannot see that that is an insuperable hurdle for a country such as New Zealand to face. That is for your fund alone ? —Yes. # But there are other funds as well, and the aggregate amounts to considerably more than that. You must look at the matter from the point of view of the whole, and not of one fund alone «—The aggregate amounts to roughly a million, the Chairman tells me. Do you suggest a million can be raised by taxation to-day ? —I am not sufficient of a financier to answer that. , I would like your opinion. You understand that a million pounds annually would have to be raised to put the funds in a sound condition ?—Yes. And that that money would have to be raised by taxation ? If the Government has explored every other avenue, presumably. Mr. W. Nash.] You contend that the women teachers get lower pay, even though they give equal service ? —That is so. Men on the grounds of sex are paid more, both by way of salary and by way of married allowance. Further, in the case of head-teachers, most of them draw a houseYou suggest also that that is supported in a large degree by the grading-list of appointees that you have here ? —Yes. . . . , • ■ , 9 Lower pay automatically means lower superannuation, even though it is proportionate to pay .- Yes. Not only that, but women teachers who retire early draw thirty-sixtieths —that is to say, one half. Most men teachers draw at least forty-sixtieths, which, is two-thirds, unless they are on the barrier of £300, which it is proposed to remove. We are not opposed to the removal of the barrier— if thought to be unjust. . . You mention that, presuming the Government had kept its portion of the contract that it made with you as individual teacher and with the members of your organization, and then it had been found that, although both parties had kept to the contract when they were able to do so, it was not possible for the fund to stand the load that was then on it, you at that point would have been quite willing to have negotiated with the Government to have found out what was the right thing to do ? I can say, without any fear of contradiction, without any hesitation, that every woman teacher would have been willing for that. You mentioned one other point, in connection with the alteration of the agreement, by coercion or by legislation—you are of opinion that it might have a definitely harmful effect not only 011 the Government's relations with its servants, but on the Dominion's relations with overseas countries, and also its relations with other parties ?—Yes. It would have a definite lowering of the national standard of justice. Did you mean by that that, presuming that it was a reasonable agreement to make, ancl that the State when it was able to keep its part of the agreement failed to do so, and then endeavoured by some means to repudiate its liability —are you of opinion that that would have a harmful effect 011 the raising of loans overseas, shall we say ?—I should imagine so. There would not be that faith 111 the Government's integrity that should obtain. . Assume that we had a private teaching system in New Zealand, the same as m the Ufa Country when I was there, and that the private teaching organization had made an agreement with its servants that, on condition that they paid a certain sum of money over a given number of years, they m turn would pay a certain sum in to enable the fund to pay a pension to the servants, and then that private organization, not having resources sufficient to enable it to keep to its agreement, definitely failed to pay according to the terms of the agreement. What would you say the job of the Government was at that time ?—I should say to prosecute the private people who did not keep to their agreement. And to compel them to keep to the agreement, presuming they were able to ?—Of course. Regarding your reference to creditors paying the amount, that the Government had used the funds that you had paid in to pay to other people whose payments they were responsible for, and then they were asking you now to make the fund good after using your money to pay some one else ?— You mentioned also the difficulty that the women teachers were suffering from and are likely to suffer from if they had to extend their teaching years from 50 to 55, or even to 60, and you cited the case of the grandmother. It is rather difficult to question your age, or anything like that, but try and take your mind back over thirty-five years, and then bring some one in to teach the children of to-day, with the mind of thirty-five years ago. Do you think they could possibly do it ? Assume

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that some one at the age of 60 to-day were now compelled to take the children of to-day, after forty years teaching do you think they could do it ? The children of a new generation, new habits, new customs ? I would not say that the children had changed. My own teaching experience extends over a period of twenty-seven years, and I think that the children as I remember them twenty-seven years ago were in effect very similar to the children of to-day. But I would say that my own patience and my own standard of efficiency are not as high as compared with ten years ago. I would say that without fear of being dismissed by my Board. I was thinking of the schoolmistress of a class that I was in forty years ago. I can imagine her coming into the modern classrooms that I have been in contact with during the last two or three years, and being shocked at the greater freedom children have to-day, that they would not have had forty ago , the job then was to do as they were told and sit still ? —I see your point now. I think it is indisputable that teaching to-day, particularly if one uses individual methods, as one doe's if at all progressive, is a greater strain than just simply standing in front of a class dictating to them. I know that from my own experience. I did not quite get your point at first. I will say in that respect the teaching of to-day makes greater demands on the vitality and physique of the teacher than it did years ago. Do you think if the period of service of women teachers is extended the children cannot help but suffer that the efficiency of the teaching will not be up to the same grade as it would have been during the earlier years ?—I do not see how it could be. Ido not see how women can have the same drivingpower that they had in their younger days. Without going into the minor principles of the Bill, you are basing practically the whole of your case on the fact that the Government failed to pay its portion of the fund—that is agreed—when it was able to pay, and the country is now asking you to make good the deficiency ? —Yes. The Chairman.] I take it, following your last question, that you would not be here to-day if such were not the case in regard to the failure of the Government in the past to meet its liabilities to the fund ?• —Certainly not. Getting back to the question Mr. Nash put to you, about the teaching of years ago as compared with to-day—you may, for instance, have started at twelve or thirteen years of age. Do you say that the teacher did not improve as the years went on ? They did not remain at that standard, did they ? —No, I do not think I said that. Ido not say you did, lam asking you—do you say that the teacher remains at that standard of twelve or thirteen or fourteen years of age of knowledge and education right on up to to-day ?— Certainly not. They improved all the way through ? —lf they remained in the Service, I take it so. About the £300 limit, I notice you do not say very much about that, but I understood you to say you were in favour of the removal of the barrier ? —Yes. I would like to point out that women teachers in the primary schools can never have more than an academic interest, because we never get to the position where we are able to draw £300 pension. Do you realize, considering the condition of the funds at the present time —the hopeless state they are in—that it means adding a further burden to the fund ? —Yes, I realize that. And, notwithstanding that, you recommend it ?—Certainly ; if it is an injustice it should be removed. Of course we are only getting information, you understand—these are not hostile questions that any of us are asking. You also took up the question of the payment of women as compared with men y ou referred to that as an injustice. Should it not be taken into consideration that the average school-teacher becomes, in the course of events, a married man—l am speaking of men —and does he not shoulder liabilities in respect of the education and the bringing-up of a family, as compared with the woman teacher, who remains stationary, as it were, without those responsibilities of life ? —I am very glad to answer that question, because my association has always stood for equal payment as between single men and single women ; but we have always advocated that married men should receive an additional allowance commensurate with their domestic responsibilities. Mr. W. Nash.] Would you extend that to all the married men?— Outside the profession? Certainly I would. Mr. Gostelow.] If the witness were asked to report on what teachers should be retired in the Dominion what would be the governing principle ? Would it not be age and physical fitness ?— Efficiency, I should say. Not length of service—that would have nothing to do with it ?—I do not know. I should imagine that length of service and efficiency would be difficult to separate. If you were dealing with a lady teacher aged 50, the only thing you would be concerned with would be her age to teach the children, or her physical fitness, not how long she had served ?—Take my own case. If Igo on teaching until lam 50, that will mean that for twenty-seven years I have taught the same class. That is to say, I have been doing the same thing over and over and over again, endlessly, for a period of twenty-seven years ; and I should say inevitably that process of work must become largely mechanical, and must have lost a certain driving force and enthusiasm. That is what I referred to when I spoke of mental nausea. There is no promotion possible for women. In my 1927 report—you have probably seen it ? —I have a copy. I took out an analysis of the female teachers who had retired —i.e., normal retirements, no medical unfits, or anything like that —and the figures showed that 126 out of a total of 454 retirements were under 50, say from 45 to 50 —one teacher in every four retired under age 50. Do you not think that is a big burden to throw on the fund imagine that it is as I said —it is a protest against the conditions. Women teachers are so tired of doing the same work, and so tired of this stagnation, and

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mental prostration due to lack of opportunity for promotion, that they naturally get out as soon as they can. They want a little peace ; they want to be independent of control, as it were, the whole time. I am just making the point to show you the strain there is on the fund —that the woman going out at 45 has probably thirty years of life in front of her in which to draw a pension ? —You must remember that her pension is very small. It is relatively high. As a matter of fact, a pension of thirty-sixtieths at age 45 is considerably higher than a pension of forty-sixtieths ten years later. However, Ido not want to stress that point. There is another point, as regard the effect of the war on salaries in the teaching profession, the strain that is thrown on the fund. Comparing the 1927 salaries of women teachers, I find that £154 to £161 is the increase per lady teacher ? —That is going to disappear in years to come. That will not disappear. Take £161 as the increase : the contribution on that at 5 per cent, would be about £8. Some teachers paid that £8 for three years —£24 in all, and were able to draw a pension of £100 a year for life ? —You mean they retired very shortly afterwards ? Yes. Mr. W. Nash.] There is one point, as regard the improvement of the teacher. As the years went on the capacity of the teacher would be improved ; and then there would be a peak year, and then her years of experience after that would not make her teaching more beneficial; her teaching value, even though she had the experience of fifty more years, would decline as her years increased ?— According to the grading-officers, the peak would be about twenty-five years, because they do not give marks after that.

Percival Mabtin Smith, Hon. Secretary, Secondary Schools' Association of New Zealand. (No. 22.) The Secondary Schools' Association of New Zealand desires to express appreciation of the opportunity given of stating its views on the proposed amendments to the Teachers' Superannuation Fund as set forth in the National Expenditure Commission's report and contained in the Government Superannuation Funds Bill, 1932. In the first place, it views with apprehension the fact that the proposals contained in the Bill are an expressed intention to set aside a contract entered into between the State and the teachers of New Zealand, and to replace it by another that is to the advantage of the State and to the disadvantage of the teachers, who have at all times been perfectly satisfied that they have had as an unalienable right, what one always associates with the State —security. For this, as professional men and women, they have been content to labour at their life's work at a comparatively low rate of remuneration, satisfied that when this work is completed, they will be able to enjoy a period of retirement, free from participation in the exacting task of educating the youth of this country, and free from the responsibilities of their office, savouring the fruits of an old age for which the State has assisted them to make provision as a reward for service faithfully carried out. Reasons for the Present State of the Fund. In his triennial report for the period ending 31st January, 1930, the Actuary states (para. 19) — " It will be seen from the above statement that there is a total State liability of £5,559,202, as compared with £4,647,798 at the last valuation, giving an increase of £911,404. This increase is mainly due to the accumulation at interest of that part of the State's liability which is unprovided-for, and to the number of retirements of comparatively young teachers with long service being in excess of the valuation assumptions." That naturally then makes the position fall into two divisions —first of all, the State's liability» and, secondly, any inherent defects in the fund itself apart from the State's liability. I. State's Liability : — Let us turn first to the failure of the State to meet its obligations. It is a difficult matter to ascertain exactly what have been the State's obligations, because it seems well established and incontrovertible that the fund was never intended to be put on an actuarially sound basis. To quote again from the Actuary's report of the triennial period ending 31st January, 1930 (para. 22), — " The Act, however, does not provide that the subsidy is to be determined from the foregoing actuarial ascertainment required by section 3 (2). The same clause directs the Actuary to show in his report the probable annual sums required by the fund to provide the retiring and other allowances falling due within the ensuing three years without affecting or having recourse to the actuarial reserve appertaining to the contributor's contributions. As the contributions are insufficient to provide the full benefits in respect of service after joining the fund, my interpretation of the principle underlying the section is that the State makes its contribution when benefits are actually entered upon, and then pays 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 contributor's contributions." This principle of the State making its contribution when benefits are actually entered upon is apparently quite a common one. In South Africa the Superannuation Fund receives a pound-for-pound subsidy and is protected by the Union in respect of early retirements due to policy measures. In the Commonwealth of Australia scheme, when the retiring-age is reached by new entrants or members joining the scheme under the age of 30, only one-half of the pension is paid from the

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Superannuation Fund the other half being paid from the Consolidated Fund ; while in the case of employees over the age of 30, when the scheme was introduced, an equitable amount, less than onehalf of the employees' pension, becomes payable by the Superannuation Fund, the Consolidated Fund finding the balance. In New South Wales the amounts payable from the fund in excess of contributions are paid out of consolidated revenue. When the scheme was established it was decided that the State Treasury was to pay £232,253 per annum for thirty-four years to cover the case of those who came into the scheme late. This annual payment was later abandoned, and now the State pays its portion as the superannuation becomes due. It seems to be a matter for argument whether the tying-up of big sums of money by the Government to meet future liabilities is a wise one or not, and many authorities can be quoted against the principle. The secondary teachers are not vitally concerned over this question, but are vitally concerned that the State, having given its guarantee to the fund, should not go back on that guarantee. It is to be noted that the Government has neither made good the initial deficiency of £800,000 (now amounting to £2,402,000 at 4| per cent, compound interest) due to back service prior to the commencement of the fund, nor has it paid the amount certified as being due each year to the fund to make up the actuarial balance between the pensions paid and the amount provided by contributors. In this, past Governments stand condemned. The following table shows the amount by which the Government subsidy has fallen short each year compared with the surplus in the Consolidated Fund : —

If the Government did desire to make the fund actuarially sound, and did desire to pay its full contribution in regard to the back service, owing to the surplus in the Consolidated Fund in those various years it was perfectly able to do it. From this table it will be seen that despite surplus after surplus no effort was made by the State to meet its liabilities. In this connection it is interesting to recall the words of the late Mr. Massey when the then Government Actuary, Mr. Morris Fox, asked for £17,000 to be paid into the Teachers' Fund : "It is a matter for regret that the Government have not paid over their contribution instead of allowing a liability to pile up that will some day surprise the Government and astonish the people of this country." In practically all superannuation schemes there is a contribution on the part of the employer and a contribution on the part of the employee. The ratio varies somewhat, but it would be difficult to find a scheme in which the employer or employing body pays less than half the amount of the total contributions. In many schemes the ratio rises much higher than 50 per cent. We feel sure the State never intended to bear less than half the burden, and we feel equally sure that no member of the Committee would be satisfied that the State should pay less than a pound-for-pound subsidy on contributions.

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Shortage accumulated at „ , Year. Government Shortage. 4* per Cent Compound Consolidated Fund. Interest to End of 1931. £ £ £ 1905-6 .. .. .. -5,000 1906-7 .. .. .. 2,000 6,011 1907-8 .. .. .. 5,000 14,380 850,000 1908-9 .. •• 5,000 13,761 106,654 1909-10 .. .. .. 1,000 2,634 247,995 1910-11 .. .. .. 4,000 10,080 954,167 1911-12 .. .. .. 10,000 24,117 720,792 1912-13 .. .. .. 10,000 23,079 652,232 1913-14 .. .. .. Nil Nil 392,397 1914-15 .. .. .. 16,000 33,815 72,142 1915-16 .. .. .. 16,000 32,358 2,017,830 1916-17 .. .. .. 16,000 30,964 4,308,777 1917-18 .. .. .. 26,000 48,151 5,885,934 1918-19 26,000 46,077 3,678,773 1919-20 .. .. .. Nil Nil 2,299,416 1920-21 .. .. .. 25,000 40,571 6,132,232 1921-22 .. .. .. 25,000 38,825 —33,983 1922-23 .. .. .. 2,084 3,097 1,315,685 1923-24 .. .. .. 29,167 41,478 1,812,365 1924-25 .. .. .. 69,000 93,900 1,243,800 1925-26 .. .. .. 69,000 89,856 1,155,679 1926-27 .. .. •• 69,000 85,986 587,142 1928 .. .. .. 105,000 125,214 1929 .. .. .. 105,000 119,822 179,076 1930 .. .. .. 105,000 114,663 -5,772,252 Total .. .. 735,251 1,023,136

L—ls.

If in the previous table, instead of taking the amount by which the State had failed to pay in its share, as certified by the Actuary, we take the amount by which the State's payments fell short of a pound-for-pound subsidy, then we get the total indebtedness of the State for shortage in subsidies alone, amounting as follows : —

It will thus be seen that the total deficiency due to a failure to pay pound-for-pound subsidy was £1,858,726 in 1930. By March, 1932, this would be over £2,100,000-—that is, without taking into account the amount by which the subsidy was short for 1931 and for 1932. If this be added to the £2,402,000 that the fund is short owing to the non-payment for the back service of original contributors, it will be seen that the total State liability on a very minimum basis is over £4,500,000 out of a total actuarial deficit of £5,559,202. In any plan put forward to improve the state of the Fund, these figures must be constantly kept in mind. Despite the State's defaults, the fund at the present time has a credit balance of £1,218,166, an increase of £19,454 16s. 4d. over 1930, and £135,010 Is. Id. over 1927. It seems perfectly obvious that the State, right from the start, rejected the idea of placing the fund on an actuarially sound basis, and has in the same way as the Government of New South Wales decided to meet claims as they arise. It seems absurd, then, suddenly to try to make the fund actuarially sound at the present time. If the State capitalized its future commitments e.g., its old-age pensions, &c.) in this way staggering figures could be given. Again comes the question as to whether it is necessary for the State to tie up huge sums of money in order to meet future liabilities. There seems little doubt but that if the Government had made good its liability with regard to original contributors and kept up a pound-for-pound subsidy the fund would be sound to-day. It seems an impossible position then for the State to put the fund on an actuarial basis at the expense of present and future contributors. The contributors have fulfilled their share of the contract. The Government chose to meet claims as they arose rather than to put the fund on an actuarial basis, and it seems that once having made this election, the State cannot very well go back on its contract. In his report for the period ending 31st January, 1927 (page 6, para. 29), the Actuary says, " 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 reasoning, however, would apply to all the expanding activities of the State —to its expenditure on education, pensions, and all social services. Again, we would emphasize that the appeal the fund has made to teachers has consisted in the fact that it carries the guarantee of the State. With this they have been satisfied, and are satisfied. Recommendations of National Expenditure Commission. —In the report of the National Expenditure Commission it is recommended that the State should in future pay a pound-for-pound subsidy. The report continues (para. 1449 (5) ), — " It does not appear that a pound-for-pound subsidy will be required for all time as when the liability in respect of back service is ended—i.e., forty years from the inception of each of the funds, a much smaller subsidy will suffice, provided that our recommendations as to conditions of future retirements are now accepted and are not later altered." Apparently the Commission had in mind the idea that the State's obligations were to be met by a payment of a pound-for-pound subsidy for a number of years and then the State was to be freed from all liability. Practically the whole of the burden of putting the fund right —the whole burden of the State's defaults in the past —is to be borne by the contributors. We feel sure that no public man in New Zealand would subscribe to such a policy of flagrant injustice. Under this recommendation, the State would free itself of the whole of its past liability and would in a short space of time be free from practically all responsibility to the fund. With all respect, we say that that is not an honourable man's way of facing his obligations. In concluding this section on the State's liabilities to the fund, we would like to stress again the large part of the actuarial deficit due to the State, and impress upon members of the Select Committee that though the secondary teachers are prepared to assist the Government to place the fund on a sound financial basis, and are prepared to make concessions to that end, they cannot possibly acquiesce in a policy that amounts to such a shameless breach of faith.

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Shortage of Shortage of Shortage of „ Pound-for- v „ Pound-for- v Pound-for-Year - pound Year " pound Year " pound Subsidy. I Subsidy. Subsidy. £ £ £ 1906 .. .. 32,285 1915 .. .. 448,078 1923 .. .. 1,080,340 1907 .. .. 71,023 1916 .. .. 538,641 1924 .. .. 1,170,041 1908 .. .. 111,504 1917 .. .. 633,280 1925 .. .. 1,271,098 1909 .. .. 146,806 1918 .. .. 732,188 1926 .. .. 1,384,099 1910 .. .. 183,698 1919 .. .. 809,536 1927 .. .. 1,505,364 1911 .. .. 237,759 1920 .. .. 891,028 1928 .. .. 1,636,715 1912 .. .. 294,253 1921 .. .. 931,124 1929 .. .. 1,778,685 1913 .. .. 343,290 1922 .. .. 999,128 1930 .. .. 1,858,726 1914 .. 394,533

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11. Other Factors blamed : — A. Early Retirements.—The Actuary lias in his various reports referred to the drain that early retirements have been on the fund. There have undoubtedly been cases of retirement on full pension at a comparatively early age in the past. There is no doubt, however, that the age at which entrants into the teaching service are admitted is steadily rising, and the days of probationers entering at the age of 14 and 15 years have passed. The common prerequisite of entry is now the higher leaving certificate which consists of one or two years of post University Entrance (Matriculation) work. Differences between primary and secondary service : In this connection it might be well to point out some differences that exist between the primary and secondary services in this country. (1) Under the present conditions, a person entering the primary service does—or did —have the right to join the fund when he or she becomes a probationary assistant, generally at an age of anything from 16 years of age, immediately upon leaving secondary school. In the case of a person desiring to enter the secondary service, a degree is almost a sine qua non for entry. At the present time it is almost impossible for a person to get a position in a secondary school unless he or she has a degree or is well started on a degree course. This means, then, that the average age of entry into the secondary service is about 23 years for women and about. 21-6 years for men. There are, of course, a number of teachers in the secondary service who have come from the primary service, and consequently their age of entering the fund is lower, but the great majority of teachers in the secondary service have first obtained a degree. There has been no real provision for the training of secondary teachers in New Zealand, and so the great majority have had to make their own provision to equip themselves for their profession by taking a University degree course. Thus they have not had the opportunity of joining the fund at an early age. Thus, with a later entry into teaching and later membership of the fund, it will be clear that, generally speaking, secondary teachers have not been able to make early retirements and so have not been a drain on the fund. (2) Proposals to equalize: If there is to be any alteration in the retiring-age, the secondary-school teachers feel that some relief should be given them in the matter of allowing them to count as years of service the time they take to prepare themselves for their profession so as to place them on an equality with the primary teachers. In other words, they ask that when they join the service they should be allowed to post-date their time of entry by three years in the case of having obtained a Bachelor's degree and four years in the case of having obtained a Master's degree. Under the present arrangement very few (if any) secondary teachers get in their thirty-five years' service in the case of women and forty years' service in the case of men before they have reached the age of 55 or 60 respectively. In other words, there is no need for the provision in the Bill that they are to teach until 55 in the case of women and 60 in the case of men as a minimum. Another proposal that might be made to get over the objection of retirements at a comparatively early age, and one that would tend to place the primary and secondary services on a more equal footing, would be to fix a minimum age —say, 20 years —at which teachers could join the fund. This would ensure that no full pensions were obtainable before the retiring-age had been reached. As salaries would be higher after 20 years of age (when the probationary and training college courses had been completed) this would tend to give a higher fate of contributions to the fund and would materially help the finances of the fund. Retiring-allowances of Teachers. —In order to dispel any idea that the retiring-allowances of teachers is large, it may be as well to quote the following figures showing the average annuities payable to those in receipt of over £300 from the various funds. £ Public Service Superannuation Fund .. .. .. .. 415-8 Railways Superannuation Fund .. .. .. . . 407-5 Teachers' Superannuation Fund .. .. .. .. 386-4 The total average pensions for teachers is in the vicinity of £175. At the end of 1930 it was £177. B. Increase in Cost of Living : — The Actuary in his reports has referred to the fact that the sudden increase of salaries after 1914 has had a weakening effect upon the fund. It must be borne in mind that these increases in salary represent partially the increased cost of living, not a raising of real wages. This is a matter that raises another altogether different problem for the State to solve, a problem that strikes at all insurance schemes, the problem of fluctuations in currency. It is to be remembered, however, that the chief effects of the sudden raising of salaries are noticed within a comparatively short time of the raising when those who are retiring are retiring on a salary considerably in excess of that upon which they have been contributing for the larger part of their service. The effect of this sudden raising of salaries will pass off in time and is only a transitory feature. Attitude to the Bill. —The secondary-school teachers of New Zealand do not wish to take up a narrow attitude to the Bill —in fact, they are willing to co-operate with the Government in seeing that the fund is kept in a sound financial condition and are willing to meet the Government on a fair and equitable basis. They do desire, however, to stress the fact that the position of the fund to-day is due almost entirely to the failure of past Governments to meet their liabilities. It does not seem a reasonable thing to ask that the present, past, and future contributors should bear the burden of the State's defaults. When the shortage paid in by the State year after year is compared with the budgetary surplus, and when the report after report the Actuary advised the Government of the position, it seems a very one-sided bargain the State is now about to make, especially viewed in the light of the fact that by the National Expenditure Commission's report the pound-for-pound subsidy is to be merely a temporary matter. We feel sure that such an arrangement will not appeal to the sense of justice of members of the Select Committee.

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From the figures previously quoted it appears that the State's liability for the actuarial deficit on a conservative estimate is four-fifths of the actuarial deficit and on these grounds we claim as a common matter of justice that the State should bear at least four-fifths of the burden, if the State now desires to put the fund on an actuarial basis. Again, it must be pointed out that if the Bill is put into operation as it now stands almost the whole of the burden is to be placed on the contributors, and after the elapse of a period of forty years from the establishment of the fund the state's liability will practically cease. Steps the Government should take if it desires to make the Fund actuarially Sound.—ln his report for the triennial period ending 31st January, 1930, the Actuary states (p. 4, para. 21) : — "... the total shortage in the fund to be met by the State —namely, £5,559,202 — is equivalent to an annual interest income (at 4-| per cent.) of £250,164. It follows that if any less sum than £250,164 is paid in by the State as subsidy, the total deficiency will increase, and the subsidy must accordingly, by way of compensation, rise much later on to a much higher figure than £250,164 per annum in respect of present contributors alone. If, however, any annual amount in excess of £250,164 be paid in, the fund would, in respect of present members, attain solvency within a definite period of time." As the contributions of members for 1931 amounted to £136,931, this would be tantamount to a subsidy of less than £2 for £1 (the ratio of £250,164 to be paid in and the £136,931 paid in by the contributors for 1931). As the State subsidy in the past has averaged about ss. in the pound, and as the deficiency has been caused almost wholly by the State's default in the past, it is reasonable to ask that if the Government desire to place the fund on an actuarially sound basis, that this two-to-one subsidy that should be taken in conjunction with this, is the main step. Secondary teachers might be prepared for the sake of the fund to be willing to concede the following : — (a) The raising of the last three years of service to the last five. (b) The taking of steps to prevent the retirement of comparatively young teachers. (c) The granting of an actuarially computed pension for those who retire before their full service. The Retiring Age.—(a) For males : Though prepared to make concessions on the point, if it is proved to be absolutely necessary for the stability of the fund, the secondary teachers do not favour the raising of the age to 65 in the case of males. It should be pointed out that teaching is a most arduous and exacting profession and that in most cases a man after 60 years has passed his best as a teacher, especially if that teacher is still engaged in the routine of ordinary class teaching. From the point of view of efficiency and from the point of view of the welfare of the pupils, it is undesirable that teachers be compelled to carry on after 60 years of age. Another point to be noted is that under modern practice a large part of a teacher's work consists in organizing, supervising, and directing the out-of-class activities of the pupils. A man after 60 is too old for most of this work, with the consequence that a greater burden is cast upon the younger teachers, so that inexperience rather than experience has to guide this branch of school activity, which has now come to be regarded as so essential a part in modern education. It would be a grave oversight not to recognize the fact that an important consideration from the point of view of full and true education is the contact established between teacher and pupil and the inspirational effect of this contact. This is largely brought about in out-of-class activities of the pupils, and it is very doubtful if this contact and inspirational force can exist between pupil and elderly teacher so well as between pupil and younger teacher. It is certainly undesirable for a teacher to be compelled to go on teaching after he feels that he is no longer in full sympathy with and in full understanding of his pupils. (b) For females : The Secondary Schools' Association wishes to resist most emphatically the proposal to raise the retiring-age for women. What has been said with regard to the raising of the retiring-age of men applies with ten-fold emphasis in the case of women, owing to the different physical and psychological facts that apply to women. It is well known that women are more concerned about and worry more over their work than men, and in most cases a women after 55 years of age is quite unfitted for the nerve-racking task of class-teaching. The fact that over 50 per cent, of women retire before 55 shows that they do not desire to teach beyond this age. In many cases they have been prepared to accept a lower pension in order to retire earlier. Again the interests of the women, but more especially in the interests of the pupils and efficiency, it is not desirable that women should be compelled to teach beyond 55 years of age. It is admitted that the women have tended to weaken the fund somewhat, but we are still emphatically of the opinion that women should not be asked to teach for another five years in order to give actuarial soundness to the fund. It has been already noted that the average age for entry in the secondary service is 23 years for women, so that in most cases the women cannot get in the requisite thirty-five years' service before 55. The Secondary Schools' Association is therefore firmly convinced that any actuarial deficiency caused through the shorter term of service of women should not be made good by increasing the length of service, but by some other means. By raising the retiring-age of women it feels that a serious blow will be struck at the efficiency of our secondary schools. Retiring-allowance based on the Last Ten Years. The Secondary Schools' Association would be agreeable to the period of three years being lengthened, but would not agree to an extension beyond five years. Five years appears to be the' limit of time recommended by most authorities on superannuation schemes. It might here be pointed out that in basing the retiring-allowance on the last years of service, teachers frequently suffer from an injustice that is not generally suffered by other branches of the Public Service. Teachers' salaries are based 10—I, 15,

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on the grade of position held, and this is in turn determined by the attendance roll. It quite frequently happens that owing to a fall in attendance at his school owing to reasons he cannot control, a teacher finds himself during the last few years of his service on a lower salary than he has enjoyed for some considerable time. In the primary service where removal allowances are granted and where there is a larger number of vacancies occurring, there is more mobility than among secondary teachers, where removal expenses are not granted and the number of vacancies occurring is very small. It is, also, in many cases undesirable that a teacher near retiring-age should be forced to move to a new school. We feel, then, that a grave injustice to some teachers would be removed if instead of the salary for the last years forming the basis for computing the retiring-allowance, teachers were given the right to base their retiring-allowance on their best three or five consecutive years. Though the number affected in this way is not large, there is no doubt that it does work real hardship in a few cases, and we feel that this injustice should be removed. Removal of £300 Bar. The Association is agreeable to this, but only on the distinct understanding that the right of election to pay 011 the higher or lower salary granted to the teachers after the salary cuts were imposed, is again conceded to all teachers. It feels that a grave injustice would be done if the benefits of the fund were altered within so short a time of their electing 011 the higher or lower salary, when, at the time of making their election, they were unaware of any impending change. General. There are some points in connection with the Teachers' Superannuation Fund to which the Secondary Schools' Association would like to draw the attention of the Committee : — Contributions on Evening Work. —The first is an anomaly that has existed in the case of those teachers who engage in evening work at technical schools. These teachers are subjected without option, to a deduction from their salary for this evening work, of superannuation payments, while others engaged in the same work from other branches of the Public Service do not have superannuation contributions deducted. This is regarded as a distinct injustice, for this work is seldom engaged in by teachers in the last few years of service, and so has no effect upon the retiring-allowance. The Association recommends that either these superannuation payments on salaries for evening work be abolished or on relinquishing evening work, the amount paid into the fund be returnable. Reciprocal Pension Scheme. —The Association lias for several years endeavoured to prevail upon the Government to establish a reciprocal pension scheme with the United Kingdom. In the United Kingdom service in a Dominion is recognized in computing length of service, but in New Zealand there is no such reciprocity with the result that English teachers, contributors to the Teachers' Superannuation Fund in England, coming to New Zealand are frequently severely penalized in the matter of superannuation. Right to withdraw. —The Secondary Schools' Association is most emphatically of the opinion that if the Government alters the basis of the Teachers' Superannuation Fund in the radical way that is proposed by the Bill, then they must in all fairness give contributors the right to withdraw from the fund, so that they can make other arrangements for their old age. It is needless to point out that the State alone is in a position to legislate out of its liabilities. No other party to any undertaking could get rid of its obligations in this manner, and the secondary-school teachers feel that the members of the New Zealand Parliament as men of honour will not seek this way out. Summary and Conclusion. 1. The state of the Teachers' Superannuation Fund is due almost entirely to default on the part of the State, and the State should in any readjustment that is necessary bear its full share. 2. The fund has admittedly not been established or administered on an actuarially sound basis, and the Teachers' Superannuation scheme has now been in operation for a considerable time. While ideally it may be right and proper to put the fund on a sound actuarial basis, we ask whether in view of all circumstances and especially our faith in the integrity of the Government, this is in practice necessary or desirable. 3. There is a special case to be made out for secondary teachers in that— (a) Their work is of an especially arduous and exacting nature, and so their age of retirement should not be raised : (b) They join the fund at a comparatively late age : (e) There are no sudden promotions on the eve of retirement : {d) They contribute a minimum of 5 per cent, on their salaries. 4. The secondary teachers have placed full confidence in the State guarantee. 5. Proposals on which the secondary teachers are willing to compromise, provided that the State fulfils its obligations in full and continues for all time its pound-for-pound subsidy, and providing that the right of election to pay in on the salaries before or after the salary cuts is reopened :— (a) The computation of the retiring-allowance 011 the last five years of service : (b) The removal of the £300 bar : (c) The prevention of the right to retire at a comparatively early age : (d) The placing of early voluntary retirements on an actuarially computed retiring-allow-ance : 6. Proposals to which the secondary teachers are radically opposed : — (a) The raising of the retiring-age of men to 65 and of women to 60. (b) The computation of the retiring-allowance on the last ten years of service.

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Mr. Smith : There are one or two points I wish to elaborate. The first is that in computing the liability of the State for the position of the funds, on the figures I have given it makes out a better case for the State than actually eixsts, because it must be remembered that the early retirements and the retirements that ha.ve been getting the benefit of the increase in salaries after 1914 are practically all original contributors which are really the State's burden, so that, apart from the State's failure to pay in for back service, if these pensioners retire on a basis that is not sound from an actuarial point of view, then the State is responsible for those, and consequently the total State liability is even more than has been made out. Then in connection with the back service, it is interesting, I think, to quote from the report of the Departmental Committee on the Superannuation of School-teachers set up in England in 1923. Apparently the Teachers' Fund there ha.d got itself into much the same position as our fund has here in New Zealand —that is, the State had not met its obligations with regard to back service—and when one compares the method that the National Expenditure Commission would adopt with the statement of this English Committee one is struck with a significant difference. The report says "For 'future service' we hope to be able to suggest a system under which the State will pay no more than an arguably just share. In the case of ' back service ' there is no hope of corresponding relief. The State must bear the burden unaided." Then, later on, it says, " In other words, on this showing, it would be open to us to propose that, in regard to service up to the date from which contributions became payable (Ist June, 1922) a proportion only of the average salary of the last five years of actual service should be taken into account for pension purposes, instead of the full figure. Nevertheless, we cannot recommend that this course be followed. We are not starting with a tabula rasa, and there are other considerations which ought not to be lost sight of. The concession implied in leaving ' back service ' untouched is undoubtedly a great one. But we think that it would be wise to be generous. All of us feel, some of us feel very strongly, that there is much in the past to be atoned for." The National Expenditure Commission had no hesitation in recommending what the English Committee definitely refused to do —that is, placing the liability for back service upon the contributors. We like to feel that we take our examples of moral uprightness from Britain and we are here prepared to do something that the Motherland set her face against and ruled out of court as having no moral basis, so I think that, putting the case like that, we feel sure that the members of this Committee will want to do no less than what was done in England under the same circumstances. On page 6, under the heading " Proposals to equalize," we set out a definite proposal in regard to the alteration in the retiring-age. That recommendation has the advantage that it does not interfere with the rights of the present contributors. It solves the difficulty in a straightforward manner which the Bill does not do. It removes inequalities as between two services, and we feel sure that it will recommend itself to the members of the Committee as a just and equitable proposal. On page 7, in reference to the " Steps the Government should take " —that is, of course, if the Government is fully determined that the fund should be put on an actuarial basis. We have not argued that out, because we feel that it is more possibly a matter for experts, but we maintain that that is a perfectly fair proposal. If the Government is determined at this stage to put the fund on an actuarial basis, it can do no less than we have set out there. In the Actuary's report for 1927, page 7, it was stated that a subsidy of 10 per cent, of the salary roll should be paid. That recommendation that the Government should pay in 10 per cent, of the salary roll is no more than we suggest the Government should do if it wants to put the fund on an actuarially sound basis. I may say, of course, that that suggestion also is founded on the Actuary's recommendation. On page 9 in connection with retirements of women, there are various alternative proposals that might be considered, but we do want to stress the fact that any alteration that is made should not affect the position of present contributors to any great extent. Possibly if an election was given to women teachers to pay an extra 2 per cent, on their salary in order to allow them to retire five years before the men that would meet the situation. If they paid an extra 2 per cent, into the fund that would enable their position to be actuarially sound. It is also interesting, in connection with the English report, to note the Committee's findings in connection with the position of the women : — " An interesting point arose as to whether the rates of contribution should be the same for women as for men. The witnesses with whom we discussed it were all for equality, but it is very important to secure that equality in the rates is not conceded at the cost of inequality in the proportions of the liability placed respectively on men and on women. An investigation of the position in this connection was obviously necessary. Women teachers, on the one hand, break down more frequently than do men, and women pensioners live the longer. On the other hand, a large proportion of women withdraw from the service young, chiefly, of course, on marriage, and under our proposals will generally, no doubt, take out their own half of the contributions which their service lias attracted, leaving the other half to assist in meeting the heavy liability to those of their sex who retire on pension. It might have happened that these differences in the incidence of the risks as between men and women would have required different contribution percentages in regard to ' future service.' Fortunately, our inquiry has had a satisfactory issue. We are advised by the Government Actuary that taking women teachers as a single class the elements of loss and gain, as indicated above, practically neutralize each other, with the result that the combined contribution of 10 per cent, is not only necessary on the whole, but is appropriate to each sex taken separately." The 10 per cent, refers of course to the 5 per cent, contributed by the contributors and the 5 per cent, on the part of the employing body. There is another matter in connection with the reopening of the right of election to pay on the higher or lower salaries. When the first salary cut was imposed the teachers were given the right to elect to pay on the higher or lower salary. When the second salary cut was imposed the teachers had again to make the election, but if they made no election to pay on the higher salary, despite the fact 10*

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that they had elected to pay on the higher salary in the first case, they were automatically dropped on to the lower salary. Now, many teachers, about one hundred or more in all, made the mistake of thinking that, having elected to pay on the higher salary in the first case, they did not need to make the election in the second case to pay on the higher salary, and they have since received a notification from the Superannuation Board that they are to pay on the lower rate, and consequently that means a very great difierence in the retiring-allowances of some teachers. In the case of a teacher who wants to retire within the next three or four years, it makes a difference of anything up to £50 in the retiringallowance, and in that connection I might quote a letter which was received by a teacher from the Superannuation Board that misled her about making the second election. It reads, " I have to acknowledge receipt of your letter of the 18th instant, but have to point out that you have already made an unqualified application under the provisions of section 8 of the Finance Act, 1931, and this election cannot be withdrawn or qualified." The teacher assumed that therefore there was no need to make the second election. Mr. Dickie.] Did I understand you to say that the English Committee recommended that women who wanted to leave the fund on account of marriage should take out half the contributions ? —That refers to the fact that I explained later, that they would take out half, which would be their own contributions, the other half is what would be paid in by the employer. Mr. Hargest.\ We have all become used to criticizing the report of the National Expenditure Commission, and you say they recommend the placing of the burden for back service on the contributors. I contend that they do not say anything specific in that case. In fact, in one of their recommendations it is the reverse ? —What I mean is that by altering the basis for retiring-allowances, raising the age, and the other alterations, that means the fund is to be put on a sound basis by the sacrifice of the present and future contributors. There is nothing specific in the report relating to back service. You were referring to back service compensation that accrued to annuitants who came under the scheme in 1903 or, in your case, 1909 ; but it is scarcely a fair inference to place on the National Expenditure Commission's report, is it ?— I take it that the only additional thing, if it can be called additional, that the National Expenditure Commission recommended the Government to do was to pay in a pound-for-pound subsidy which was in time to be cancelled or practically cancelled, and the whole burden of placing the fund on an actuarial basis was to be borne by the teachers. Mr. McCombs.'] On page 2, paragraph 3, there is a reference to New South Wales Teachers' Fund ? —lt is not the teachers ; it is the Civil Service Superannuation Fund. Does it cover teachers ? —I am not sure on that point. Mr. Gostelow: Yes, it does. Mr. McCombs : Teachers only ? Mr. Gostelow: No, the Civil Service. Mr. McCombs.] On page 4 you give the figures £4,500,000 and £5,500,000 showing the State's default, and suggest an apportionment of the present deficiency. Then on page 7 you refer to the State's liability as being four-fifths of the deficit. You seem to imply that your Association would not be averse to taking its share of the deficit ? —That is so. The secondary-school teachers take up the attitude that they are prepared to make some concessions if it is shown that the unsoundness of the fund is due to some inherent defect in the scheme ; in other words, that the teachers are getting better treatment than they should get for the actuarial soundness of the fund, apart from the State's liability. You say the State's liability is four-fifths of the deficit. You assume that there might be an inherent defect to the extent of one-fifth ? —Yes. It has been difficult to find out whether that is actually so or not, but it seems to me, from facts that the Actuary has at different times enumerated, that those all apply to the original contributors, to early retirements, for example, or those cases of women retiring at 44 years of age. It seems fairly obvious that that was never intended, and there are things like that, but those all refer to the original contributors and the people going into the Service now at an early age that will allow them to retire at 44. There are hardly any secondaryschool teachers who can retire before the minimum age, on account of not being able to get the requisite number of years of service in. You only propose to take half. That is your share of this inherent defect of one-fifth. Suppose the State and contributors contributed on a fifty-fifty basis, and they made provision for benefits which created an inherent defect of one-fifth, then the teachers' share would be one-tenth. The State would have to find another one-tenth in addition to making up its share of the four-fifths ?— Yes. Of course, we are only speaking in general terms, because it would be practically an impossibility to definitely say the State's share represents one-fifth or one-tenth, but we wanted to show that we are prepared to make concessions that would tend to get rid of the defect if there is an inherent defect in the scheme itself. You do not propose to make concessions to make up the State's deficiency ?—Certainly not. The State should meet its deficiency, and then if there are any inherent defects the State should take its share of the inherent defects ? —Yes. The teachers would be prepared to do, in the least, their share. In regard to the women, Ido not follow you. You suggest that they might pay 2 per cent, extra, and then you quote from a British report to show that it was totally unnecessary ?—Yes. The New Zealand Actuary apparently has found, or considers, that the women, owing to their earlier retirements, have been a strain on the fund, and I quoted the investigation in England to show that that was not their experience. It might not be the experience here ? —No. I wanted to point out the discrepancy for further investigation, if thought desirable. You were not suggesting that they pay 2 per cent, extra ?—We are suggesting that if it were found that the women were a burden on the fund that some method such as giving the women the

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right to elect to pay an additional 2 per cent, on entry in order to allow them to retire at 55, or allowing them to pay the same rate as the men and retire at 60. We suggest that that option should be given to them, but that of course would only apply to those coming into the fund, and would not alter the rights of those already in the fund. It looked to me as though you were suggesting that the women should pay more than the men when there are such a number of factors to be taken into consideration—the factors mentioned by the British Committee and, in addition, during the whole period of service they are paid less than the men for doing exactly the same service. It seems unfortunate that there should be a suggestion that the women should face additional burdens ?—We took it we were to be quite candid with this Committee, and we are not suggesting that should be done, but we are suggesting something that might be considered. Mr. W. Nash.] Are you not representing the women teachers ? —Yes, certainly. The women, for the most part, are prepared that something like that should be done if it is definitely shown that the women are getting away with more than their share under the present circumstances. Mr. McCombs : It seems to show the other way, seeing that they are doing the same service as the men and getting less pay. Mr. Wilkinson.] The Association seems to lay considerable stress on the guarantee of the State. I would like a little clarity on that point. Will you state what, in your opinion, is the absolute guarantee by the State that this fund would be maintained and kept sound ?—I cannot point to any specific statute, but I take it that every Government has always assumed that it has a responsibility to the fund. The mere fact that they have organized it and laid down a definite schedule of benefits to be given surely implies that the fund has the State behind it. It is an implied guarantee, not a definite one ? —lf the State says, " If you pay contributions of so-much for such-and-such a period you will get such-and-such a retiring-allowance," surely that is a definite guarantee of the State. There is nothing in the statutes regarding the guarantee apparently ? —ln the Superannuation Bill. I understand that your answer is that the guarantee is an implied one, more than a definite one ? —I should say that it is contained in the Teachers' Superannuation Fund as set forth in Part IX of the Education Act, 1908, with various amendments. I think also that the Government Actuary has mentioned the State guarantee. I have not seen a definite guarantee in regard to your Service, although I understand there is one in regard to the Railways Department ? —lt seems to me that if the State definitely, in its Bill, provides that you pay in something and that it will pay you out something, that that is a definite guarantee. Is it not provided that these benefits shall be paid from the fund, not by the State ? On page 5, paragraph 2, there is a statement at the end, " With all respect, we say that that is not an honourable man's way of facing his obligations." That is in reference to the Commission's report. I would like to ask if the present Bill gives effect fully to the Commission's report to which objection is taken ?— Not quite, because one cannot tell from the Bill as to how long the pound-for-pound subsidy will be given, but one assumed that it was based on the recommendation of the National Expenditure Commission, and they assumed right through that the pound-for-pound subsidy would not bo necessary after forty years had elapsed from the inception of the fund. We take it that if the Government now provides in the Bill to pay pound-for-pound subsidy that by the time forty years has elapsed from the establishment of the fund, it will probably take advantage of getting out of its liability. The point was made that the secondary teachers enter the Service at a later age than the primary teachers. Do they not get very much higher salaries than the teachers in the primary schools to compensate for that later entry ? —Their salaries, I suppose, on an average would possibly be higher, although when one takes into consideration the various allowances and so on that the primary teachers have, I doubt whether, taking qualifications into account, one could say that there is a very big difference in the two salaries. You strongly urge that the teachers should have another opportunity of considering the matter of contributing on the higher salaries ?—Yes. There are two precedents for that. There is the case of the 1921 Public Expenditure Adjustment Act under which the teachers were given the right to elect whether they would pay on the higher or lower salaries, and the Act was amended to give them a longer period. There was another case in 1925 when the teachers were given the right to count in house allowances for superannuation purposes. Those who were already in the fund had the right of election as to whether they would accept that or not, and a definite time was fixed, but the period was later extended by one year. Therefore, there are two precedents for reopening the question. Mr. W. Nash.] In your opinion the women should receive equal pay with the men, and your Association has no desire to take any benefits from them in anyway whatever ?—We have no desire to take any benefits away from them whatsoever. With regard to the question of equal pay lam afraid that I could not definitely speak for the Secondary Schools Association on that matter. The question of the guarantee was raised. You mentioned that the Government has made a contract with the teachers under which, if the teachers pay so-much the Government, in turn, will pay so-much so that there will be a fund available for the pensions. Have you looked at the Public Service Superannation Act in which it specifically provides in section 111 in connection with the Teachers' Fund what the Government Actuary has to do. He has to find out how much is required to be paid out annually without interfering with the actuarial soundness, and section 112 says that the Government shall in the month of January in every year pay into the fund out of the Consolidated Fund, without further appropriation than this Act, £143,000, together with such further amount, if any, as is deemed by the Government Actuary to be required to meet the charges of the fund during the ensuing year. The Government Actuary reports what is required to keep the fund sound, then

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the Government has to pay such sum as is deemed by the Governor-General in Council to be necessary# Would you not read that as a guarantee ? —Yes, I certainly would. The Government Actuary states that £5,500,000 is required to put this fund on an actuarial basis. You work out that the money required that has been short-paid in interest is £4,500,000. What rate of interest did you use ? —4J per cent. Then if the money had been paid in at the time and the interest rates being earned by the Superannuation Fund had been received, that £1,000,000 would not be short, to the extent that the interest rates were in excess of 4J per cent., that would reduce the £1,000,000 ? —Yes, as a matter of fact, I think the actual interest earned is a little over 5J per cent. If you had taken your interest earnings at 5f per cent, instead of 4|- per cent —that is, the sum that had been earned—on your assumption there wonld not have been any shortage at all ? —I would not say there would not be any, though on the face of it I think it would certainly be considerably less. The difference between the £4,500,000 and the £5,500,000 would come off the £1,000,000 that you are making provision for ?—Yes. You are basing your case on the fact that the Government should take responsibility for all special retirements. The Government has the responsibility in that it allowed the special and early retirements ; the teachers did not allow them %—Yes, that is so. In the case of back service, if the money had been paid in by the Government you are of the opinion that with the £1,000,000 the fund would be on a sound footing ? —Yes. Have you taken into account the three factors that the Government Actuary has so often mentioned, that the specific lift of the war-time salaries has brought a burden on the fund, and also the other two things I have just mentioned. If the war-time lift in salaries has brought a burden on the fund that ought not to be there, would your Association take into account the fact that some pensioners are receiving more than is warranted, taking the price-level to-day compared with that during the war-time years. Would you be agreeable to an adjustment being made on that basis ? —I would not like to answer that question straight out. The point we wanted to make was in connection with the increase of salaries, that that represented not so much increase in salary as increase in cost of living, and that pensions based on that increase in salary would bear the same proportion to the cost of living as the salary did before the 1914 rise. You mentioned on page 6 the retiring-allowances of teachers, and compared them with the other funds. You have not gone into the average pension in the whole of the Service. You have only taken the average pension for those in excess of £300 per annum. You say, "it may be as well to quote the following figures showing the average annuities payable to those in receipt of over £300 from the various funds," and-tliose figures show that the Public Service is the highest, the Railways second, and the teachers third. That would not be a very fair comparison, because there are no particularly high salaried men in the teaching profession. They only go to a certain limit. They do not get £3,000 as they do in the Railway service ? —No. I have put the total average pension for the teachers in the vicinity of £175. The Chairman.] For secondary teachers ? —No, from those drawn by the superannuitants. Mr. W. Nash.] On page 7 you refer to the " problem of fluctuations in currency." What do you mean ? The price-level or currency ? I wonder whether currency is the right word there ?—Currency in the sense that the pound will buy a certain amount at one time and less at another time. In regard to the basis of the retiring-allowance and raising it from three to five years, you cited some cases where the average of ten years would be greater than three. Would you agree in that case that they should take whichever is the higher of the two. You are willing to agree to the period being -lengthened to five years and in some cases the average of ten years would be greater than the average of three. In cases like that would your Association be willing that the pension should be based on whichever is the greater, the average of five or ten ?—Yes. On page 10 you say that the secondary teachers in some cases make contributions to the Superannuation Fund for evening work for which there is no benefit in their superannuation ? —Yes. Many secondary teachers have paid up to as much as £100 for work they have done in the evening classes and under the £300 limit that has been of no assistance to them, but the major fact is that it very seldom, if ever, occurs that a teacher in the last few years of his service engages in that evening work. It is generally a younger teacher's work. There is one case I know of where a man, after he had given up evening work, was asked to pay £85 into the Superannuation Fund on his evening work for back service. Mr. Dickie.] Based on what percentage ? —Five per cent. Mr. Hargest.] In what period of years would that be ? £85 at 5 per cent, would be £1,700. Do you mean to say that some one gets £1,700 for night work ?—lt may be fifteen years or more. Mr. W. Nash.] You do not consider that they ought to pay for any benefit they do not get ? —• No. The Chairman.] On page 8 you refer to the subsidy of £2 for £1, and say that £1,000,000 is wanted by the fund. Suppose the Government was not able to raise that money at the present time, what alternative do you suggest ? It is not only this fund we have to consider, we have two other funds ?—• I take it that this is a definite liability on the part of the State. It is as much a liability as any other liability the Government has. We admit that; but lam asking you what alternative you can suggest to us if the money cannot be raised now. We admit the liability ; that is all right ? —I would suggest the same alternative if the Government could not meet its overseas debt. Repudiate it, is that what you mean ? —My point is this: that I do not think the Government should cut the superannuation scheme about any sooner than it has to make arrangements for its other obligations. Yes, but you are asking that this money shall be paid in. I say we have two other funds as well as yours. If we cannot pay the money in, have you any alternative suggestion ? I presume you have none ? —No.

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In regard to the cuts that you have referred to. You are asking for an extension of time in regard to paying on the higher basis. Will you tell the Committee exactly what was done in the matter of the notification to the teachers that they could pay on the higher salaries ?—By publication in the Education Gazette. Nothing else ? —No. Did you not think it worth while to circularize the teachers the same as the Railways did ? — Well, it is a matter, I think, between the Superannuation Board and the contributors. You think that is their job ? —Yes. As a matter of fact, I would like to point out that under the Act the Board is directed to issue to each contributor a copy of the actuarial report. That, as far as I can gather, has never been done. In connection with the election of the Teachers' Superannuation Board there is supposed to be an election every three years, and a notification is supposed to be sent out that an election is falling due. Going back about four years I can find no notification in the Education Gazette of an election falling due, and the secondary-school teachers take up the attitude that there is an obligation on the Board to deal with its contributors, and not for another body to go in and act as an intermediary. Would you say then that, having made your public statement in the Education Gazette, drawing the attention of the teachers to it, and they have failed to take advantage of it or to take the matter up, the teachers were to blame. That you did all that was necessary ?—I think you must understand this is a matter for the Superannuation Board Never mind about the Board, we are talking about your Association. I asked what notice you sent out, and you said it was published in the Education Gazette. I asked if any other notice had been sent out, ana you said " nothing else." You said it was the duty of the Board. Having given that notice in the Education Gazette, do you consider that you did all that was necessary as far as your Association was concerned ? —lt was not our Association that put the notice in the Education Gazette, it was the Superannuation Board. You did nothing ?—No. All members of the Secondary Schools Association are not contributors. We have no paid secretary. The matter is a matter of business between the Superannuation Board and its contributors, and we cannot see that there is any liability on any other body to notify the teachers on behalf of the Superannuation Board. Mr. Wilkinson.] Was that notification in the Education Gazette sufficient notice in your case ? — No, because there may have been teachers away on leave. The Chairman.'] I want to know what was done by your Association. Apparently you took up the attitude that it was the duty of the Superannuation Board to notify the contributors ? —Yes. Mr. Gostelow.] On page 2, fourth paragraph, you say, "It is to be noted that the Government has neither made good the initial deficiency of £800,000 (now amounting to £2,402,000 at 4J per cent, compound interest) due to back service prior to the commencement of the fund, nor has it paid the amount certified as being due each year to the fund to make up the actuarial balance between the pensions j>aid and the amount provided by the contributors." Those two things are not quite separate. I think it is necessary to point out that the Government never proposed to pay interest on that initial deficiency. What it did propose to do was to pay its share of the pensions as they fell due. You are assuming that those two things are quite separate and additional ? —Yes, I take it that both would be required, would they not, to put the fund on an actuarially sound basis ? No, only the latter. That £800,000 does not come into the picture at all ? —I think the figure still stands true, the £2,402,000. No, that figure is quite wrong. It is quite wrong to take into account the accumulated amount of the initial deficiency in spite of the fact that the Government has been reducing that deficiency by paying in as the pensions fall due, and they have, as a matter of fact, paid in about £970,000. Now, on page 6, at the foot of the page, you give an estimate of pensions, and show the total average pensions for teachers in the vicinity of £175. That is scarcely a fair statement for the Committee. When you take into consideration the fact that 60 per cent, of the teachers are women and paid lower salaries. Would it not be better to compare the average for the male teachers. The average pension for a male teacher is £250 and the Public Service is £200 and the Railways £150. I think the Committee should realize that the Teaching Service is the highest - paid service ? —I did not intend to mislead the Committee there. I simply took the number of pensioners and divided that number into the total sum received in pensions. I only wanted to bring that point out for the Committee. They will have the average pensions received in the Railways and Public Service, and they might get the impression that the teachers get very small pensions in comparison, whereas in fact the male teacher gets the highest average pension. On page 7 you refer to the rise in salaries after 1914-. You quite realize that salaries went up considerably after the war, and pensions are payable on those high salaries, although the contributors probably contributed on those salaries only for a few years. Do you think it is reasonable in a superannuation scheme that what was really equivalent to a cost-of-living allowance should be included in a pension for ever ? —lf he needs an increase in his salary in order to enable him to live he would need an increase in his pension to enable him to live. But the cost of living does not remain stationary. Salaries have been cut three times since the war. The point lam trying to make is this: that those were cost-of-living increases granted for a specific purpose following the war. Ido not think it is a fair thing that they should be a strain on the Superannuation Fund for life, since the men only contributed in some cases for two or three years ?— Yes, I quite realize that has had a tremendous effect upon the fund, but I think you are wrong in saying they are cost-of-living bonuses ; they were definite increases in salary. But they were definitely cost-of-living bonuses. Ido not think that can be denied ? —Undoubtedly, we can see they have had a tremendous effect upon the fund, but still it must be admitted that those were the original contributors who were, as it were, the foster-children of the Government with regard to their contributions.

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Quite so ; but you can realize that in any scheme that is to be sound there must be some equation between income and outgo. You can see what effect it would have on a scheme where contributions are based on the average salary right through service and the pensions are paid on the big salaries during the last few years. In the case of a war or economic inflation salaries go up and permanently increase the liability of the fund, since pensions are governed by the salaries for the last few years? You would not interfere with the persons joining the fund now on the present scale of salary. Those persons' positions would be sound on the present scale. I am only trying to bring out the difficulty of getting financial soundness in any scheme where there is no correlation between contributions and pensions. I would like to follow that up with your remark on page 9, where you say, " The Secondary Schools' Association would be agreeable to the period of three years being lengthened, but would not agree to an extension beyond five years. Five years appears to be the limit of time recommended by most authorities on superannuation schemes." Have you anything to support that «—Edwards and Murrell, "Staff Pensions Schemes in Theory and Practice " ; Bernard, Robertson and Samuels, " Pension and Superannuation Funds " ; and most of the schemes seems to fix five years. England, I think, is five years. New South Wales is five years. New South Wales is a unit pension scheme ? —Yes, that is so. It is England that is five years. I have not a note of the other opinions I read, but the period seemed to vary between three and five. One or two had seven, but five seems to be the maximum that was supported by most of the authorities that I saw. The concensus of opinion of actuarial experts is coming round to basing pensions on the average salaries over the whole period of service. I have a report which I received only last week from one of the biggest private superannuation schemes in New Zealand—one of the banks—and their scheme is based on the average salary of the last twenty years of service. I only mention that to show that if you want soundness it is far better to broaden the base, and that is what this Bill proposes to do, to broaden it from three to ten years. Mr. W. Nash : What is the basis of the contribution on the salary ? Mr. Gostelow : I do not know. Mr. W. Nash : Would it not be a consideration ? If you paid in 5 per cent, you could afford to base it on five years. If you paid in only 1 per cent., you might have to base it on twenty years. The Chairman : We can investigate that matter later. Mr. Gostelow.] In regard to that extract you read from the report of the British Committee ahout the equal rates for male and female contributors : Have you any idea of the age the women retire ? —Thirty years' service or compulsorily at 60 years of age. It is quite obvious that the same contribution for a female contributor cannot suffice if she retires ten years earlier than a male contributor ? —No. So that that 2 per cent, seems reasonable—the difference between the two ?—lt does seem that there is a discrepancy. Mr. W. Nash.] About the question the Chairman asked in regard to the notification to contributors of the right to pay in on the higher salaries. Do you think the Superannuation Board should have notified every one of its contributors. The Board should have notified them what was happening, and asked them to elect or otherwise to contribute on the higher or reduced salary ? —Yes. We feel very definitely that the Board should have a definite obligation on it to deal with each individual contributor. In the same way as the Railway Department did ? —Yes. Mr. Dickie.] In 1921 you had the same right of election. I think the period at that time was extended six months in order to make sure that every one was advised. That was the position was it not ? —Yes.

Arthur George Barnett, Secretary, Wellington Harbour Board. (No. 23.) The Superannuation Fund of the Wellington Harbour Board was established under the Local Authorities' Superannuation Act, 1908. A superannuation scheme based on the Act was prepared by the Government Actuary and submitted, with suggested subsidy, to the Board. It was then placed before the employees and, upon a majority agreeing to join, a decision was come to to establish a Superannuation Fund. The only limitation of retiring-allowance in the 1908 Act was contained in section 22 of that Act —i.e., not exceeding two-thirds of wage or salary on forty years' service or at 60 years, Board's option, or at sixty-five years, employee's option. The rates of contribution in the Act were fixed at: Under 30 years, 5 per cent. ; 30-35 years, 6 per cent. ; 35-40 years, 7 per cent. ; 40-45 years, 8 per cent. ; 45-50 years, 9 per cent. ; over 50 years, 10 per cent. No subsidy was obtained from the Government, as in the case of local-body funds established under the " National Provident Fund Act," but, the Board agreed to add to every £100 of employees' contributions the sum of £65. This subsidy was added fortnight by fortnight to the employees' contributions and, in accordance with the Act, paid into the Public Trustee and became interest bearing. While the fund was being established, it was found that there was a technical defect in one of the clauses dealing with early service, and this delayed putting the fund into operation. For the purpose of remedying this weakness an amendment to the 1908 Act was introduced at the request of this Board, but in the last hours of the session, in the Legislative Council, a new clause was added without the Board's knowledge, limiting the retiring-allowance to £300. The fund came into operation on the Ist April, 1913, with the rates of contribution as set out in the 1908 Act. The last triennial investigation by the Government Actuary shows that the Wellington Harbour Board Superannuation Fund is in a satisfactory condition, and he further advises that the fund is capable of meeting the retiring-allowances specified in the 1908 Act.

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The Revenue Account of the fund for the twelve months ended 31st December, 1931, shows that last year the income was £20,499 13s. lid. and the expenditure £4,556 17s. 2d., and that the funds in hand amounted to £209,737 lis. 9d. (Revenue Account, 1931, attached.) On account of the £300 restriction, cases have occurred where technical or expert officers have been called upon to pay excess contributions to the fund within a year or two of joining and in other instances the order of retirement has been interfered with. Apart from the common reasons of objection, the Board feels that it has a special claim for consideration as the scheme was prepared on the 1908 Act, the rates of contribution set out in the Act were calculated to provide for a maximum two-thirds retiring-allowance, and the Board's subsidy was recommended by the Government Actuary and originally adopted by the Board on a basis that an officer paid in contributions for a maximum retiring-allowance of two-thirds of wage or salary upon retirement. The diagram attached showing the total income and expenditure of the fund since its inception in 1913 and by the broadening gap indicates the sound financial position of the fund at the present time. It is estimated that out of the present total corpus of the fund (£209,737 lis. 9d.), 61 per cent., or £127,100, represents the employees' capitalized contributions, the Board's subsidy with interest thereon, £82,638, or 39 per cent., providing the balance. The disability of certain employees in regard to retiring-allowance and the payment of excess contributions by contributors is being accentuated year by year, and, as the common justice of the Board's appeal has been acknowledged on the many occasions it has approached the Government on the matter, it now asks that legislation be enacted either in the form of a simple repeal of section 3 of the Local Authorities' Superannuation Act, 1912, or by a permissive clause in an appropriate Act to the following effect:— " Any local authority which has established a fund prior to the passing of this section is hereby empowered to pass a special resolution that section 3 of the Local Authorities' Superannuation Amendment Act, 1912, shall not apply to such fund or any contributor to such fund, and thereafter the said section shall not apply to such fund or any contributor thereto, or annuitant thereof, but no such resolution shall take effect until and unless it is confirmed by the Governor-General by Order in Council." Wellington Harbour Board Superannuation Fund. Revenue Account fob Twelve Months ended 31st December, 1031. Expenditure. £ s. d. Income. £ s. d. To Retiring-allowance .. .. .. 3,190 9 8 By Amount of fund at beginning of year 193,794 15 0 Annuities to widows .. .. 529 19 4 Members contributions .. .. 6,178 16 3 Allowances in respect of children .. 156 19 9 Subsidy from Wellington Harbour Contributions refunded to members .. 679 8 5 Board .. .. .. 4,016 3 8 Amount of fund at Interest .. .. .. 10,304 14 0 end of year — £ s. d. In hands of Public Trustee .. 209,733 11 5 Cash in hand . . 4 0 4 209,737 11 9 £214,294 8 II £214,294 8 11 A. G. Baknett, Secretary 22nd February, 1932. J. E. Gamble, Accountant.

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The Chairman.] In effect you are asking us to put a clause in the Bill to remove the £300 limit in regard to your own particular Fund ? —Yes. The reason we have come here is on account of the fact that the difficulty of the Government has been on account of a precedent that they were likely to establish in regard to the £300 limit in the Government funds. They have said that they have no objection to us getting what we want. Mr. Dickie.] Would it be equally satisfactory to your fund if those excess contributions were refunded and the contributions were based on the £300 limit and employees were allowed to make their own arrangements outside ? —No, inasmuch as it only affects new employees. The old employees who have paid for certain pensions would not be able to receive them. If they had their extra contributions refunded ?—Then they would lose a certain amount of pension benefit. They would lose the opportunity of making other arrangements ? —Yes. The Board is quite agreeable, and paid its subsidy on that basis and the employees originally voted on it, but the Parliament of the day added this limit without our consent or knowledge. Mr. Hargest.] I take it that the Board and employees claim that, having a fund that is sound and well administered, it is in a position to extend its benefits to those people who would be ordinarily entitled to more than £300 a year retiring-allowance. There is no danger of this ever putting your fund in jeopardy I—No. I would like to point out that that clause we have suggested makes provision for the resolution of the Board only taking effect with the approval of the Governor-General in Council. The reason that was put in was so that it could be subject to the Actuary's approval. The Chairman : I might read this extract from notes of a deputation to the Prime 'Minister : — " ' Mr. Forbes : We have the matter now before Committee, and I propose to send your suggested amendment to that Committee so that they can consider it and make a recommendation in regard to it. There will- be an opportunity given for your Board to appear before the Committee and state your case. . " ' Mr. Norwood : That will be excellent.' " Mr. Forbes referred to the Government superannuation question, and said that it was not in the healthy position of the Harbour Board Fund. When the £300 limit was applied there, proper provision had not been made for it, in that the contributors should not have been required to pay on more than £450 a year ; for anything over and above that they could have made their own arrangements. It would have been a fair thing if that had been done. The Commission had recommended that the limit should be deleted, but the Committee must go into the question of what effect unlimited pensions had had on the fund. The amendment to £300 had, of course, not operated yet. He understood that the feeling in the Service had been that it would be amended before it came into operation." That is what Mr. Forbes said and that is why the matter is before us to-day. Mr. Wilkinson.] In regard to the amount contributed by those who will not receive over £300 a year. Have you any figures showing the extra amount that they have contributed ? —Yes, something in the vicinity of £3,000. We have estimated that up to date. It is going on slowly all the time. Recently we engaged a junior pilot and almost at the time he started he was paying in more than he could receive as pension. You have referred to the soundness of your fund. Is that not due, to some extent, to the limitation of the pension to £300 a year ? —To some extent, but I am sure it is mainly the basis on which it was established. It was established on actuarial advice. Mr. W. Nash.] Do your contributors retire on an actuarial basis if they retire before the period provided in the Bill? — There is only one provision—medical unfitness —in our fund. There is no other provision for early retirement. Who takes the responsibility for medical unfitness, the Board or the fund ? —The fund. If you had a large number of servants medically unfit it might make the fund unsound ?—lf a large number did retire medically unfit it might have some little effect, but I do not think we have had more than one or two in the whole service. Bid the fund accept any responsibility for back service prior to its inception ?—The fund only gave authority for payment, the amount was paid out of the Board's funds. Is that why it is sound, because back service was paid for by the Board out of its own funds ?— Yes, and the extra benefits which are paid to widows and children are paid out of the Board's own funds, too. Mr. Gostelow.] You say, " A superannuation scheme based on the Act was prepared by the Government Actuary and submitted, with suggested subsidy, to the Board." Was that Mr. Morris Fox ? —Yes. And the fund has operated satisfactorily ever since ? —Yes. And it has always had a surplus ?—Yes. And the raising of the limit would not interfere with the pensions of the lower-paid men ?—Not at all. Would you object to the insertion in that clause you suggest after " Order in Council" : "and it has been reported by the Government Actuary to possess a sufficient surplus " ? —That would be quite satisfactory. We would not expect it to be agreed to without the Actuary's approval.

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John Francis Barr Stevenson, Barrister, Wellington, on behalf of Wellington Harbour Board. (No. 24.) Mr. Stevenson : I represent the Wellington Harbour Board, and am here to support the remarks made by Mr. Barnett. The amendment limiting the pensions to £300 was passed without any representations from the Board and without its consent. Under the Local Authorities' Superannuation Act, 1908, the Wellington Harbour Board established a Superannuation Fund for its employees, and when an amendment was put through to remedy a technical defect the £300 limit was put in in the Upper House by a private member and passed in the dying hours of the session without the consent of the Board, and the senior officials would then have had the right to withdraw from the fund, but as it was just being established they stayed in to give a lead to the junior members of the rank and file. Since then the Board has made representations practically every year to the various Ministers, and it has always been told that when the opportunity came along the limit would be taken away, and the Government would have done it at once, but they were afraid that if the question was brought up on the floor of the House it would get tied up with the Civil Service Fund, and such fund would come up for discussion and they did not want that. On one occasion when the Government did move in the House to take this limit away, the very question they were afraid of did come up, the Public Service Superannuation Fund, and it developed into a fight over that and the matter was dropped by the Government. The Board also feels this, in reply to a question asked by one of the members of this Committee: that they would like the limit taken away rather than the suggestion be adopled of refunding the excess contributions and keeping the limit at £300, for the reason that it has been the experience of the Wellington City Council in getting expert officers to come to New Zealand from abroad that when these experts found out that there was a £300 limit to the superannuation scheme they refused to leave their employment in England or elsewhere because the fund under which they were going to receive superannuation or pensions in England was so much better than they would get here, and they would not accept even a higher salaried position in New Zealand on those conditions. The Board wants to be at liberty to get, if it thinks fit in the future, the best expert officers it can get, and to enable it to do that it is necessary to be able to offer a proper benefit scheme—a proper superannuation or pension scheme.

Thursday, 24th November, 1932. Professor Thomas Alexander Hunter, Victoria University College, 011 behalf of University Staffs. (No. 25.) The principal evidence for the University staffs will be given by Professor Bell; my duty is to put before the Committee the general position. 1. It must be remembered that when it was proposed to extend the Teacher's Superannuation scheme to members of the University staffs strong protest was made to the Minister of Education (Sir James Allen) against the suggestion on the ground that the scheme was unsuitable. 2. The main ground of objection was that the scheme had been designed to meet the needs of those who came on to the fund at an early age (16-18) who, therefore, paid a small percentage of a steadily increasing salary and drew a pension estimated on the average salary of the last three years of service, whereas the members of University staffs had a much longer period of preparation and came into the scheme at a much greater age ; paid therefore a higher percentage on a salary that was normally fixed, and drew a pension on the same basis as those who bad contributed much less. 3. The limit of the pension to £300 made the scheme particularly unjust to University teachers, converting what was meant to be a benefit into a new form of taxation. 4. For purposes of superannuation the condition of employment of University teachers resembles much more closely those of Magistrates than of teachers. It was considered necessary to devise a separate scheme for the Magistrates, Even now it would probably be fairer to transfer members of University staffs to this fund. _ 5. The proposal in the Bill not to retain the £300 limit will remove some of the injustice that is being done to University teachers. 6. If for any reason the limit is to remain, we strongly urge that University teachers be allowed to contract themselves out of the present system and, subject to the approval of the governing bodies, make suitable arrangements—e.g., with an insurance company by means of an endowment policy. It is a matter for consideration whether this alternative might not be allowed to University teachers even if the limit is removed. ... . The present scheme, and this from the point of view of the University is an important point, has tended to limit applications for University posts, and this is a very serious matter for New Zealand, whose position far from the intellectual centres of the world demands that she offer special inducements to suitable applicants. In England under the federated superannuation system for Universities the University teacher is never called upon to provide more than 5 per cent, of his salary per year, and this amount is made up to 15 per cent, by the University authorities. Professor Hunter : In regard to the last paragraph I can give you one illustration. In 1883 for a Chair in the Otago University there were fifty-three applicants for the position ; in 1919 there were only'ten applicants. While it was possible in 1883 to get, for a Chair in the Otago University, fiftythree applicants, in 1919 it was possible to get only ten. The Chairman.] Was that because of the £300 limit «—Yes, to a very large extent. Mr. Hargest.] That position would be different again to-day, would it not 1 There would be many more applicants for the Chair to-day ?—That is not correct. Take, for example, the Chair for English in Canterbury College. There were relatively few applicants for that Chair —that is, applicants of the type required. The position is, of course, that men will not leave England, where opportunities are so very much greater, to come out to New Zealand unless special inducements are offered, and this £300 limit is one of the drawbacks. _ The Chairman.] That point has already been brought to the notice of members of the Committee.

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Professor Robert John Bell, University of Qtago, on behalf of the University contributors to the Teachers' Superannuation Fund. (No. 26.) It has been felt that the provisions of the Teachers' Superannuation scheme, designed to apply to contributors who mostly join at an early age and whose salaries increase from a low figure, do not apply equitably to the University contributors, whose salaries are practically uniform throughout their service, and who, in the case of professors, are generally over thirty years of age when they first become contributors. Under the present conditions the majority of the University contributors have to pay into the fund sums in excess of those necessary to produce the actuarial values of the pensions that they can obtain on retiring. Not a few would, by the payment of the same annual sum to an insurance company as they pay to the fund, secure insurance cover for themselves during their service and a pension on retiral of over £300, the present limit. In 1929 the position was investigated by the University Teachers' Association, and calculations, based on returns made by forty-one professors and twenty-seven lecturers showed — Professors. Lecturers. Total amount at 5 per cent, of contributions on retiral at £ £ age of 65 .. .. .. .. .. 143,868 65,488 Actuarial value at 5 per cent, of pensions obtainable .. 95,306 57,045 Difference ... .. .. .. .. £48,562 £8,443 Hence, if every one of these contributors lived to exhaust the full actuarial value of his pension, the fund would still profit to the average extent of over £1,000 for each professor and over £300 for each lecturer. The case of the Professor of Obstetrics in the University of Otago (case A in the following table) is glaringly anomalous. It is not included in the above figures as he was appointed in 1931. He has to contribute £180 per annum for twenty years, or £3,600 in all, before he is entitled to receive a pension of £300, of which the actuarial value at 5 per cent, is about £2,385. When he reaches the age of 65, his contributions, with interest at 5 per cent., amounts to £5,952. At the present average rate that the fund is earning (5-78 in 1932) this amount is more than sufficient to produce £300 a year, so that the interest on his contributions more than pays his pension. If he dies after drawing the pension for twelve years, or £3,600 in all, the fund has no further liability in his case, and retains all his contributions and interest. If he were to pay £180 to the Government Life Insurance Department, he would receive a policy of £3,500, which at the present rate of bonus would be worth £5,100, or an annuity of £520, when he retired. A number of the professors are in a similar position though the anomaly is less striking in their cases. There are two obvious ways in which such inequalities as above might be avoided. The first is to alter the basis on which each contributor pays into the fund so that it would not exceed that proportion of his salary which would entitle him to the maximum pension of £300 ; and the second to amend clause 76 of the Public Service Superannuation Act, 1927, so as to provide that the limit for pensions should be either £300, or that pension whose value, actuarially calculated, is equal to the amount of the contributions paid, with interest at 5 per cent., whichever is the greater. The first of these has been adopted in the Hospital Board's scheme, which applies to the Superintendents of Hospitals, whose conditions of appointment and service approximate to those of professors. The following table has been drawn up to furnish a comparison between the position of professors and lecturers having uniform salaries and other contributors have increasing salaries :— Comparison of Contributions of Professors and Lecturers having Uniform, Salaries and of other Contributors having Increasing Salaries. Cases A, B, and C are those of professors ; cases D and E of lecturers ; cases F, G, and H are typical cases of increasing salaries as follows :— Average Salary. Average Salary. ¥. G. H. F. G. H. Age. £ £ £ Age. £ £ £ 25 to 35 .. 300 300 200 45 to 55 .. 700 500 400 35 to 45 .. 500 400 300 55 to 65 .. 1,000 600 500 Notes. —The average rate of interest earned by the Teachers' Superannuation Fund in 1932 was 5-78 per cent. The actuarial values of the pensions were calculated from values given in British mortality tables for male lives at 65. The actuarial value (A.V.) of a pension of £300 is (i) at 5 per cent., £2,385 ; (ii) at 4f per cent., £2,465. In this table I had no New Zealand figures for expectation of life and mortality, so I took the values which were given in standard British mortality tables. I took the salaries over the ten-year period because the suggestion is to base the retiring-allowance on the average salary for the last ten years. I took Fas being the maximum for teachers in secondary schools. Ido not think even headmasters of secondary schools would get to such a high salary, but it was really a maximum, for those in the highest positions. In regard to G, I took that as the maximum for masters of secondary schools, who rose to be heads of departments, or masters of primary school. II I took as the maximum for primary teachers. I do not think many primary

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teachers rise above that in the ordinary course of events. I tried to be as fair as I could in taking out these maximums and comparing them with those of professors and lecturers. A, B, C, D, and E refer to professors and lecturers, and A is the case of the Professor of Obstetrics in the University of Otago to which I have already referred.

Mr. W. Nash.] Under heading "Annual Subsidy to give 111, 5 per cent. -4| per cent., 3-8." What is that 3-8 ? —£3-8 per annum is the annual subsidy. Mr. Hargest.\ You do not mean 3-8 per cent ? —No, £3 16s. per annum. Mr. Gostelow.] His actual contribution would be altered from £60 to £63-8 ? —No, lam assuming that the Government is going to subsidize the fund. The fund would receive £63-8 instead of £60 ?—Yes, £60 from him but £3-8 by way of subsidy from the Government. From these figures the following conclusions can be drawn. If the present rate of contribution is maintained, it is no more than justice to the University contributors to remove the present £300 limit to the pension. Even if that is done, the position arises that the University contributors generally provide the full actuarial value of the pensions they receive, whilst the contributions of others, who pay on increasing salaries, have to be subsidized to provide their pensions. As University appointments are made from graduates of outstanding merit and high distinction, it follows that in the pension scheme, even if the limit were removed, these receive less-favoured treatment than others whose attainments are lower. Thus it seems necessary to increase the benefits of those whose contributions over a lengthy period are levied on the same salary as is taken to compute the pension. The Superannuation Bill now under consideration provides that the salary for pension purposes is to be the average salary over the last ten years of service. It is suggested that the rule for computing the pension be amended to one-sixtieth of the retiring salary for each year of service plus one two-hundredth of that salary for each year, in excess of ten, in which the contributions have been made on a salary not less than the retiring salary. That is the rule I call X, and in the last column of the table I have drawn up I have calculated the pension that would be given if that rule were adopted. In the interests of the proper staffing of the University colleges it is important that there should be as little difficulty as possible in the way of transfer to the Dominion of members of the staffs of British universities. The present superannuation scheme is a serious obstacle to such transfers. Throughout Home universities the federated superannuation scheme is in operation. In it, each beneficiary contributes 5 per cent, of his salary and the employing institution an additional 10 per cent., and these sums are paid as a premium to an insurance compa.ny selected by the beneficiary from a list of approved companies. The benefits are chosen by the beneficiary, according to his circumstances, from the various options offered by the companies. A professor or lecturer appointed to a New Zealand College from a British university would in many cases prefer to carry on with the federated scheme, paying the full premiums himself. In our opinion, the Bill should provide that he has the option of doing so instead of joining the teachers' scheme. Professor Bell: There are one or two points I would like to make. With regard to the age of professors when joining : Out of forty-one professors who sent in returns in 1929 thirty-six were over 30 years of age when they joined and twenty-seven were over 35 years when they joined. Of the lecturers, twenty-seven sent in returns, and of these ten were over 30 years when they joined, so you see that professors join at a later age, mostly all over 30, and more than half over 35 years of age, so that conditions are totally different from those of other teachers, who join at a comparatively early age. The case of the Professor of Obstetrics is a peculiarly striking case, because of his large salary, and it is a striking fact that he could pay the same amount into the Government Insurance Department and get a much better return for this money. In the recommendations I have made at the end of my statement I was influenced in this way. If you look at case E you will see that it is not aflected by the removal of the limit. The pension is £300 whether the limit is removed or not, and yet the beneficiary pays for a pension which is more than that and, in the case of those lecturers, who really give excellent service to the Universities and the community, but who, on account of the University finance, receive low salaries, it seems unfair that they should pay the full amount of the pension or more than the value of the pension, while people in a much less influential position, who do not give the same service to the Dominion, should have their pensions subsidized. If you will look at case F you will notice that he pays for a pension of about £377 or £330, whether you take the interest at 5 per cent, or per cent-., and if you take 4f per cent., it is necessary, in order to pay the pension if the limit were removed, to

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I II. II. j III. 1 ri i. -t, „ i • x Pension whose Annual Subsidy! Contributions. Amount of A V is T A V of TT to give TTT i Years of Contributions. A.v.isi. Pm . a.v.oiii. to give .in. Pension Case. j j Service tf no j unde1^ Per I T . f „, i at9B- 5 per 4§ per 5 per 4-J per Limit. 5 per 4$ per 5 per 4J per ! Rule X - Cent. Annual - j 10taL , ; Cent. Cent. Cent. Cent, Cent. Cent. Cent, j Cent. A 9 180 3,600 20 749 687 667 5,302 5,479 .. .. 767 B 6 i 60 1,920 32 4,518 I 4,120 568 S 501 533 4,237 4,380 .. 3-8 643 C 7 1 56 1,680 30 3,720 3,316 468 403 400 3,180 3,287 .. .. 480 D 5 i 25 1,000 40 3,020 ; 2,676 380 | 326 333 2,650 2,739 .. 0-6 408 E 7 1 42 1,260 30 2,790 j 2,562 351 j 312 300 2,385 2,465 .. .. 360 F 5 15-50 1.250 40 2,996 : 2,713 377 330 667 5,300 5,479 19 1 25-8 667 G 5 15-30 900 40 2,372 ; 2,129 298 ! 258 400 3,180 3,287 6-7 10-8 400 H 5 10-25 700 40 1,768 1,593 222 194 333 2,650 2,739 7-3 10-7 333

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subsidize his contributions to the extent of £25-8 per annum through the whole period of his service. In the cases of G and H the subsidy necessary would be about £10 10s. per annum through the whole period of service. It does not seem fair that the man in the University, who is giving excellent service, should have to pay the full value of his pension, while the man in the primary schools has his contributions subsidized ; and I have tried various expedients, and make this suggestion finally as to a rule which might be applied throughout the Service to take into consideration the fact that some people paid for a very long time on the salary which was taken to compute the pension. I suggest that in case E in addition to the thirty-sixtieths of the retiring salary one two-hundredths of the retiring salary should be added for each year of service in excess of ten in which the contributions have been made on a salary not less than the retiring salary. The only other point I have referred to is in the last paragraph. It is exceedingly important that we should get our Universities staffed by men who have standing. If a man goes Home from New Zealand, as many of our students do, he can, in many cases, make a very good name for himself in his subject, but the trouble is to get him back again. One of the big drawbacks at the present time is our pension scheme. There is an Otago student who has gone Home to Edinburgh and who is recognized now as the authority at Home on statistical mathematics. There was a Chair of Mathematics vacant a year ago, and he preferred not to apply for it, but to stay at Home. If we could get men of standing out here it would keep up the standard of our Universities in the eyes of University people abroad, and would give a kind of standing and tone to our educational system. It is very important in the interests of our colleges that these people of standing should be induced either to come here from the British Universities where they have made names for themselves, or to return to New Zealand after they have gone Home and made names for themselves there. Those are the only additions I wish to make in my statement. Mr. W. Nash.] You are not objecting to the £300 limit as a limit, but you are objecting to the fact that they have to pay in more than would provide the £300 and lose the benefit of their own moneys during the years they are contributing to the fund I—We are objecting to the £300 in any case, because we have to pay into the fund much more than we get out of it under the limit. That is covered by my question that you are objecting to your moneys being taken and invested and the money that is obtained from the investments is used for the benefit of some one else and not for yourselves ? —lt goes straight to the fund. You do not lose any of your capital, as capital ?—Professor Dawson, case A to which I have referred would lose the whole of it. _ _ _ . You would not lose any of the money that you paid in ; that is definitely provided for m the statute. You get back as much as you paid in, but you lose the interest-earning capacity of your money and that is your objection ? —No, it is not that altogether. We lose more than that. If you take the case of Professor Dawson, he loses much more. His pension is paid by the interest on the amount of his payments and he gets nothing back at all beyond his £300 pension. If he had put that money out at interest at 5 per cent, in twenty years it would have amounted to £5,952. Then he could have spent the interest himself over and above the £300, and still had all his capital, whereas if the fund takes it from him and gives him the interest on it for twelve years as his pension, then it keeps the whole of the capital and some interest as well. Can you lose any more than the interest-earning capacity of your money if the capital payments are refunded ? —Yes, he loses the whole thing. You may get, in the form of an annuity, an amount equal to the amount that you have paid in. You are bound to get that back ? —Yes. Then all that you lose is the interest-earning capacity of your own money ?—No, Ido not agree with that. I cannot see what more you can lose ?—How do you explain the case A I have quoted. _ If this man pays in £3,600 there is a definite provision in the statute for him to be repaid £3,600 ? T Then is it possible for him to lose anything more than the interest-earning capacity of the money? Professor Hunter.] Supposing he takes the pension at the end of his service and has it for a number of years and does not exhaust the amount of his payments into the fund, would the balance be refunded ? Mr. W. Nash: Yes. Professor Hunter : Then I agree with you. Professor Bell: I think he loses the whole of it. Mr. W. Nash.] Supposing he pays in £3,600 and lives for ten years after his retirement. He would receive back £3,000, then his beneficiaries would receive the other £600 ?—I understand that, but you take the case I have illustrated in which it is possible for a man to lose his capital as well. I cannot see how he can lose more than the interest-earning capacity of the money if the agreement is that he is to be paid back what he pays in ? —You can put it that way, but I think it is possible to put it the other way too. You take the rate of interest at 5 per cent, and then quote the fact that the fund earned in interest last year 5| per cent. ? —Yes. Can you go to any insurance company that will give you a greater return than of or 4 per cent. . No, but I am not obliged to go to an insurance company, and the professors are compelled to join the superannuation scheme. There is another point that the insurance companies are there in a profitearning capacity and they have to make profits, whereas the superannuation scheme is not a profitmaking concern. Take a mutual office, can you give me an instance where you can get more than 3-5- per cent, or 4 per cent, without making a profit ? —I could not say from my knowledge of insurance companies, but they have big expenses in connection with the office and staffs and getting business,

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I am asking this question, because you stated that the insurance companies would give you greater benefits. I agree with you to a certain extent, but you cannot quote these figures at 5 per cent, and then suggest that the insurance companies will compare with those, when the insurance companies will never give you more than 3J per cent, or 4 per cent. ? —That is so. To get a proper comparison with the insurance companies you would have to take the figures at 3i per cent, instead of 5 per cent. ? —lf you wished to calculate the pension that the insurance companies would give you for that man, you would have to take it at 3| per cent. Would you consider it just if the full interest earned by your contributions was conserved for the contributors and no subsidy given ? They take away from the business £60 a year ; they invest that £60 every year and the earning-capacity of the money is definitely conserved exclusively for the benefits of the individual contributor, would you consider that just ? —lt would be more just than the present method, but it would mean that in certain instances in the educational service you would be subsidizing the pensions and in other instances you would not be doing so. I asked that question because where you have the subsidy system the greater the salary the greater the subsidy ? —Yes. That is not the purpose of the State in trying to help the men in later years. You would be agreeable, presuming the State agreed to it, to lift the £300 limit, and then stop the subsidy payments at a certain point ? —Yes, I think so. Professor Hunter : With the proviso that you give the person the right, as is done at Home, to make other provisions approved by the governing authority. If you are going to make it a compulsory scheme the compulsion has to be considered. Mr. W. Nash.] Yes. Would you, Professor Bell, agree to a scheme in which the pensions were individualized and were based on contributions with an equal subsidy, not a proportionate subsidy ? — Yes, that would be all right. You are not asking for any special subsidy for the higher-paid sections of the Government service ? The subsidy based on the contributions would be a higher subsidy, but you are not asking for that ? — No. All you ask is that the money that is provided by the members of the Service shall be conserved for their benefit exclusively ; and, secondly, if there is to be a subsidy you would be quite willing for the subsidy to stop at a certain point ?—Yes. In any case you would be agreeable for the subsidy to be an equal sum and not based on a percentage ? —Yes. Mr. Veitch.] In connection with your comparison between life insurance companies and the superannuation scheme : Assuming that you insured your life for £300 and paid one premium and then died, what would you get ?—You would get from the insurance company £300. Suppose you joined the superannuation fund and paid one premium and then died, what would you get ?—You would simply get your money refunded. So that an insurance company's policy is not comparable with the superannuation scheme ? — Not on those lines. Inasmuch as it gives you a very substantial benefit that the Superannuation Fund does not give ?—Yes. Mr. W. Nash : Following that, are not the insurance premiums definitely based on the expectation of life and all the other factors that come into the matter, and even then there is only 3i per cent, on the money. At that point it is not comparable with this scheme. What lam trying to drive at is that the 5 per cent, and 4| per cent, cannot be compared with an insurance policy properly. Professor Hunter : It should be provided that the contributor has the right, provided the Service is protected, to make his own arrangements. Mr. W. Nash : I think that it is right for the contributor not to be compelled to do certain things, provided that the scheme itself would not be wrecked without compulsion. The Chairman : I take it that if the bar was removed from your fund and the subsidy had been paid, you would be entitled to a much better retiring-allowance than is payable now ? —Yes. And your object in coming here to-day is to point out that you are receiving no benefits under the £300 limit; that'there is no inducement for others in the Old Country to take up a Chair in our Universities ; and that you want the £300 limit removed. Is that the position ? —Yes. Mr. W. Nash : I cannot understand this point in the last paragraph of your statement regarding the 5 per cent, and the 10 per cent, of salary. You say the beneficiary contributes 5 per cent, of his salary and the employing institution an additional 10 per cent. Is that an additional 10 per cent, of his salary ?—Yes. That means that the payment into the superannuation scheme is 15 per cent, of the person's salary ? —Yes. Mr. Gostelow : Contributions on a flat salary" for forty years at 5 per cent, amount to 120 times the contribution, because money trebles itself in forty years at 5 per cent. At the end of the forty years you have three times the amount you have paid into the fund —your contribution, plus interest equal to twice the contribution. As far as the fund is concerned it is capital ?—Yes. And if the statute limits it to a refund of contributions, you are losing capital ? —That is what I feel. Charles Edward Crawford, Secretary, Teachers' Superannuation Board. (No. 27.) The Teachers' Superannuation Fund came into existence on Ist January, 1906, after the passing of the Teachers' Superannuation Act, 1905, but within two years the provisions regarding benefits were very materially altered by the Public Service Classification and Superannuation Act Amendment Act of 1908, to bring the Teachers' Fund into line with the Public Service Fund.

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Membership. The original Act covered persons employed by Education Boards, High School Boards, Technical School Boards, Education Department (teachers, &c.). Those in the Education service on Ist January, 1906, were given the option of becoming contributors, but as regards persons subsequently appointed membership was, and still is, compulsory for public-school teachers and officers of the Education Department; and optional for probationers in public schools, teachers in high schools, teachers in manual and technical schools, and office staffs of Boards. The Amendment Act of 1912 brought the New Zealand University, the four University colleges, and the Canterbury Agricultural College under the scheme, those then permanently employed being given the option of becoming contributors, but making it compulsory for all persons subsequently permanently appointed to contribute. Benefits on Retirement. The following is a comparison of the benefits under the two Acts : — . 1908 Act and Amend - Retirement by right — e " ments (now 1927 Act). Males .. .. .. 65 years of age (compulsory) .. 65 years of age or after 60| years of age (optional) forty years' service. Females .. .. . . 60 years of age (compulsory) .. 55 years of age or after 50J years of age (optional) thirty years' service. Retirement by permission (there is no such thing in the 1905 Act), conditions may be imposed — Males ...... Nil 60 years of age, or thirty-five years service, or 55 years of age if over thirty years' service. Females ...... Nil 50 years of age. Allowance . . .. • - One-sixtieth of total salary One-sixtieth of average during contributory service salary of last three with half-rates for back ser- years for each year vice, but with a minimum of of service with a £52 per annum for original maximum of twocontributors thirds of such average and for those joining after 24th December, 1909, a further limit of £300. University officers joining under 1912 Act receive half-rate only for the back service. The act of 1908 increased the benefits very considerably, in some cases by more than 100 per cent. House-allowance. —In 1925 provision was made for the inclusion of house-allowance or similar benefits as salary for superannuation purposes. This increased the annual rate of current retiringallowances by £7,332, and provided for the payment of arrears of allowance for past to the extent of £40,550, while the additional contributions paid by such annuitants together with interest up to the date of the change amounted to £23,108 only. Retirements under Extended Provisions. —I might say that we use the term retirements under extended provisions " for retirements by permission before the contributors have earned the full right. That is generally known as " extended, provisions. Retirements under the extended provisions of section 75 of the Act have not added any great liability to the fund as from the early years of the fund the Teachers' Superannuation Board has given a reduced allowance in such cases. The policy of the Board has been to make the full " actuarial deduction " from the allowance computed on the length of service unless, on account of special circumstances in any case, it was deemed right to grant a concession. If, for instance, a contributor was continually in bad health although not sufficiently bad for medical retirement, the Board would allow of the retirement with (say) half the actuarial deduction. Amount of Allowance and £300 Limit,. —Of the 1,465 retiring-allowances at present payable, only six are for pensions in excess of £500 per annum, the highest being £676 135., and 231 are for amounts in excess of £300. The amount by which, in the aggregate, these exceed £300 is £19,267. Of the present annuitants onlv one is subject to the limitation. While in the case of an officer starting as a boy and gradually working up to a high salary a retiring-allowance of £300 is more than is provided for by the contribution and interest thereon, the limit acts very unfairly in the case of those entering at a high salary and receiving little or no increase during the period of service. In the case of some contributors joining the Service as University professors, the £300 is very much less than the amount which the contribution, without Government subsidy, will provide.

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Retirement before becoming entitled to a Pension.—Those retiring before becoming entitled to an allowance receive a refund of contributions without interest, but the fund does not make a great profit on this account. The interest earned by the fund and retained in this connection amounts to £4,000 of £5,000 per annum. The English Act provides for payment of compound interest at 3 per cent, per annum. Widows and Children. A widow receives, at her election, (a) a refund of her husband's contributions (less any sums paid to him by way of allowance), or (b) an allowance of £31 per annum during widowhood ; and there is paid on account of children up to the age of 14 years an allowance of £26 per annum. There have been a number of instances where a contributor has died after long service, shortly before reaching the age of retirement or shortly after retirement. In such cases the amount of contributions available for refund is considerable and worth more than the allowance of £31 per annum, and it does not appear to be fair that the fund should make a profit by paying no interest in such cases. A petition in such a case was before Parliament last year. The rates of allowances to widows and children were originally £18 and £13 respectively. During the war a cost-of-living bonus of £13 was given, and in 1925 this bonus was stopped, but the allowances were increased by a similar amount. Provision was made that the additional money required was to be paid from the Consolidated Fund into the Superannuation Fund. The present annual rate of allowances of male retired officers is £165,291, and the total of the widows' and children's allowances is £9,241, at present rates. At the old rates for widows and children the amount would be £5,237. The liability in respect of the death of contributors or annuitants is thus seen to be very small, the present amount being only 5'6 per cent, of the retiring-allowances to male annuitants, while, at the old rate of payment, the percentage is only 3T6 per cent. Finance. The present annual rate of expenditure is as follows : — £ Allowances .. .. .. .. .. 304,203 Refund of contributions . . .. .. .. 30,000 Administration expenses .. .. .. .. 4,000 Total rate of expenditure .. .. .. £338,203 while the revenue is— £ Contributions .. .. .. .. .. 106,000 Interest .. .. .. .. . . 55,000 Government subsidy (ordinary) .. .. .. 43,000 Government subsidy for increase in widows' and children's allowance . . .. .. .. .. 4,000 Total rate of revenue .. .. .. £208,000 The present deficiency is, therefore, at the rate of £130,000 per annum. The reduction in salaries has accounted for a fall in contributions to the extent of at least £23,000 per annum, and the reduction in interest (approximately £18,000) is caused by the reduction under the National Expenditure Adjustment Act, 1932, and by the realization of investments in order to meet expenditure. The rebate to contributors who did not elect last year to continue to contribute on the basis of the salary prior to the reductions on Ist April, 1931, amounted to £20,970. The year 1931-32 was the first year in which the income was less than the expenditure, the deficiency being £53,983. This year investments to the extent of £70,000 have already been realized and the money used for allowances, &c. Investments.—The investments at present amount to £1,147,000, of which £51,800 is Government stock at 5| per cent, and 5J per cent., and £135,040 rural bonds, 5 per cent. The balance is nearly all on mortgage at 6 per cent, (now reduced to 5 per cent.). The amount of interest on mortgage due and unpaid is much greater than in previous years : 31st January, 1930, £1,911 ; 1931, £3,862 ; 1932, £13,315. Allowances.—The following is a statement of the allowances now current: — Per Annum. Retiring-allowances — £ Male .. .. .. .. .. .. 563, totalling 165,291 Female .. .. .. .. .. 902, totalling 129,671 Total .. .. .. .. . .1,465, totalling 294,962 Widows'allowances .. . .. .. 245"\ , , lr n Children's allowances 63 |totallm g 9,241 Total, all allowances .. .. .. .. £304,203 It will be noticed that 61 per cent, by number and 43 per cent, by value of the retiring-allowances are for women, and on account of the earlier age for retirement, such a large proportion of women annuitants means a heavier burden than would be in the case of a fund where the proportion of women is small.

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Government Subsidy. The Government subsidy has been most inadequate from the commencement of the fund. Not only has the contributory service received not a penny subsidy, but the amount paid from the Consolidated Fund has been less than the amount actually paid out of the fund in retiring-allowances in respect of back service. The total allowances paid to 31st January, 1932 (the financial year ends on 31st January), was £2,309,406, of which £1,286,775 was for back service for which no contribution was paid, and which was a liability of the Government from the commencement of the fund. The total Government subsidy, however (excluding approximately £25,000 specially given for increased allowance to widows and children), is only £972,607. The Government subsidy was, therefore, at 31st January, 1932, £314,168 short of meeting the amount actually paid out of the fund as retiring-allowance for back service alone. The English Act (Teachers' Fund) provides for a subsidy of £1 for £1 plus the amount actually paid out of the fund as retiring-allowance in respect of the back service. If the New Zealand subsidy had been on this basis the total amount to 31st January, 1932, would have been £3,363,000, or, if the contributions refunded should be first deducted before computing the £1 for £1, £3,000,000, whereas only £972,607 has been paid. The contributors' payments amounted to £2,076,182 up to the 31st January, 1932. Proposed Amendments. There are several provisions in the Bill which should, in my opinion, be amended. Clause 4 (3) provides that the average salary on which the Actuary is to compute the allowance must not be more than the average salary received during the last three years. A contributor may have been paying contribution on 25 per cent, more than his actual salary under the various elections allowed and if actual salary only is taken into account his retiring-allowance may be 25 per cent, less than the true actuarial equivalent, notwithstanding that he has been paying the full contribution. Clause 19 (1) states that all who are granted an allowance and who do not acquire full rights by reason of age or service shall receive the actuarial allowance. This would include those retiring medically unfit, but subclauses (2) and (3), stating to whom such an allowance can be given, do not mention retirement on the ground of medical unfitness. It should, I think, be made clear that those retiring under section 77 of the 1927 Act shall receive the full allowance computed in terms of salary and service. Clause 23 (1) : It does not appear to be clear whether or not this subclause includes allowances which commenced to run on Ist April, 1921. Clause 23 (2) makes provision in respect of all allowances in force at the commencement of the Act. Does this include allowances which commence to run on Ist January, 1933 ? The present Act provides that a contributor does not retire from the Education service by reason of unemployment unless the unemployment extends for twelve months (with further right of extension of this period). A contributor retires — (a) If, while out of employment, he gives written notice that he has retired from the Service ; or (b) At the expiry of twelve months (or of the extended period) of unemployment. A contributor, therefore, cannot complete his retirement until, at the earliest, the day after the last day of employment, as he cannot until then give the statutory certificate. If "his employment ceases on, say, 30th December, and he does not sign the certificate that he has retired as from 30th December until, say, sth January, will his retirement be dealt with under the old Act or the new ? Clause (3) dealing with the recomputation of allowance in respect of those who have already retired before full age or service, hits teachers unfairly, as compared with others. As already explained, the Teachers' Superannuation Board has in most cases made the full actuarial deductions from such allowances, and a recomputation under the proposed conditions will make a very considerable further deduction, while a person from whom no deduction was made in the first place will suffer at the most a 20-per-cent. reduction from Ist January. The following is an example : — A teacher with salary of (say) £360 was retired at age 53 with thirty-five years' service. His present allowance is thirty-five sixtieths of £ s. d. £360 .. .. .. .. .. .. = 210 0 0 Less 26 per cent, for retirement five years before time.. = 54 12 0 Present allowance . . .. .. . . = £155 8 0 On a recomputation for seven years before time under the new conditions the allowance would be — £ s. d. Thirty-five-sixtieth of £360 .. .. .. .. = 210 0 0 Less approximately 40 per cent, for seven years before time = 84 0 0 New allowance . . . . . . .. = £126 0 0 Another officer under another fund was retired with the full thirty- £ s. d. five-sixtieth of £360 .. .. .. .. = 210 0 0 And he will now suffer 20 per cent, only . . .. = 42 0 0 New allowance .. .. .. .. = £168 0 0

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Further, in a number of eases a teacher has been retired at 31st January of a year, very shortly before completing his full service, in order that the Education Board might make the new appointment from the beginning of the school year (Ist February). Such teachers have already suffered the full actuarial deduction computed on the old conditions of retirement, and it appears to my Board to be unfair that they should suffer a further reduction computed on conditions not known at the time of retirement. My Board is of opinion that if the allowances of those who were allowed to retire before full age or service are to be now revised, the recomputation as to the actuarial equivalent should be on the basis of the rights of retirement at the time such officers retired. Computation of Actuarial Allowance.—There should, I think, be more definite direction as to the method of computation. In particular, the rate of interest to be taken into account should be stated. Clause 25 : Government Subsidy. —My Board is of opinion that the subsidy should be statutory, and not subject to an annual vote. Election of Contributors' Representatives on Board.- —The Act provides that the teachers' representatives on the Board shall be elected every three years, the ballot taking place on the first Monday in March. This is a very inconvenient time as, on account of changes in school staffs, I have not at that date the addresses of many contributors, and in the event of a ballot being necessary such contributors would be unable to vote. The next election is to take place in March next year, and I shall be glad if an amendment can be made putting forward the date of the election until October. Mr. Crawford : I wish to add to my statement a table showing the growth of the allowances. This table shows the annual rate of allowances at the end of the financial year. 31st, January, £ 31st January, £ 31st January, £ 1925 .. 132,687 1928 .. .. 192,635 1931 .. .. 239,810 1926 .. 152,422 1929 .. .. 210,154 1932 .. .. 270,840 1927 .. 174,816 1930 .. .. 226,967 and at the present time—the middle of November, 1932 —£304,203. From 1926 the allowances have doubled themselves. Of that £304,203, approximately £130,000 per annum relates to retiringallowances for back service which were a Government liability from the start of the fund. Mr. Wilkinson.] You state that there is a present annual deficiency of £130,000. I would like to know how long the fund will be able to continue paying out at the present rate \ —That will be an increasing deficit. The maximum or the peak of the retiring-allowances has not been reached yet. And the fund will become unable to meet its obligations, I presume ? —lt cannot meet its obligations now. I mean with the capital sum ; you have an accumulation ? —At present the total amount of the investments is less than the total contributions of the existing contributors without allowing anything for the annuitants. What I asked was how long you thought the fund would stand the present strain without a change being made ? Mr. Gostelow.] How long it will be before the funds are exhausted ? —There is a little over £1,000,000 in the fund now and that £130,000 per annum is an increasing figure. Possibly it will be five years. It is hard to say. The main point is the extent to which the retiring-allowance will increase during the next five years. The peak has not been reached yet. Mr. Wilkinson.] I wanted an approximate idea. Then the mortgage interest you quote on page 4 as £55,000, and you say that the interest has been reduced now to 5 per cent., and give the earnings. What is the amount of the net actual receipts by way of interest now ? —The annual rate ? Yes ? —The present rate is £55,000 per annum. You include in that the arrears and possible losses ?—The £55,000 is the rate at which interest is accruing. Yes, but not the actual amount you receive ?—No. It is very doubtful whether you will get all that interest, is it not ? It will reduce your calculation somewhat ? —lt is certainly doubtful. Can you give me the amount of the actual net receipts then ? —No, I have not got that information with me. In regard to the failure of the fund to stand up to its obligations, is the whole of the responsibility on the Government, in your opinion. Is it the failure of the Government to make adequate provision that has placed the fund in its present position ? —Altogether. I have been with the fund since 1920 and since then, as far as I can see, the Superannuation Board has administered it very fairly. The teacher members of the Board are, I think, just as particular as the Government members of the Board to see that the fund is not imposed upon, and in connection with applications for early retirements there had to be very good reasons given before the Superannuation Board would allow any concession on that full actuarial deduction, so that this fund has not suffered to any great extent by early retirements. It has not suffered by early retirements to the extent that the Public Service Superannuation Fund has suffered. In view of the serious situation of the fund you admit that something of a drastic nature has to be done ? —That is so. What is the opinion of the Board in that connection, that a change should be made or does it rest ite case, as some of the others have done, and say nothing should be done ? —The Board, as a Board, declines to express an opinion as to whether the Government should alter the conditions or whether the. Government should merely find the money. It takes up the stand that it is there to administer the fund, and not there to express an opinion on what is a matter of Government or parliamentary policy. Individually, the teachers' representatives consider that Parliament should have met its responsibilities in this connection and provided the funds, but as a Board they decline to make any comment. 11*

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Your own opinion is that the fund is in a desperate position ? —lt certainly is. Many of your contributors had their contributions reduced when the salaries were reduced. Were they notified at the time that they had the option of paying on the higher salaries % —Yes. The only means of communication between the Office and the teacher is the Education Gazette. The Education Gazette for two or three years now has been sent to every teacher. Prior to that there were only a few sent to a big school and one copy to a small school. The Department has impressed upon teachers all along the necessity to read the Gazette, but the teachers will not do so. The Chairman.] Is that a fact I—lt is an absolute fact. I had a big notice copying the section of the Act and giving an explanation of it inserted in the Gazette for the month of June, which was the first Gazette after the passing of the Act. last session, and I had a further notice in the August and September Gazettes, particularly pointing out that in the case of a contributor who made the election last year, it was necessary for him to make a further election this year, otherwise he would be contributing on the actual reduced salary only, and in spite of what the Department does the teachers will not read the Gazette. Such a man of high educational standard as Mr. Milner, of Waitaki High School, does not read the Gazette, and both Mr. Milner and his first assistant " missed the bus" in regard to the second election. Teachers should read the Gazette because, quite apart from its educational value, there are always official notices and information contained in it. Mr. Wilkinson.] Do you suggest that any further consideration should be given to them by allowing them to make the election now ? —1 am sorry if members have " missed the bus," but if they have done so through their own inadvertence by not taking the trouble to look at the Gazette I do not know that they can claim any special consideration, but if the conditions contained in the present Bill are enacted, altering the conditions very materially, it has been argued that they ought to have a further fight of election and also the right to cancel any election already made. Mr. W. Nash.] You show the present rate of contribution as £106,000. Since 1931 that has declined by £40,000—you give the contribution in your report as £143,319 ?—There have been very considerable retirements and reductions in salary. It looks to me as if your contributions have declined in two years, or in less than two years, by £37,000, and your payments have increased by nearly £100,000 for the same period ?—Yes, the payments have increased —have doubled since 1926. The contributions have gone down. Have you got your contributions for 1925 ? —No. They can doubtless be provided. How do you propose to raise any extra allowances that you would have to pay out if the subsidy is not paid by the Government for the current year ? —We would have to sell securities. The Treasury have bought back Government stock, for instance. In actual effect the Government is paying the money ? —By buying back from us Government stock. It cannot be because the Government had not the money to pay the subsidy, because it has the money to buy the securities that enabled you to pay the allowances ? —I presume the Government is reissuing that stock to the public. The Government is finding the money to buy back securities to enable you to pay out the retiring-allowances ?—That is so. And your difficulty in paying up the retiring-allowances is due to the fact that the Government has not paid the money ? —lt is due to the fact that the Government has not subsidized the fund to anything like the extent to which it was necessary to keep it in a sound condition. Of course, the subsidy was not only necessary on account of the back service, but a very considerable subsidy was also necessary on account of the contributory service, and we have not had a subsidy equal to the allowance paid out for the back service. The Government Actuary in his last report stated that £214,000 was the sum required each year ? —I thought it was more than that. That is the sum that he estimates would be required. That was not paid ? —No. You got £43,000 instead ? —Yes. And then you had to sell securities to the extent of £70,000 ? —Yes. Since January we have sold £70,000. You would not have been in the slightest difficulty if the Government had paid its subsidy according to the statute ?—No. If the Government paid the subsidy according to the Actuary's recommendation there would be no difficulty whatever. Assume you had to find another £100,000 this year. Has your Board determined in any way how it proposes to get the money ? —No. We look to the Treasury to find it, by taking stock ; or, if they do not, we have to direct the Public Trustee to sell some of the securities. And if we sell on the open market we would lose very considerably. It is mostly in mortgages ; and of that £1,100,000, over £900,000 is in mortgages —we could not sell at the present time. And you have the Mortgagors' Relief Amendment Act, too. You cannot raise the money, then, unless the Treasury buys some of your own securities ? —That is so ; and at the present rate the amount of Government securities, including rural bonds, will soon be gone, because if you notice on page 4, there is only £51,800 in Government stock and £135,000 in rural bonds —nearly £187,000 between the two, and that will not last two years. Have you worked out what the position of the fund would be if the Government had kept its contract and reimbursed the fund on account of back service and special retirements ? —That, is the' trouble, there is no contract. There is a contract to pay in so much according to the certificate of the Government Actuary. That is a statutory provision—that there shall be a payment made, under instruction of the Governor in Council, to the fund of a sum certified by the Government Actuary as being the necessary amount ?—Not quite in that way ; it does not say " shall."

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The Governor in Council " shall " do so and so. Section 112 of the A.ct says, "In the month of January of every year the Minister of Finance shall pay into the fund and out of the Consolidated Fund, without further appropriation than this Act, the. sum of £43,000, together with such further amount, if any, as is deemed by the Governor in Council, in accordance with the aforesaid report of the Actuary, to be required to meet the charges on the fund during the ensuing year." That definitely provides that the Government shall pay in such further amount as is necessary to enable you to meet the payments during the year ?—lt has been considerably disputed, that is the trouble. The Superannuation Boards have always contended that that should be the meaning taken from it —and if it were not clear it should be made clear. But, on the other hand, the Government has not taken that meaning from it; it has merely taken it as optional for the Governor-General to deem anything necessary. It does not say " may," it says " shall " pay into the fund. They have the right to determine if any money is required, but in accordance with " the aforesaid report of the Actuary." Could you give us a report setting out what the state of the fund would be to-day if that had been done ? —lf that were done the fund would be in a sound condition, and the present Government subsidy would be very much less than the £200,000 that the Actuary now says is required; but I have not worked it out —it would take a considerable amount of working out. Twenty-four years —could you not work out the state of the fund if the money had been paid in as provided by statute ? —I could work it out. Could you let the Committee have that ? —Yes ; I can let you have it to-morrow. You mention on page 5 the amount of money paid out on account of back service. Could you also give us the position of the fund if that money had been reimbursed to you ?—That is included in your first question; the figure the Government Actuary has always said is required from time to time includes anything that has been required for the back service. It includes back service—and it will also include the payments necessary for special retirements, and various other annuities that are now being paid on account of special provisions in the law, other that what the funds were originally charged with the payment of ? —Those are very small things in the Teachers' Fund. Nearly all who have retired early have already had the full actuarial deduction from their allowance. However, the fund has not suffered very greatly by reason of early retirements. Mainly on account of back service ? —Yes. On page 4 you refer to women teachers. To get a proper comparison you have to add widows' allowances to the retiring-allowances of males ? —Yes, to make a comparison of the liability of the two. To make a comparison of the cost on the fund of male teachers as compared with women teachers you would have to add widows' allowances to the male payments ? —Yes. The amount is small. Early retirements of women hit the fund very very hard, and there is such a big proportion in the Teachers' Fund, as stated in this report —61 per cent, by number, and 40 per cent, or more by value. The women being such a big proportion, although the amount of the annual retiring - allowances is much smaller than in the case of males, in the aggregate they amount to 40 per cent, of the total. The women would contend that they serve for a shorter period, at a much smaller salary, and that even though they get some advantage by earlier retirement that does not lose sight of the fact that they get smaller salaries throughout their service ?—That is so. I may say in some funds there are separate rates of contribution for men and women. In the English fund retirement is at the same age for both. In the New South Wales Fund retirement is at 60 years of age for males and 60 or 55 for women, with a different rate of contribution in each case ; and the women's rate of contribution differs from that of the men. Mr. Hargest.] What is the difference ?—There is a very very heavy benefit to widows in the New South Wales' scheme. The retiring-allowance there is not directly in proportion to salary —it is on a unit basis, of £26 per annum with a minimum of two units, so that the minimum would be £52 ; and a maximum of 6 units, £312. The teacher pays according to his age at the time he takes up the unit; as his salary increases he has to take up further units, and he pays an increased rate of contribution for those units a,s his age advances —according to the age at which he takes them up. The widow's allowance is one-half his pension ; or half the pension he would get had he gone out on retirement. Supj)osing a man paying on 6 units —i.e., a maximum of £312, dies ; his widow would get £156 per annum, and in addition If he dies as a superannuitant or as a contributor ? —Whether as a superannuitant or a contributor she gets £156 per annum ; and, in addition to that, there is a £13 per annum allowance for children up to the age of 16, as against our 14. Against that, however, the contributions are much higher. I worked out the case of a man starting at £300 a year, at the age of 25 ; he would be paying 9-6 per cent, of his salary in contribution, and the State subsidize that £1 for £1. There is no back service in the ordinary way, because there is a high rate of contribution according to the age at which he takes up the units, so that the question of back service does not come into it. As I say, the rate is much higher than here, but the State subsidise £1 for £1. Now there are no widows' allowances to be taken into account for women contributors, and no children's allowances, so that a woman retiring at the age of 55 pays practically the same contribution as the man retiring at the age of 60. There are no extra liabilities in respect of the women, Sixty years is the age of retirement for men, and the man on £300 would pay 9-6 per cent, of his salary. A woman, to retire at 60, would only pay 5-6 per cent, of her salary, because there are no widows' or children's allowances, but if she wants to retire at 55 her contribution works out the same as the man —9-6 per cent. Do you think the women teachers would have any serious objection to paying an added percentage of contribution, as a partial offset against earlier retirement than that proposed in the Bill ?—lt is very hard to sav.

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The Chairman.] On page 4 you refer to investments. Is it true that the amount of Government stock and rural bonds is not very great, and that at the rate you are going in selling securities it would not be long before the amount is wiped out, unless something is done. Do the Treasury make any charge to you at all in regard to the stocks that you sell to them ? They take them back at full value ? So far. I suppose you realize that, if the Treasury refused to do that, then you would come to a full stop, and you would be able to pay no retiring-allowances ? Mr. Wilkinson : They can be sold on the open market. The Chairman.] But at a loss, probably ; and therefore it is in the interests of the fund itself that the Treasury should find the money for you, so that you can get the full benefit of the investments ? — That is so. What have you got to do, as a Board, with the annual investments ? llow is the money lent out —what, say, have you got ? Do you hand it to the Public Trustee, or to whom ? We hand it over to the Public Trustee. Does he do the whole of the investing ? —Government directed that we had to take it out in rural bonds. I am talking about the other investments ? —They are mostly earlier investments. Who made those investments «—The Public Trustee. The Act vests the whole of the investments in the hands of the Public Trustee. In the earlier days of the fund, until 1918 or 1919, the fund merely formed part of the Common Fund, and we got Common Fund rate of interest. Then, under an arrangement made between the Superannuation Board and the Public Trustee, with the approval of the Government, the Public Trustee specifically allocated to the fund certain investments, and the fund then was to get the interest actually earned on those investments ; but as against that, the fund was to bear any liability for loss. Do you know how your money is invested by the Public Trustee —upon what security ? Yes, it is nearly all in land, rural land. And that has been done through the Public Trust Office ? —Yes. Not by your Board ?—Not by our Board at all —we have no say. About the £300 limit: what have you to say about that ? Is there any expressed opinion by the Board 1 You have heard this morning a statement by the University professors—has the Board made any statement ?—The Superannuation Board is very much of opinion that the limit should be lifted ; or, if it cannot be lifted, that there should be some variation of the present provision, because the limit at present acts very unfairly on those who joined the Service at a high salary and who remain on practically the same salary for the whole of their service—as in the case of the University professors. I have worked out quite a number of cases myself. In the case of one officer in the Public Service, who commenced with the Education service—this was just before the " cuts " in salary —taking the money at 5 per cent., if he lives to the ordinary expectation of life of a man in New Zealand, his contribution, with the accumulation of interest, would provide rather more than double the £300, and he gets the £300 only. A man cannot lose his capital, because if he dies before receiving a retiring-allowance covering the full amount of his contributions, the balance is paid to his widow or other legal representatives. It is optional ?—Yes. The Board is in favour of the removal of the £300 bar ?—Yes. In regard to the notification of the cuts in salaries ; it has been stated here that it was considered that it was the duty of the Board —I am speaking of your Board —to have sent out notices to the contributing members regarding the alterations that have taken place as regards the cuts. Was that done ?—No. Did the Board think it was unnecessary to do it ? —I do not think there is any doubt whatever, but that it is no part of the Board's duty to advise members of the alteration in the Act. lam merely telling you it has been stated here that it was the Board's duty ? The Board does not look upon it as its duty at all. You did not consider it your job to give personal notification ? —No. It was published in the usual way, and left at that ?—With a view to helping the contributors as much as possible I took care to have the notifications published in the Education Gazette. And some do not read it ? —Some will not. Mr. Wilkinson.] Did the Board make representations to the Government that the fund was in a dangerous condition ? —Yes, the Board has very frequently made representations to the Government. I personally, quite apart from the Board's representations, made a statement in 1928. In view of the Actuary's report, which had just been received, showing the big subsidy required, I wanted to see to what extent the back service had been responsible for the deficiency, and I took the trouble to work out how much retiring-allowance we had paid out for the back service, as distinct from the retiringallowance in relation to contributory service, and I made a report, which was considered by Cabinet, in 1928, just before the election at the end of that year. Not since ? —I have not made representations since. The fund at that time was not in anything like the serious condition that it has been in later ?— To any one knowing anything of these things, it was obvious it was bad then. But much worse later. Still, no direct representations have been made since 1928 —that is the time of the Coates's Government ?— I There have been several resolutions since from the Board to the Minister for the Minister of Finance. But not in the direction of calling his attention to the particular state of the fund, I presume ?— Yes, the necessity for bigger contributions. I take it, then, that representations have been made ?—Yes.

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In regard to investments, does the Board exercise no control over the Public Trustee in regard to the nature of the investments made ? —The Board cannot. Under the Act the investments are entirely under the Public Trustee. You have no guarantee from the Public Trustee in regard to the soundness of the investments, or the payment of interest ? —No. The Public Trustee invests the Board's funds entirely at his own discretion, and any loss that may be made in interest will be a loss on the Superannuation Board ?—That is so. The Chairman.] What rate does he charge for commission ? —lt was 2-1 per cent. ; it is now 3§ on mortgages, but a less rate on Government stock —\ per cent, and 1 per cent, on local-body debentures. And no liability ? Mr. Wilkinson : The only thing the Board does is to make a protest to the Government, and pay out the funds. Mr. Gostelow.] You said the fund had not suffered from early retirements as in the other funds ? —Not to such a great extent. I take it you mean the thirty-five-year and other permissive retirements by the Minister ? —Yes. Would it be a fair question to ask your opinion, or the opinion of the Board, as to whether the terms are not too generous, to allow women contributors to go out after thirty years' service at about age 40 or 45 ? —I myself personally think that it is too generous ; but the Board has never expressed an opinion. Not as Secretary to the Board, but personally, I think it is too generous a condition. You can realize, from your knowledge of the fund, where one woman teacher out of every four goes out under 50 years of age, and another one in four under age 55 —one in two under age 55 —what a big liability it is on the fund ? —That is so. Mr. W. Nash.] You said the Public Trustee charged 3f per cent, commission. When was it raised to that figure ? —Some time last year. It was 2| per cent, on all investments, and it was altered —and altered also in the Public Service Fund —to 1 per cent, only for local-body debentures, § per cent, for Government securities —of course they were a little bigger then than they are now —and 3f per cent, for mortgages. They said 2| per cent, on mortgages did not pay. It runs out at about £300 a year more —very little more. It was 2§ per cent, in 1930 ; the Public Trustee submitted a return then that 2§ per cent, was the charge ?—lt was altered last year. One other point, in connection with the Chairman's question about the Government finding, the money, and your difficulty in selling stock. Supposing somebody owed you £1,000, and you asked them to give you the £1,000, and they said, " No, we cannot give you the money we owe you, but we will buy something off you that you have for £1,000." Would you consider that equity ? Or would you rather not comment on Government policy ? Mr. Verschaffelt.] In regard to those reduced rates of allowance : was that not one of the causes of making you liquidate some of your securities earlier than if that provision had not been passed in the previous Act ? When the option was given to contributors to contribute on a lower rate of salary, has the Board any views on that point —as to whether that affected the stability of the fund, where an officer was paid on the higher rate and elected to contribute on the lower rate ?—Those who elected to pay on the higher rate thought it would benefit them. Really those within a few years of retirement ? —Yes. The fund really suffered considerably ? —The fund suffers by that. That election has placed an additional burden on the fund. There is a further point in regard to the reduction of pensions. You have referred to the 20 per cent, suggested by the National Expenditure Commission in relation to your own men, where your own men have suffered a certain actuarial reduction ? —My Board thinks it is unfair that a teacher should suffer the full 40 per cent., or it may be more than 40 per cent, altogether, because the teachers have already had a reduction. The point is this : if it is to be reduced at all, should the 20 per cent, come into it at all ? Should it not be the full amount, whether 30 per cent, for the teachers or 30 per cent, for the Public Service — should there be a2O per cent, arbitrary limit at all ? —lt is doubtful whether there should be any limit ; but I think it is unfair that the reduction should be computed on new conditions. A man went out five years before time under the old provisions ; under the new provisions it would be ten years before time. Ido not think that he should have the reduction computed on the ten years before time, but on five years before time. But if something like that is necessary to put the fund on a financial basis, would not the Board agree to that ? Supposing the Government does not pay up, you have to make some drastic alteration, have you not ? Supposing the Government paid £1 for £1, and not for back service, you are still going to be in a desperate position ? —lf the Government pays £1 for £1 from now on, and alters the conditions of retirement as set forth in the Bill, we will gradually recover. Mine is a fairly rough calculation. Of that £1 for £1, something like 14s. or 15s. of it would be required for contributory service, and the other ss. would be going towards making up the present deficiency ; but it is a fairly rough calculation —• I have not the means of making a definite or very reliable calculation. I think if the age for retirement is amended as shown in the Bill, and the Government from now on pays in £1 for £1, it will gradually recover. £1 for £1 will not make the fund recover. Supposing reductions are made in regard to future annuitants, those who retire next year —should they be in a worse position than those who went out last year, or during the last five years ? —I think so. Those who have gone out, many of them, would not have gone out if they had known they were going to have their allowances reduced by 26 per cent, or 40 per cent.

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But if there is no money to pay the future annuitants, they will really be contributing for the pensions of those who have gone out. Should they be required to pay it ? Supposing you have to liquidate the fund ? —lf the fund had to be liquidated, all would have to bear the loss in proportion. That would mean that all those who went out with full rights would be further reduced. But it would not be fair to reduce those with full rights, as compared with those who had not got full rights. That is where the unfairness of the 20 per cent, comes in. It would not be fair to penalize men who went out on full-retirement rights to the same extent as a man not fully qualified ?— The 20 per cent, is not fair, like that; but Ido not think that the reduction should be made on the new basis. Mr. Wilkinson.] There seems to be a discrepancy on page 5, where it states the contributors have paid in £2,000,000, but if the Government had paid £1 for £1 the Government would have contributed £3,000,000 ? —Plus the amount that the fund paid out for back service. It is on the same basis as the English fund, which is £1 for £1, plus the amount required for back service ; and the amount required for back service was £1,286,000-odd.

Miss Nellie Eupiiemia Coad, Assistant Mistress, Wellington Girls' College. (No. 28.) I. I am appearing before this Committee in an endeavour to stow that the Superannuation Act of 1908 operates with undue harshness in my case, especially so if the proposed extension 01 women teachers' service by five years is carried into effect. To begin with, the Act of 1908 deprives me of six years' service on a minor technical point. This means that I sha.ll have to teach for forty-one years, instead of thirty-five, before I can retire on superannuation. The bad feature of that situation is that the young people under my charge will be placed at a serious disadvantage. After a woman teacher has completed thirty years of arduous teaching service her nerves are generally on edge, her powers are rapidly failing—more rapidly indeed, in the teaching profession than in any other walk of life. Moreover, after thirty years of service, she is out of date, and out of touch with the young; she is unable to keep pace with changing educational conditions that changing times make necessary, and she falls a long way behind in the march of educational progress. After thirty years' service she is merely hanging 011 to her job, while the real life of the school lies in the disgruntled younger teachers whose promotion is blocked, and whose zeal will inevitably slacken, because there is little in the profession to exploit their self-interest. Incidentally, I may say, it is rarely considered desirable, in any other department of life, to retain the slackening services of women after thirty years of strenuous work. Clearly then, a Superannuation Act which has the effect of keeping me at work for forty-one years, is not in the best interests of the educational system, and is in urgent need of amendment. Surely the powers that be will not think so little of the best interests of young people as to insist on forty-one years of service from a worn-out woman teacher. 11. The Minor Technical Point which is proving a stumbling-block in my case relates to the date at which my teachers' certificate was granted by the Education Department. The Department did not recognize my certificate till the Ist February, 1909. The closing date, according to the provisions of the Superannuation Act, for permitting back service to be counted was the 10th October, 1908. I was four months too late —at least, my certificate was recognized four months too late—and I have, in consequence, lost six years' arduous service for superannuation purposes. (Appended is my record.) Thus it is that if the new conditions are brought into effect I shall have to teach forty-one years before I can retire. 111. Undue Hardship in regard to the Date at which my Certificate was recognized.—Thirdly, the conditions in regard to the granting of my certificate were extremely harsh. As a matter of fact, two years before the closing date for computing of back service came into force (in 1906) I had gained a much higher certificate than the Department required as a minimum for superannuation purposes in all but one minor elementary detail that was required for the lowest D certificate. In other words, I had gained a teachers' C certificate, which was much higher than the teachers' D, the minimum requirement for superannuation purposes. Where I fell short was in one small elementary detail—blackboard drawing (one-third of a subject required for the lower D certificate). I may say that I had long before the closing date in 1908 passed in two other branches of drawing. Yet, because I failed to complete in this small detail—elementary blackboard drawing —my higher qualifications were entirely disregarded for superannuation purposes. In addition to my Ō certificate I had also kept terms at the University, and was well on the way in my degree course. As the matter stands now, teachers with far lower qualifications than mine were recognized as certificated, allowed to count back service, and become contributors to the Superannuation Funds before 1908, whereas I was not. My claim is that my higher qualifications should be set against this elementary minor detail of blackboard drawing, and that I be recognized as certificated before 10th October, 1908, and considered a contributor. lam willing to pay into the fund the sum necessary to meet the situation. I have been told that an amendment of the Act will be necessary to suit my case, but surely this will not be beyond the bounds of possibility. IV. Pupil-teachers and Probationers allowed to become Contributors to the Fund. —What makes my case so unfair is that, at one time, pupil-teachers and probationers without any certificate at all were allowed to become contributors to the fund, and count all their service. Also, some of the original contributors were actually given from about five to ten years' service. Yet I, because I strove after higher qualifications than the necessary minimum, have actually been penalized by a loss of six years' teaching service. I have missed these years of service by four months.

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V. Compelled to join the Scheme.—Again, although the superannuation scheme was not, in my case, a particularly good investment, I was compelled to join it. Thus I was prevented from making other investments which would have given me more freedom, and better security for old age. VI. Mine a Special Case. —Lastly, I have been informed by the superannuation authorities that my case is one of many. I deny this. My case has very special features —higher qualifications and the stumbling-block due to the blackboard drawing, for instance. I therefore venture to express a hope that my case will receive special consideration, and that it will be treated on its merits. In conclusion, I repeat that I have been told that my only remedy is an amendment of the Superannuation Act. In view of the pending changes lengthening the period of service, I respectfully suggest that such legislation be promoted to avoid a great injustice, and especially in the interests of the educational system itself. Service. —Pupil-teacher, Thorndon, Ist March, 1903, to 29th February, 1904 ; pupil-teacher, Mount Cook infants, Ist March, 1904, to 28th February, 1906 ; student, Training College, Ist March, 1906, to 28th February, 1907 ; relieving assistant, Terrace, Ist March, 1907, to 30th April, 1907 ; relieving assistant, Island Bay, Ist May, 1907, to 30th September, 1907 ; relieving assistant, Pahiatua, Ist October, 1907, to 31st October, 1907 ; relieving assistant, Taita, Ist November, 1907, to 30th November, 1907 ; sole teacher, Wainuiomata, Ist December, 1907, to 31st December, 1907 ; relieving assistant, South Wellington, Ist January, 1908, to 31st March, 1908 ; relieving assistant, Newtown, Ist April, 1908, to 31st August, 1908 ; assistant, Newtown, Ist March, 1909, to 28th February, 1913 ; assistant, Te Aro, Ist March, 1913, to 20th February, 1917. Since sending in my statement another matter has arisen on which I should like to make representations. Under the provisions of section 8 of the Finance Act of 1931, I elected to contribute to the Superannuation Fund on the salary I received before the cuts. The Secretary of the Superannuation Board, in answer to my written inquiry, informed me in a written statement that I had made an unqualified election (see copy of statement appended). He expressly informed me that my election was unqualified, and could not be withdrawn. Consequently, when further general notices appeared in the Education Gazette requiring a second election from people who wanted their superannuation computed on the higher rate, I did not think it applied to me. I had the Secretary's express statement written to me individually saying that my election could not be withdrawn. I was very much surprised, therefore, to receive a notice from the Secretary last Friday informing me that as I had not elected under the National Expenditure Act, 1932, to pay at the higher rate, my superannuation would be computed at the lower rate of salary. My contention is, that had I not received the statement from the Secretary that my election could not be revoked, I should have certainly made a second election, as set forth in the Education Gazette, which, I may say, was not posted individually to me. I also maintain, that as the position had changed, I should have had a notice or circular informing me directly and personally of the change. In an important matter like this, I think an individual notice was, in my case, required. The tragedy is that owing to the communication I received from the Secretary, I have led other members of the stag astray. Having seen my letter, they, too, thought it was unnecessary to make a second election. I would respectfully submit, therefore, that in the circumstances an extension of time be granted to those who made the first election, but who, through this unfortunate combination of circumstances, failed to make the second election. Mr. Hargest.] In your statement of service you go only as far as February, 1917 ?■ —I have been teaching continuously since 1903, without a break. You heard, I think, the evidence of Mr. Crawford. Would the women teachers elect to pay a higher rate than the minimum, on the lines of the New South Wales' contributions ? —From my conversations with women teachers, a great many would. I personally would welcome the opportunity of paying a higher rate, and a great many more would. Some of the staff at my school would, I know. You say you are quite willing to pay into the fund the sum necessary ; that is for six years, I take it ?—'Yes. What would it be —have you any idea ? —I have no idea, I could not say. My salary was so varied during that period that it would be difficult to say ; it would be something under £50, I think. There is a great deal of difference of opinion regarding the notification given to the teachers. Miss Coad in her statement has obviously been placed at a disadvantage in not being properly informed. Can we get evidence on that matter ? The Chairman.] It is so diflicult; here we have this case of Miss Coad's, where she received the notification from the officer who has just left —Mr. Crawford —and naturally she took it for granted. I think that is quite clear. However, we will look into that afterwards, and see what we can get ?— The Education Gazette is not posted individually to teachers. Bundles of them are sent to the school, they are thrown on the table, they often get mislaid and hidden under things. Another point is that the Gazettes really are of more interest to the primary-school teachers than to the secondary teachers ; they have more matter in them dealing with the primary branch of the Service than with our branch of the Service. Do the teachers read them ?— I cannot read them, because my eyesight is so bad. It is very hard to read, and the notice about the new election was very closely printed—it was quite easy to overlook it. Mr. W. Nash.] What is your salary now ? —I do not know, with the cuts, and the unemploymenttax ; somewhere in the region of £300, I suppose. If you paid in to the fund for the purpose of getting that six years' benefit, the idea is that you would pay on the first six years rather than on a later six years —it would mean paying on a basis of something between £80 and £100 a year as against something between £280 and £250 ?— In those years

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when my service was not counted I was taking assistant positions—l was not a pupil-teacher, and they could compute it on the salary that I was receiving. I was taking certificated teachers' work all through. The Chairman.] You do not agree apparently with the statement made here yesterday by the secondary-school teachers in regard to the five years. They suggested that the computation for retirement should be over five years ? —I do not want to weaken the case for the secondary teachers. That is the opinion of the men.

C. J. McKenzie, President, the Civil Service Institute. (No. 29.) Mr. McKenzie : Mr. Chairman and gentlemen, we are here this afternoon representing the Civil Service Institute, which has, as members, all the senior officers of the Service —that is, of all the services, the Public Service, the Post and Telegraph Department, and the Railways Department. We have something like two hundred members, being all senior administrative officers of the whole Service ; and we wish to place our views before you. We have prepared a statement, sir, and it will be read to you by Mr. Malcolm Fraser, who will answer any questions. We have also the Secretary of the Institute here, Mr. Wansbrough, who will also be available for answering questions ; and who will, if necessary, give you information with respect to the Railways Superannuation Fund. He is a member of the Railways Department. I will now ask Mr. Fraser to read the statement.

Malcolm Fraser, Under-Secretary, Internal Affairs, representing the Civil Service Institute. (No. 30.) 1. The Civil Service Institute, representing the senior administrative officers of all Departments of the Public Service, including the Government Railways Department and the Post and Telegraph Department, desires to make the following representations in regard to the proposals contained in the Government Superannuation Funds Bill. 2. The Institute has viewed with grave concern the financial position into which the Superannuation Funds of the respective services have been allowed to drift. They desire in the first place to record their appreciation of the Government's action in taking definite steps to arrest the drift and to place these funds on a sound financial basis. The Institute also desires to acknowledge the Government's courtesy in inviting discussion of their proposals as contained in the Bill. It is in the spirit of genuine co-operation and helpfulness, in seeking a sound and equitable basis on which to establish these funds for the future, that the Institute submits the following statements in regard to the Government's proposals. 3. The National Expenditure Commission in its report has set out concisely an historical summary of the facts in regard to the Government Superannuation Funds, and the causes which have led to the present deplorable position of these funds. The Institute agrees that these have been accurately summarized by the Commission, and it is therefore unnecessary to repeat them here. The Institute desires, however, to record and emphasize certain aspects responsible for the present position of the funds, which are not sufficiently recognized. 4. When the funds were inaugurated the then Government deliberately offered pensions to the then existing Service in which they undertook to provide the finance to meet all pensions for service prior to the inception of the fund, while the officers' contributions were fixed on a basis sufficient to practically provide pensions for all subsequent service, except for widows' and children's and medically unfit benefits. The basis of the officers' contributions thus fixed was a conservative computation of 4 per cent, interest earning for the funds, whereas the funds have actually earned over 5 per cent, interest, which has enabled officers' contributions to provide the full benefits approximately for the whole service on which they have contributed. 5. While it is admitted that in so conceding free pensions for all service prior to the inception of the funds, and compensation rights to those officers who joined under the Act of 1871, the Government acted generously towards those benefiting in this respect, it must be pointed out that to the extent of its failure to make the necessary financial provision, this generosity has been exercised by using the contributions of the present officers for the payment of such pensions and compensation ; such compensation, it must be remembered, was a direct liability of the Consolidated Fund, and in no way an obligation of the contributors to the Superannuation Funds. 6. While thus acting generously to those officers with back service at date of inception of the funds, it is further to be noted that the basis of Government contributions towards those officers who would be contributors over the whole period of their service was extremely small —less than that usually arranged where superannuation funds exist in local-body, bank, insurance, and other commercial services which are generally on a pound-for-pound basis. Fjven in the case of the National Provident Fund —where the relation of employer and employee does not exist —the Government contribution was fixed at 25 per cent, of the contributor's payments, in addition to which a maternity benefit is provided directly from the Consolidated Fund. In this connection it is to be noted that the Government has regularly paid its contribution without default to the Superannuation Funds of local authority and business firms arranged through the National Provident Fund —while it has defaulted in respect of its contributions to the Superannuation Funds of its own employees. 7. A fundamental principle of the Superannuation Fund as originally established was that each officer's contributions were to be retained, and invested at compound interest, to provide his own pension, the Consolidated Fund making up any deficiency in the pension outgo as it arose. The Government's failure to provide such deficiencies and the consequent utilization of the officers' contributions to meet the State's obligation, combined with the effect of the retrenchment of large numbers of comparatively young officers in order to relieve the Consolidated Fund, has been almost

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entirely responsible for the present position of the funds. These factors were the result of deliberate Government action, which could not have been averted by any action of the contributors. The scheme originally also was drawn up on the basis of retirements at 60 and 65, and the effect of such retrenchments and the general policy of compulsorily retiring men on reaching thirty-five and forty years' service, irrespective of age, has had disastrous effects on the finance of these funds. The effect of these early retirements, whereby men become pensioners during a period when they would otherwise be contributors, is not generally appreciated in their loss of contributions and of interestearning capacity and in their earlier pension payments. For instance, few people realize that a retirement at, say, age 55, places almost double the liability on the Superannuation Fund that a retirement at age 60 does, and it is more than treble the liability of a retirement at age 65. 8. It is observed also that the whole of the actuarial deficiency of approximately £23,000,000, thus brought about by the failure of successive Governments to meet their obligations, is now proposed to be liquidated on a fifty-fifty basis as between (a) the State and (b) the present contributors and annuitants ; and, further, that contributors and annuitants are to meet their half-share by the immediate effective sacrifice of rights and benefits now enjoyed, while the State's share is to be liquidated by amortization payments over a long extended period. 9. The essential and immediate objective, however, is to place the Superannuation Funds in a sound financial position, not to enter into recriminations as to how the present position has been brought about; but it is essential that the general taxpayer (of whom the Government for the time being is the accredited representative) should realize that the present position is mainly due to the fact that contributing officers have had in effect to meet the Government's dishonoured promissory notes. That these promissory notes were not dishonoured on account of inability to pay is evidenced by the fact that during the period since the inception of the funds, the aggregate of Budget surpluses to 31st- March, 1930, exceeding £33,960,000, yet promissory notes to the amount of £2,036,000-odd were dishonoured during the same period in the case of the Public Service and Teachers' Funds. 10. The Civil Service Institute emphatically protests against being called upon to share on a fifty-fifty basis with the State a deficiency which is entirely the Government's, and not in any particular the contributors or annuitants. The Institute regards this as a breach of faith and of contract which is being inflicted on officers in the Service. In common fairness the Government should undertake to liquidate a greater share of its own debt. 11. The Institute is most emphatic that in the amendments now to be made, whatever payments are to be borne by the Government, should be paid each month coincidentally with the payments by contributors, and should be automatic under the authority of the amending Act without further appropriation than the Act. Only by the automatic regular payment of the Government contribution in this way will officers of the Service feel that security in their fund which is essential to a contented and satisfied service. 12. The Civil Service Institute, as already stated, recognizes and appreciates the Government's earnestness in initiating action to place these funds on a sound financial basis, and failing the Government's ability to honour its present contract, or to undertake a greater share of the deficiency, and in the absence of any less objectionable alternative from the contributors' point of view, the Institute believes that the scheme of reconstruction proposed is an equitable scheme for adjustment as between contributors and annuitants. The Institute would like to have the assurance of the Government Actuary that the stability of the funds will then be beyond question. The Institute nevertheless feels very strongly that these proposals are being brought forward and considered at a time when the Dominion is experiencing the most severe financial blizzard in its history. Consequently, in a time of such unparalleled depression revision of such sacred contracts is apt to press more unjustly than necessary on the officers of the Service. 13. Dealing seriatim with the principal provisions of the Bill the Institute makes the following brief comments :— (a) Clause 4 (3) : Computation of actuarial retiring-allowance : — The Institute would like to be assured that a drafting error has not been made in line 25 of this subclause in using the words " salary actually received " instead of " salary on which contributions were actually paid." The same remarks apply to the words " salary received " in clauses 12 (2), 23 (2) and 34 (2). • (b) Clauses 6, 18, and 30: Modifying the right of members to retire by length of service by limiting it to those who have attained a specified age (e.g., males 60, females 55) ; also increasing by five years in the age or length of service at which a female contributor has the right to retire :— The Institute accepts the principle of this proposal, but suggests that in equity provision should be made for the refund to the contributor, on retirement in accordance with the above, of all contributions paid into the fund prior to age 20. (c) Clauses 7, 19, and 31 : Eliminating all options to retire with Minister's consent earlier than as proposed in clauses 6, 18, and 30, and substituting actuarially reduced annuities in cases of retirement otherwise than for misconduct after a specified length of service or age :— The Institute is in accord with these proposals as a necessary safeguard if clauses 6, 18, and 30 are to be given effect to in full, but considers that the right to voluntarily retire on an actuarial pension under paragraphs (bj and (c) of subclause (3) of clause 7, 19, and 31, should also be extended to male contributors whose age is not less than 60 years and to female contributors whose age is not less than 55 years.

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(id) Clauses 8, 20, and 32 : Altering the basis of calculation of " final salary " from the average salary of the last three years to the average salary of the last ten years : — The Institute agrees that this provision brings into the superannuation scheme a better relationship as between pension and contributions and tends to eliminate the influence of final short period promotions. Nevertheless, this provision represents a very drastic cut in the benefits now enjoyed, and the Institute would like to have the assurance of the Government Actuary that such a period is essential to the rehabilitation, of the Superannuation Funds. The Institute considers that probably a period of seven years, as mentioned by the National Expenditure Commission would be sufficient for the safeguarding of the funds. (e) Clauses 9, 21, and 33 : Abolition of £300 limit of retiring-allowance :• — The Institute desires to support and endorse this proposal. This arbitrary limit of £300 inflicts a grave injustice on a number of officers —particularly professional and technical, who are usually recruited to the Services well on in life —in that they are required to pay into the fund much more than the value of any benefits to be derived. Moreover, a pension of £300 in their case would mean such a reduction in their accustomed standard of living that the tendency would certainly be for them not to retire, but to continue on in the Service beyond the usual retiring-time, thus greatly retarding promotion in the Service and militating against and impairing, its efficiency. As a safeguard for the Superannuation Funds its effect is not nearly so important as is generally supposed. A striking example of the relatively little saving to the three funds is contained in the report of the Government Actuary in 1920. He pointed out that had a limit of £300 been in force from the inception of the respective Funds the saving would have been only 4-7 per cent, in the Public Service Fund, 0-7 per cent, in the Teachers' Fund, and 1-8 per cent, in the Railways Fund. Although at the present time the actual position would probably show somewhat higher than these figures on account of the effect on salaries during the wax and post-war inflation, this will be corrected by the deflationary processes now operating, and the figures given may be taken as correctly representing what may be regarded as normal conditions. The present £300 limit applies only to those who joined the Public Service subsequent to the 1909 Act, who will therefore not be retiring for many years to come. Their pensions will not be computed on the inflated post-war salaries. Even those at present contributing on the unreduced salaries will have to contribute on the lower rate on advancing to any higher position. The operation of clauses 8, 20, and 32 will further tend to reduce both the number and magnitude of pensions that would be affected by the removal of the limit, and even in these cases the pension will have been paid for in full by the contributors concerned under the conditions of the amending Bill. The point has been well and ably dealt with in the National Expenditure Commission's report recommending its abolition. All Government Actuaries and every authority reporting on superannuation funds have recommended against an arbitrary maximum. Furthermore, the retention of an arbitrary maximum of £300 is inconsistent with the provisions as to " actuarial pensions " ; since the effect might easily be that an officer who has been drawing over £1,000 a year in salary and who is compulsorily retired after twenty-five years' service while under 50 years of age would only be entitled to a pension of less than £100 per annum. The Institute requests that contributors should be given a fresh opportunity of electing to contribute on the salary received before the reductions of 1931 and 1932 ; such fresh election to be made within a period of three months of the passing of the Act, and to be retrospective to the dates of such reductions. (/) Clauses 12 (4), 23 (4), and 34 (4) : Providing for a 20-per-cent. maximum reduction in pensions of annuitants :—• The Civil Service Institute holds that the contract between the Government and the present contributors is the same contract and equally as sacred as the contract between the Government and the present annuitants. In both cases the contract was entered upon when the officer joined the fund If the 20-per-cent. maximum reduction provided for annuitants is adopted, the Institute strongly holds that any increased liability thereby imposed on the Superannuation Funds should be borne directly by the Consolidated Fund. (g) Clauses 16, 26, and 38 : Rate of interest on investments of funds guaranteed at 5 per cent, per annum : — The Institute recognizes and appreciates the assistance which this proposal makes towards the stabilization of the financial position of the funds ; and endorses the provision. The Institute hopes and believes that it will prove only a nominal liability on the Government since the funds have actually been earning an average rate higher than that covered by the guarantee. (h) Clauses 14 (2), 25 (2), and 36 : Fixing the Government contribution to the fund at a sum equal to that paid by the contributors and requiring payment to be made monthly : — The Institute heartily welcomes the alteration here proposed, but considers it essential that such payments should be made automatic under the authority of the Act and without further appropriation than the Act. The Institute cannot too strongly urge the necessity for eliminating as far as possible from the method of payment of the State contribution any possibility of a further crisis in the financial position of the funds owing to the neglect or omission by a subsequent Parliament to appropriate the requisite finance.

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(i) Clause 29 : Increasing by 2 per cent, of salary the rates of contribution to Government Railways Superannuation Fund by persons who became contributors prior to Ist January, 1908 : — It is admitted that under the scheme as at present contributors who joined the fund prior to 1908 enjoy an advantage in this respect. The provision, although like the other proposals it constitutes a breach of contract, seems a reasonable adjustment as between contributors. If, however, uniformity is to be brought about in regard to contributions as between the Railway and the other funds, then the Institute urges uniformity in all respects. The contributors to the Government Railways Fund are at a disadvantage in that the widows of annuitants receive no annuity, nor do officers compulsorily retired after twenty years' service who have not qualified for pension receive interest on the refund of their contributions, as is the case in the other funds. The Institute requests that the provisions of the Railways Fund in this respect be brought into line with the other funds. 14. If the proposals in the Bill are given effect to in their entirety, then the Institute strongly desires that the control and administration of the funds be placed independently and absolutely in the hands of Commissioners (with the responsibilities of trustees) appointed from the Service, of whom the Government Actuary should be one. As showing the necessity of the funds being administered by independent Commissioners with a due sense of their responsibilities as trustees, the Institute would draw attention to the compulsory retirement within the past year of 457 members of the Railway service with thirty-five years and under forty years' service, thus prematurely increasing the burden on the Railways Superannuation Fund by £108,000 per annum, while at the same time, losing contributions for an average period of five years to the amount of approximately £5,500 per annum. Had the Railways Superannuation Board not relied on section 119 of the Government Railways Superannuation Act, 1926, and section 16 of the Government Railways Amendment Act, 1927 (Government guarantee of fund) and had that Board the powers and responsibilities of trustees to maintain the solvency of the fund, it is hardly conceivable that such methods of relieving the Working Railways Account would have been adopted. The maximum new pensions granted from this fund in any one year up to 31st March, 1930, was £36,409 in 1924-25, while during the two years 1930-31 and 1931-32 new pensions to the amount of £40,573 and £143,807 respectively were placed on the fund. As a result of these recent retirements it is doubtful if the financial provisions of the Bill will be sufficient to place this fund in a sound position, even on the proposed new basis, which will also very seriously penalize the annuitants, thus created by reducing their pensions to an extent never even dreamt of at time of their forced retirement. The position of this fund would appear to require special consideration to ensure its solvency. 15. In conclusion, the Institute desires to stress most emphatically the imperative need for placing the stability of these funds beyond question. The institute views with grave concern the continuance of the present default and the possible exhaustion of the contributors' own moneys. The position is so serious that there should be no delay in effecting remedial, measures. The need of remedial action is so obvious as to scarcely require stressing. The position is getting progressively worse every day. The Institute trusts that no postponement of the Bill will be contemplated unless at least sufficient finance is provided to prevent any further increase in the existing deficiency and steps are taken to prevent any further loading on to the Superannuation Funds of these disastrous compulsory premature retirements. The Institute realises and appreciates that the present Government is making a genuine attempt to restore stability, and while hesitating to do anything which might endanger the action initiated being carried into immediate effect, the Institute does urge with all the force possible that it is incumbent on the Government to strain its resources to the utmost to redeem the country's honour in regard to these funds. Although the matter is now being dealt with at the depth of the worst depression ever experienced, there is no doubt but that the financial position and ability-to-pay of the Dominion will recover, and the spirit of this conviction should dominate consideration of the issues at stake. The Institute has refrained from making specific pleas for particular benefits. In its anxiety to see these funds righted, it asks for the utmost generosity in the provision of Government contribution towards that end. Mr. Savage.] Do you say that the number of members in your Institute is two hundred ? —Yes. Are any of your members women ?—We have only one. You propose to increase the contributions by 2 per cent, of the Railways Superannuation Fund ? —Yes. You support that ?—Yes. Are any of your Railway members interested in that proposal ? —Yes, practically all of them, except probably two. With the exception of two, they are all affected by the increase of 2 per cent. Your present railway members, with the exception of two, will be affected ? —Yes. Then you advocate the removal of the £300 limit ? —Yes. Would not that impose a financial burden on the fund ?—lt might do so slightly in the future ; but we consider that it will be only slight, and that it is a matter of justice. Would not the people who would benefit the most by that be the highly paid officers ? —Every officer above £450. And would not that be at the expense of the lower-paid officers ? Mr. Wansbrough : There is no correlation between the two. The position is that the higher-grade officers are paying contributions for benefits they are not receiving. Mr. Savage : Was there not a definite arrangement entered into between the Government and those officers? Now you suggest that that arrangement should be altered so that your high-grade officers can benefit 1

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Mr. Wansbrough : It would benefit them, but it would benefit them justly. I would like to point out also that the limit of £300 does not in any way benefit other subscribers, and that you cannot budget on it. You cannot budget on the surplus, and the surplus can therefore only lie idle in the fund. Mr. Savage.] Is it not a fact that there has been great abuse of the Superannuation Funds ?— The remedy is to bring about a scale that will do away with abuse. Is it not a fact that the funds have been abused ? Mr. Wansbrough : Can you give us an indication of what you mean by abuse ? Mr. Savage.] Have not the Public Service Fund and the Railways Fund, been abused during the last couple of years ? —We admit that. We have had special legislation safeguarding the superannuation rights of the highly paid officers, while the rights of the rank and file have been abused ?—lf there have been generous payments they should be paid for. It appears to me that the generosity mentioned in your statement has been at the expense of the contributors to the various funds ? —That is our statement. The various sections of the Public Service seem to be pushing responsibilities on to other sections. We have a list of officers here, some of whom have contributed practically nothing, but who are receiving very high retiring-allowances at the present time. I have one gentlemen here who only contributed £605, and he is receiving between £1,400 and £1,500 a year. That is the sort of thing right along the line. Another one contributed £1,820, and has been receiving £2,000 a year ? Mr. Wansbrough: Have you gone into the total amount involved ? Mr. Savage: I have gone into what those gentlemen have paid into the funds, and I have run out what they are taking out; and lam quite satisfied that there is no financial institution in this country, or any other, that would stand up to it. Mr. Hargest.] What you say is that, if the £300 limit is abolished, it will practically mean no additional burden on the funds ?—Yes. On page 7 you state, "As a safeguard for the Superannuation Funds its effect is not nearly so important as is generally supposed. A striking example of the relatively little saving to the three funds is contained in the report of the Government Actuary in 1920. He pointed out that had a limit of £300 been in force from the inception of the respective funds the saving would have been only 4-7 per cent, in the Public Service Fund, 0-7 per cent, in the Teachers' Fund, and 1-8 per cent, in the Railways Fund " ?—Yes, and we refer to that again in the next paragraph. You admit it will have a slight bearing on the funds ? —Undoubtedly. It would have some bearing on the funds to-day ? —Oh, it would have some bearing. That is the effect of the post-war inflation. You are in agreement with the uniformity of pensions ? —Yes. Do you believe that the whole of the three funds should be on a common basis ? —Yes, on a common basis. On page 9 you state, " As showing the necessity of the funds being administered by independent Commissioners with a due sense of their responsibilities as trustees, the Institute would draw attention to the compulsory retirement within the past year of 457 members of the Railway service with thirtyfive years, and under forty years' service, thus prematurely increasing the burden on the Railways Superannuation Fund by £108,000 per annum, while at the same time losing contributions for an average period of five years to the amount of approximately £5,500 per annum " ? —Yes. You refer to independent Commissioners with a due sense of their responsibilities as trustees ? — Yes. We suggest that it should be the same as in the Government Life Insurance Department. Then on page 10 you state, " The Institute trusts that no postponement of the Bill will be contemplated unless at least sufficient finance is provided to prevent any further increase in the existing deficiency and steps are taken to prevent any further loading on to the Superannuation Funds of these disastrous compulsory premature retirements ? —Yes. We consider that the matter has been allowed to drift during a period of prosperity, and we ask that you should not allow it to drift further. Something must be done. What do you suggest ?—Well, we suggest that sufficient financial provision should be made to prevent the deficiency increasing, and to avoid the placing of what we consider to be not proper burdens on to the fund. Mr. McCombs : Do you consider that the figures which have been supplied by the Government Actuary are correct ? Mr. Wansbrough : The Institute feels that that is not a matter on which it can express an opinion. That is a matter for the experts. I would not like to go the length of disputing liis figures. I may say that such rough calculations as we have made tend to support his figures. Mr. McCombs : If a public servant receives the limit of £300, is not that his bargain ? Mr. Wansbrough : There is no bargain in it. He had no option. Mr. McCombs : But is it not the bargain he made ? Mr. Wansbrough : A young man in search of a job has no option. He must take what is offered him. Mr. McCombs: That would apply to all wages and salaries ? Mr. Wansbrough : If it is a bargain, then he has made the bargain, in most cases, when he has been under the age of twenty-one. He entered into it when his salary was about £60 a year. £300 would appear to him to be wealth at that age. Mr. McCombs.] In regard to the superannuation contributions to local authorities through the National Provident Fund, you say that the Government has regularly paid its contributions to those funds ? —Yes, regularly.

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Are they similar contributions ? —No. Back service has to be taken into consideration. With back service the contribution to the National Provident Fund is smaller; but, on a straight-out basis, from the time the contributor pays, the Government contribution to the National Provident Fund is greater than to the Government Superannuation Funds. Could we have a list of all your members who are affected by the £300 limit ? Mr. Wansbrough : We have no objection to giving the members affected. Mr. McCombs : And the amounts they would otherwise receive when they retire ? Mr. Wansbrough : We cannot give the amounts when they retire. There is no way of getting that. Mr. W. Nash.] On page 2 you state, " While it is admitted that in so conceding free pensions for all service prior to the inception of the funds, and compensation rights to those officers who joined under the Act of 1871, the Government acted generously towards those benefiting in this respect, it must be pointed out that to the extent of its failure to make the necessary financial provision, this generosity has been exercised by using the contributions of the present officers for the payment of such pensions and compensation ; such compensation, it must be remembered, was a direct liability of the Consolidated Fund, and in no way an obligation of the contributors to the Superannuation Funds " ? — Yes. Could an amount be raised to put the funds on a financial basis ? —No. But we are anxious to see them established firmly. If default takes place there will be nothing left to pay the future superannuitants. Could not the financial position be put on a firmer basis by doing what is necessary at the present time ? —lt all depends, of course, what you mean by " doing what is necessary." Various opinions have been expressed as to what is necessary to put things right. But some are very short of the mark. Well, what is the correct thing to do ?■ —Of course the correct thing to do is to stand up to your contract. But this Bill has been submitted to us for comment, and we have stated our views. We wish to ultimately re-establish the contract. You say that the Government has dishonoured its promissory notes ? —Yes. If outside parties dishonoured their promissory notes, what would be the position ? —They would be subject to the law. They would have no power to alter it. Would you consider they would be justified in altering a promissory note, even if they had the power ?—No. You say there are about two hundred members in your Institute ? —Yes. Do you suggest that the benefits should be curtailed ? —No. We have taken the proposals as submitted. If reductions and adjustments have to be made, they seem to suggest equitable proposals. Do you consider that the proposed treatment of women is equitable \ How many women have you in your Institute ?—Only one woman. And then there is the increased contribution of 2 per cent, to the Railway Fund. Do you think that is correct ? —We maintain that that is still a breach of contract. Mr. Wansbrough: From the senior railway officers point of view—there are thirty of us in the Institute—our feeling is that if anybody has to make sacrifices, they should make the same sacrifices, and have no unfair advantage. We do not want to see any unfair burden thrown on to other people. Mr: W. Nash.] What is the amount of salary an officer must have to be a member of your Institute ? —He must have a certain position in Class I. What is that on a salary basis ?—£567 now. No one can go into the Institute unless he has a salary of £567 ? —That is so. How many of your members contributed to the fund prior to 1909?— Most of them. Will not every one of your members be benefited by the lifting of the £300 limit ? —Some of them. Every one of them. As some members go out others will come in, and they will receive the benefit?— That applies to every one joining the service. , No ; the other sections of the Service do not get such high salaries ? —We are not denying that our Institute would be more benefited by the lifting of the £300 limit than any other section of the Service. Are you not asking for what is almost an exclusive benefit ? —No ; no benefit to present members, but future members will benefit. Some of the present and all of the future ? —Very few of the present members. It will apply mostly to future members. How many of your members in the Railway service are affected ? —Out of thirty members only two are affected. Mr. Wansbrough : I should say there are very few with less than thirty years' service. Mr. W. Nash : The suggestion has been made that the Bill should be postponed to consider more reasonable propositions ; but you say that the Institute trusts that the Bill will not be postponed % Mr. Wansbrough: The question is, Will you be able to make a recovery in that way ? Mr. W. Nash.] The point is that every one of your members would be benefited if the £300 limit is lifted. The Bill as it is will benefit every one of your members ?—The Bill will benefit those that are affected. It will benefit every one of them. Those joining prior to 1908 are exempt from the £300 limit ? — Yes. So that your organization cannot lose if the Bill goes through ? —Oh, yes, every member will be a loser. We cannot retire so early, and we will not be able to get so large a pension. I want to get at the actual expense of the passing of the Bill to your members. Can you give us that ? —How can we prophesy that ? What will be the effect of the Bill on the retiring salaries of your members as compared with the position to-day ? —That would require an investigation of the ten-year period.

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Could you not do it in a couple of days ? —I think you should refer that to some departmental officer who deals with such matters. Perhaps the Chairman could get it from the Department if you give us a list of the members. We could then ask the Department to give us the effect on those members ? The Chairman: Yes. Mr. W. Nash : You refer to the standard of living, that the standard of living of your members is affected by the £300 limit ? —Yes. That is from the outlook of your own people ?—Yes. Have not other officers of the Public Service also had their salaries reduced, and their standard of living lowered ?—Well, in many cases the arbitrary limit of £300 is a greater hardship. Take the 20 per cent, drop in salaries, that affects everybody. But the man who has to drop from £1,000 to £300 feels it very much. But the man with £1,000 should have made some provision himself. We have many instances where very little has been paid in and very large sums taken out. One man has paid in £373 and has taken out £3,340 ; another paid in £705, and has already received £4,470, and if he lives for the normal period he will draw out £40,000 from the fund ?—I would like to put alongside that the huge number of those who receive less than £100 a year. Are there not some receiving £2,000 a year ?—Very, very few. Mr. Wansbrough : The calculation over the ten-year period is going to enormously reduce the amounts paid. Mr. W. Nash.] Assuming that the fund is so amended as to assure at any rate that the contributor will get the value of his contributions, would that be satisfactory to your Institute ? —Well, our Institute would not be satisfied if certain sections get more in proportion to their contributions than we do. Suppose there is a subsidy of £1 for £1. The man with £1,000 pays £50, and a man getting £250 pays £12 10s. Now, do you think that the man getting £1,000 a year should receive four times as much as the man getting £250 ? —From the point of view of the fund one man at £1,000 would be exactly the same as four men at £250. lam talking about the pound-for-pound subsidy. Is it just that that should be paid on the larger amounts ? —The Government, unfortunately, is not paying £1 for £1 at the present time. But what we maintain is that, if there is a subsidy, we should all share in the subsidy proportionately to what we contribute to the fund. The Chairman : We had a case this morning where a man is getting £1,000 and has paid in £3,600. If the ban is lifted he would get £667. If he retires at 65 the fund would still be accruing interest, would it not, and then there is a possibility that he might die and receive no benefit at all out of the fund ? —Yes. In regard to those dishonoured promissory notes, and the questions put to you this afternoon with respect to the outside man, is not the position different —is it not a fact that this is merely a contribution from the Government ? —Yes. So that the position is not quite on all fours ? —That is so. Do you prefer the period of ten years or the period of seven years ?—We have suggested that ten years is probably not required, and that seven years would be a sufficient safeguard. But we are prepared to abide by the actuarial investigation on that point. On page 8 you refer to the opportunity given to members in regard to the salary " cuts " to make an election to contribute on the higher salary received prior to the " cuts " ? —Yes. What notification did you send out to your members in connection with that matter. Did you send out notices to individual members ? —No, not to the individual members. You are asking for a further extension of the time ? —Yes. You are strongly opposed to any further retirements under the present law with the Minister's consent ?—Yes, except on an actuarial basis. Perhaps Mr. Gostelow has some questions he would like to ask Mr. McCombs : I protest against Mr. Gostelow being allowed to ask questions of witnesses. The Government Actuary and the Public Service Commissioner are here in an expert capacity to give information to the Committee. Mr. Savage : I support Mr. McCombs. Any information we want from the Public Service Commissioner and the Government Actuary, I take it, we can get when we are deliberating. I think I will raise the question by way of a resolution to-morrow. The Chairman : The next meeting of the Committee will be on Tuesday morning. Mr. Savage: Well, then, I move it now. I move that the questioning of witnesses be confined to members of the Committee. The Chairman : Of course we will have to consider that in Committee. In any case we will have to adjourn now, because there is the House division-bell ringing. (The Committee then adjourned.)

Tuesday., 29th November, 1932. Ward George Wohlmann, Commissioner of Police, representing the Police Force. (No. 31.) In bringing before the Select Committee the following considerations affecting the Bill, the members of the Police Force recognize and appreciate that the purpose of the Government in introducing the Bill is to place the Superannuation Fund on a sounder basis. We are pleased to avail ourselves of this the first opportunity afforded the Police Force to express the views of its members on the Public Service Superannuation Act.

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A short history of a Superannuation Fund as it affects the Police Force may be of assistance to the Committee. In the year 1898 the Government of the day brought to New Zealand J. B. Tunbridge, Esq., an officer of very high standing in Scotland Yard, London, and appointed him Commissioner for the purpose of reorganizing the Police Force. At the same time the Government appointed a very important Commission to inquire into the causes for the discontent in and lack of efficiency of the Police Service. At that time there was no provision for pension, but members of the Force retiring after long service or when they had become unfit for further duty received a compassionate allowance of one month's salary for each year of service, but not exceeding twelve months' salary in the case of noncommissioned officers and constables, and a similar grant up to two years' salary for commissioned officers. These payments were made out of the Consolidated Fund under the provisions of section 15 of the Police Force Act of 1886. The evidence received by the Commission in 1899 convinced it of the necessity for a Police Pension Fund. The following extract is from page XVIII of the Commission's official report: — " The Police Force differs from other branches of the Public Service. Policemen for many years have to do dreary night duty, and it appears from the evidence that, although they are generally men of superior physical development, there is a tendency to break down at an age at which other Government employees are still vigorous. Their occupation exposes them to great risks of injury and disablement. The duty of a policeman appears to unfit him for any other kind of work, and he must retire at a comparatively early age if the Force is to be an efficient one." This report, supported by the recommendation of Mr. Tunbridge, who was well aware of the necessity for a pension scheme designed to meet the peculiar conditions of a Police Force, induced the Government to pass the Police Provident Fund Act, 1899. It is of interest to note that this Act established the first Superannuation Fund in connection with the Public Service in New Zealand. This fund successfully met the needs of the Police Service until the year 1910, when, without the consent of the contributors and in conflict with their wishes, it was merged with the present Public Service Superannuation Fund one year after the establishment of that fund. At that time the Police Provident Fund had a reserve of £32,786, and that sum was taken over to help establish the new Public Service Superannuation Fund. It will be observed that the Police contributed £32,786 to the now Public Service Superannuation Fund as against one year's contribution paid in by the other contributors to that fund up to the time the funds were merged. For this contribution the police received no benefit beyond that shared by the other contributors. In eflect, the police have been contributing to the present Public Service Superannuation Fund for eight and onetwelfth years longer than any other contribxitors to that fund. Section 6 of the Government Superannuation Bill, 1932, because it strikes at the fundamental principle essential for the efficiency of the Force, is strongly and unanimously opposed by the members of the Police Force. The effect of this section (6) will be to retain in the Force men who are past their period of efficiency. The fundamental principle so essential for the efficiency of a Police Force is that its members must be physically fit to discharge their duty. 97-83 per cent, of the members of the Police Force are below commissioned rank and liable to be called upon, night or day, to discharge the duties imposed upon them by law, for default of which they are subject to fine or imprisonment (section 78, Police Offences Act, 1927; sections 11 and 19, Police Force Act, 1913 ; also Police Regulations). Repeating the words already quoted from the report of the 1898 Royal Commissioners " Their occupation exposes them to great risk of injury and disablement." This is supported by certificates from Police Surgeons throughout the Dominion, copies of which are annexed hereto. The following is an extract from the report of Lord Desborough's Commission of Inquiry on Police Services in England, Wales, and Scotland in 1920 : —■ " In considering the standard rate of pensionable pay which we should recommend we have taken into account not merely, or even mainly, the rates of pay in force before the war and the percentage to be added in consideration of the increase in the cost of living, but we have endeavoured to appraise as well as we can the services rendered by the police to the community, the standard of qualifications required, and the rate of remuneration which seems to us reasonable and proper in all the circumstances and likely to attract recruits of the right stamp. In view of the evidence which we have heard as to the work of the police and the high standard of qualifications required, we are satisfied that a policeman has responsibilities and obligations which are peculiar to his calling, and distinguish him from other public servants and municipal employees, and we consider the police entitled thereby to special consideration in regard to their rate of pay and pensions. " A candidate for the police must not only reach certain standards of height and physical development, but must have a constitution which is sound in every way. The duties the police have to perform are varied and exacting ; they are increasing, and will probably still increase in variety and complexity, and a man cannot make a good policeman unless his general intelligence, memory, and powers of observation are distinctly above the average. His character should be unblemished : he should be humane and courteous and, generally, he should possess a combination of moral, mental, and physical qualities not ordinarily required in other employments. Further, when he becomes a constable, he is entrusted with powers which may gravely affect the liberty of the subject, and he must at all times be ready to act with tact and discretion, and on his own initiative and responsibility, in all sorts of contingencies. The burden of individual discretion and responsibility placed upon a constable is much greater than that of any other public servant of subordinate rank.

12—1. 15.

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" The police also stand in a special relationship to the community. Each constable on appointment becomes one of the duly constituted guardians of law and order for and on behalf of the citizens as a whole, and, as we have pointed out, he makes a declaration of service to the Crown as such. He undertakes special responsibilities in regard to the prevention and detection of crime, and, while he does not relieve the citizen from all responsibility for the protection of his own property and for bringing offenders to justice, he claims to be and is the principal agent in the prevention and detection of crime of all kinds, and generally holds a position of trust which it is important he should be able to maintain. We consider it essential that the sense of obligation to the public should be preserved in the police, and the reason we dwell on these considerations at some length is that they are fundamental to the views wo have formed as to the status of the police and the pay they should receive. " A number of police witnesses have urged that in various ways a constable is subject to social disabilities by reason of his employment. Moreover, he must at all times, both on and off duty, maintain a standard of personal conduct befitting to his position, and this does impose upon him certain restrictions which do not exist in ordinary employments, and hardly apply in the same degree even in the case of other public servants. He is liable to be called for duty at any time in an emergency, and, in order that he may be available for unexpected calls, he may be restricted in his choice of a residence. The special temptations to which a constable is exposed are obvious, and, as any lapse must be severely dealt with, it is only just that his remuneration should be such as will not add to his temptations the difficulties and anxieties incidental to an inadequate rate of pay. The policeman's calling also exposes him to special dangers. He may at any time have occasion to arrest an armed criminal; he frequently has to deal with drunken persons, who are responsible for the greater part of the crimes against the person, and he may occasionally have to take part in suppressing violent disorder. " The policeman is also put to certain special expenses by reason of his employment, for example, he not only requires good and sustaining food, but the cost of his housekeeping is increased by the irregularity of the hours at which he has to take his meals and the frequent necessity of cooking specially for him ; and it is generally, and quite correctly, a condition of service that he may not be concerned, directly or indirectly, in any trade or business, so that he is precluded from supplementing his wages by undertaking employment for profit in his spare time." Having regard therefore to their often strenuous and dangerous duties, it is unreasonable to expect members of the Force over sixty years of age to possess the physical fitness necessary to adequately discharge the duties required of them. A policeman is, in effect, a civil soldier always on active service. This is recognized by section 14 of the Finance Act, 1919 as consolidated in section 62 of the Public Service Superannuation Act, 1927, which provides that any officer of police injured on duty is to be treated for pension purposes as if he were a member of an Expeditionary Force wounded on active service. As the conditions of service in the Police Force are so dissimilar to those of other Departments of the Public Service, its members trust they will be held to be justified in submitting for serious consideration that in respect to all members of the Force (including police matrons) one year of service should be counted as one and one-seventh years for superannuation purposes, thus giving police contributors who have reached the age of sixty years the right to retire with a full pension on their completing thirty-five years of actual service. This is half of what is granted to the police in England where three years of actual service are counted as four years for superannuation purposes (see section 10 (a) of the English Police Pensions Act, 1921). The effect would be to enable the police, whose average age of joining the Force is twenty-five years, to retire before they had passed their period of efficiency on a pension approximating to that receivable by other contributors to the Public Service Superannuation Fund. In further support of the submission made, it may be pointed out— (1) The police, by reason of habitual and regular duty on Sundays and public holidays, perform in thirty-five years longer service than most other Public Service contributors would perform in forty years. (2) During the four-year period Ist January, 1928, to 31st December, 1931, of a total of twenty-two members of the Force who died and fifty-two who were retired from the Service, not one qualified for full pension by attaining forty years' service. The average length of service of those who died being 22 years 6| months, and of those who retired 27 years 8| months. Respecting section 7 of the Bill, we are in some doubt as to the actual effect of the words " other than for misconduct." We shoidd be glad to have an assurance that this clause will not affect the provisions of sections 32 and 62 of the Public Service Superannuation Act, 1927. It is true that these sections are not referred to in the Bill, but it might be suggested that section 7 has some application to them. The fact that there is a doubt was, we understand, brought under the notice of this Committee by Mr. Wogan, Acting Secretary of the Public Service Superannuation Board who, when giving evidence before this Committee, is reported to have said, Dominion, 18th November, 1932 : — " Clause 7 (1). Contributor retired medically unfit. The Board is of opinion that this clause should be amended to make it clear in those cases where a contributor to the fund is retired on the ground of medical unfitness the provisions of this clause do not apply to his case —i.e., that he will receive a retiring-allowance computed in accordance with the provisions of clause 6 (1), and not on an actuarial basis,"

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Section 8 of the Bill is opposed for the reason that it will reduce too seriously the amount of superannuation members of the Force can receive due to the relatively late age at which they reach maximum pay prior to retirement. By extending the period from three to ten years on the average salary of which pension is to be computed, the retiring-allowance of officers in most instances will be computed partly 011 the relatively low salary they received as sergeants, and in respect to sergeants 011 the pay they received as constables. One of the chief motives, up to the present, inspiring members of the Force to qualify by examination for the higher ranks of the Service will be affected by the reduction in pension. With respect to section 9 of the Bill, we suggest that section 30 of the principal Act should not be repealed, but should be amended by substituting £600 for £300, also by providing that no contributor shall be required to contribute for superannuation purposes 011 a higher salary than £900 per annum. We consider that a maximum pension of £300 per annum for contributors who joined the Service since 1909 would operate unfairly in comparison with the pensions payable to contributors who joined the Police Service prior to 1909. Some limit to pension is we consider necessary to preclude the payment of unduly high pensions. But if section 9 of the Bill is passed into law or if section 30 of the Public Service Superannuation Act is amended, we suggest that an opportunity should be given to all those members of the service who did not elect to contribute for superannuation purposes on house allowance, value of free quarters, or on a higher rate of salary received prior to reduction in pay, to reconsider their position. Many contributors did not so elect for the reason no advantage wa.s to be gained because of the £300 pension limit. In conclusion, we would refer the Committee to paragraph 464 (page 52) of the report of the National Economy Committee which, referring to the Police Department, reads, — " This Department appears to be economically administered, and we have no recommendation to make in regard to the vote." We believe that in presenting these representations we have faithfully disclosed the true position of members of the Force and their views as contributors to the Public Service Superannuation Fund, having in mind the special conditions outlined. These conditions, we submit, place members of the Police Force 011 a footing entirely difierent to that of the members of any other Branch of the Public Service. Copy of Report to Commissioner of Police by Dr. C. H. Tewsley, Police Surgeon at Auckland, dated 21st November, 1932. I have been Police Surgeon at Auckland for the past three years, and five months. The Police Force is composed of men especially selected from considerable applications after a fairly searching medical examination. The individual officer therefore may be looked upon as a man of especially good physical development and general health at the commencement of his period of service. During service he is exposed to all kinds of weather, and may easily be so exposed without adequate covering 011 occasions—e.g., sudden change of weather after he has proceeded out on duty. This will render him liable to infections as a result of lowered resistance at these times. During times of epidemic disease he has to move about indiscriminately in the community, entering badly ventilated houses, &c. He is therefore freely exposed to infections with such epidemic diseases. Such diseases will include influenza, with its possible complications, the so-called " Infectious diseases" and the ordinary epidemic cold. In the course of his duty in handling all kinds of prisoners he is liable to the risk of contracting other serious conditions. I have had experience of constables being affected with trachoma, for example, the only likely source being contact with sufferers from this condition when on (especially) wharf duty. There is a definite risk of septic infection and possibly septicaemia from skin abrasions or cuts while handling decomposing bodies. Inasmuch as a great deal of his time of duty is carried out at night, and he is compelled to go into ill-lit and out-of-the-way places, he is more liable than other Civil servants to the risks of ordinary accidents from falls, &c. , His rota of day and night shifts and inability at times to get regular hot meals is a factor that m some cases impairs physical fitness. I have had experience of severe insomnia occurring from the constant change from day to night duty. The Police Officer is at no time free from the risks of personal violence, especially when on night duty. The violent prisoner, the mental case, and the individual harbouring a real or imaginary grudge, are all potential sources of considerable risk. This risk is immensely accentuated in times of social disorder such as strikes, riots, &c. During the recent riots in Auckland two constables suffered from very severe head fractures necessitating prolonged in-patient treatment at the hospital, and were extremely lucky in escaping fatal injuries. Other members of the Force had less serious injuries, but still quite severe injuries. There are many occasions where police Officers have lost their lives in the execution of their duty. This likelihood of personal injury is further accentuated by the instructions that the Police Officers must at all times exhibit forbearance and are counselled to use violence only as a last resort Apart from the possible injuries that may be sustained, there is always the present knowledge of risk. This imposes a strain which must have its effect over a long period of years. Apart from the grosser injuries and diseases that a Police Officer may contract as a result of the nature of his duties, he is subject to, and as a matter of fact suffers from, many minor conditions such as strained muscles, w*renched joints, &c. His work involving at times severe physical effort, further adds to the normal risks of the average man as he passes on to later middle life,

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From the foregoing facts and from my observations, I am of opinion that there are at present in the Force men who are being asked to carry out duties for which they are physically incapable as a result of passage of years in a strenuous type of life. Constables of sixty years doing street duty are quite incapable of handling violent prisoners of thirty or forty. They should be given the opportunity of retiring before they attain this age. I understand fifty-five years is the age for retiring for constables in the London Police Force, and I am of opinion that this is quite old enough to ask men to carry out their, at times, very strenuous work. Inasmuch as the nature of the work of a Police Officer is obviously, from what I have stated above, associated with risks that do not obtain from other branches of the Civil Service, some appreciation of this should be reflected in the extenuation of length of service. After ten years service additional years of service should be allowed to count for more than a year. If general health is looked upon as having deteriorated from 20 to 25 per cent, at the retiring-age, as compared with other Civil servants, consideration might be allowed in estimating length of service. Copy of Report to Commissioner of Police by Dr. D. N. W. Murray, ex Police Surgeon at Auckland, dated 20th November, 1932. After having been Police Surgeon for sixteen years at Auckland and having had to deal with members of the Force during that time who were suffering from sickness, accidents, and injuries received whilst on duty, I am of the opinion that — The men on entering the Force have to pass a strict medical examination so that they form a body of specially picked men as regards health, mental ability, and physical fitness. Their duty leads to irregular hours both as regards meals and sleep which over a long period are detrimental to their health. They have to do duty in all kinds of weather and extremes of temperature which makes them more prone to bronchial trouble. They are exposed to the danger of handling bodies which have been dead for several days or weeks, where they run a risk of blood poisoning and death from a scratch, or of a prolonged illness. They are exposed to the danger of mob violence as seen in the recent riots here, the strikes at Waihi, and the wharf strike in 1913. In the former case many men were injured badly, and in the case of Waihi one constable was shot. They run the risk of dealing with homicidal lunatics, as I have known in many cases, with considerable risk to life and limb. The risk of arresting mad drunks and members of hostile crowd. I have known police to be knocked down to the ground and kicked in the face and body with the danger of being crippled for life. They ran a risk in case of fire, earthquake, and arresting armed criminals at night. A Police Officer must be fit at all times, whether in uniform or not, and whether on or off duty, to cope with any act of lawlessness or any emergency affecting the public safety, and he has to do this single-handed without much chance of getting any aid from the public whom he protects. All the above facts tend to ultimately affect the Police Officer's health and undermine his constitution, so that by the age of fifty-five years he has given of his best to duty and the public besides having run the risk of having been permanently injured or killed in the performance of such duty. This is not the case in other branches of the Civil Service where the hours are more regular, the duties lighter, and the risk to life, limb, and health are practically nil. Copy of Report to Commissioner of Police by Dr. Peach, Police Surgeon, Palmerston North, dated 21st November, 1932. lam a graduate of Edinburgh University. I have been in active practice since 1896, thirty-two years in New Zealand. I have been Police Surgeon for twelve years. From what I have seen lam of the opinion that the duties of police officers are such that their health is liable to suffer as the result of exposure to all sorts of weather at all hours of the day or night. They are constantly running the risk of injury either as the result of accident or attack by insane, or drunk, or riotous persons. I should certainly class police work as dangerous and exacting, and consider that from thirty to thirty-five years of it about as much as an ordinary average person, in sound bodily and mental health, could be expected to stand up to. Copy of Revort to Commissioner of Police by Dr. C. D. Henry, Police Surgeon at Wellington, dated 21st November, 1932. I am a duly qualified medical practitioner registered and practising at Wellington. I have acted as Police Surgeon for the last thirty years approximately. During this period I have been regularly in contact with members of the Police Force, and have frequently been called to attend to cases connected with their duty. From a health point of view, I consider police duty dangerous, owing to risk of infection, exposure to all weathers at all seasons, and the liability to violence and its effects in the performance of police duties. I have found these risks reflected in the general health condition of the Force. Nearly thirty years' experience has taught me that the majority of the members of the Force are compelled by the nature of their work to retire long before the time-limit has expired. I consider that it is unreasonable to expect the members of the Force to serve forty years before retiring, as, with the exception of a small minority, they are more or less worn out and incapable of efficient service after the lapse of thirty-five years.

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Copy of Report to Commissioner of Police by Dr. G. H. Ussher, Police Surgeon at Timaru, dated 21st November, 1932. I certify that I have been Police Surgeon for Timaru Police from Ist September, 1920, to present date. Prior to that I attended members of the Police Force for several years. From experience gained during that period I am of opinion that the nature of the work performed by the police, in all weathers during the day and during the night, certainly exposes them to illness. Several of the men during my period as Police Surgeon have been laid up with colds, bronchitis, pleurisy, &c., and with infections such as boils. The most serious complaint, however, has been pulmonary tuberculosis, of which there have been several cases and amongst them fatal cases. I should think the hardships of their work exposes them to this risk. The police are certainly more exposed than civilians to accidents, e.g., in strikes, riots, saving from drowning, &c. With regard to violence, several of the Force have been injured by kicks, blows, &c., in the performance of their duties, whilst one constable was fatally shot whilst arresting a burglar. It is only strong particularly fit men who can stand up to the stress of police work. In my opinion the "period of efficiency " would vary with the rank the officer holds towards the latter part of his service. If the officer were still performing outside duties, I should say thirty-five years ; if performing administrative work, forty years. Copy of Report to Commissioner of Police by Dr. F. L. Scott, Police Surgeon at Christchurch, dated 21st November, 1932. I was appointed Police Surgeon at Christchurch on the Ist April, 1931, and since then I have registered 127 of the Force (Christchurch and suburbs) as sick. Twenty-one of these have been due to accident, seventeen of which occurred whilst on duty, and one of them died as a result of the accident. Of the remainder of the cases fifty-four have been influenza, due mainly to exposure on outside duty in cold weather. There have been two deaths from illness—one due to gall-bladder disease, and the other to asthma. One has been off duty and in hospital for six months because of rheumatoid arthritis. One had spinal disease (disseminated sclerosis) and after four months in hospital was retired medically unfit on Ist December, 1931. This disease was probably caused by frequent exposure to cold and wet. A policeman is always liable to assault in the execution of his duty. Sometimes by drunken persons and sometimes by the lawless militant class, and in times of industrial troubles this is liable to be more prevalent. The effect of these illnesses and injuries on the health of the Force depends largely on the seriousness of the illness or injury and on the age of the patient, the old men being as a rule affected more seriously. Copy of Report to Commissioner of Police by Dr. W. Evans, Police Surgeon at Dunedin, dated 20th November, 1932. I have completed eighteen years' service as Police Surgeon, and to give some idea of the work during that period I have given approximately over eight hundred certificates to members of the Police Force at various times, stating they have been unfit for duty. This is a high percentage of disability for what may be regarded as a small Force in Dunedin and suburbs. The chief disability has been influenzal bronchitis due to the men being exposed at all hours to varying degrees of temperature. I have had a small number of cases due to violence when arresting prisoners, and one constable had to retire owing to head injuries received from a violent prisoner. Police-work is always a source of danger, owing to the members being exposed to infection in handling dead bodies. I have recently had a constable rendered unfit for duty, owing to septic mischief starting in abrasions of face and arms received while searching in the bush on the mountains for a missing man. Exposure to all sorts of weather over a long period of service undoubtedly has a deleterious action on a man's physique, and renders him less efficient for service than men of similar age in more sheltered occupations. In the case of ordinary police duty that is expected of constables and sergeants I am of opinion that 60 years of age may be considered as a period of real efficiency, but officers in administrative positions should be able to remain in the service till they are sixty-five years of age. Mr. Dickie.] Are you of opinion that it was not in the interests of the Police Force that they were taken under the Public Service Superannuation Fund and their own fund abolished ? —I am, in many respects. You think they would have been better under their own scheme ? —We would prefer it, provided that we were placed in the same position as the Public Service Fund in regard to Government assistance. You state that you are not in favour of the increased age. Is it not a fact that in certain circumstances you prefer older men to deal with, say, mob violence, riots, and things of that kind— that the older men are of more use than the younger men ?—No. When it comes to physical force the young man is the best. As far as handling a difficult problem, precipitating trouble in regard to riots and so on, do you mean to say that a man over 60 would be of no use in a situation like that ? —His advice and direction as an officer would be very valuable. Ido not say that all members of the Force should be retired under 60, but those who have to perform active street duty should be allowed to retire at 60 years of age. Mr. Savage.] I wonder whether any investigation has been made on behalf of the Police Force as to what their position would be if they had paid the same amount of money into a private insurance company ?—We have not gone into that. We do not know.

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Mr. Hargest.] On page lof your statement you say that in 1910 the Police Provident Fund had a reserve of £32,786. What was the strength of the Police Force at that time ? How many men were subscribing ? —773 contributors. Sir Apirana Ngata.] How many now ?—1,142 on 31st March last. Mr. Hargest.'] If the fund had been left in your hands and the contributors paid their contributions into it, would that fund of £32,000 be in a sound position to-day ?—I could not say that it would without Government support. I mean with Government support ? —lf that had been done I think it would have been in a sound position to-day. Mr. Dickie.] That is with a pound-for-pound subsidy ? —Yes. Mr. Hargest.] The point I wished to make was : With the reserve that you had, £32,000, and the 773 subscribers, and their proportion of the subsidy, do you think that would have kept your fund sound ? —I think so. On page 4 you refer to the extension of the period from three to ten years on the average salary, and say that would fall very hard on the Police Force. Do your men get promotion comparatively late in life ? —They do. Mr. Veitch.] The essence of your statement is to the effect that all members of your Force retire earlier than men in other branches of the Public Service. In face of that statement, how do you reason it out that if your Fund had stood by itself it would now be in a healthier condition than that of the othdr Departments ? —The Police Pension Fund was guaranteed by the State and there was provision made for a report by the Actuary or from the Police Provident Fund Board, to the Government, and the Government, if satisfied that it was necessary, would then make up any deficiency. It is quite true that at the time our funds were merged in the Public Service Superannuation Fund our outgoings were overtaking our income from contributions, but we were not receiving any assistance from the State, and it was apparently not contemplated that our fund should be actuarially sound on the basis on which it was set up ; but it was contemplated and put into the statute that the Government would support the fund when it became necessary. One reason why our fund would be in a strong position is that our men are physically fit, and they have to pass a strict medical test as to good health before they become members of the Force, they are men of mature age, and they contribute on a fairly high salary from the start. Have any numbers of your men been prematurely retired in the interests of economy recently ? — No. That did not affect our Department. We may assume that would have left your fund somewhat sounder ?—Quite so. Mr. Ansell.] What was the basis of contribution to the Police Provident Fund ?—5 per cent, to 10 per cent. —5 per cent, for a contributor whose age was not more than 30 years ;6| per cent, from 30 to 40 years of age ; 8 per cent, from 40 to 50 years of age ; and 10 per cent, over 50 years of age. Mr. W. Nash.] In connection with the Police Provident Fund, is it correct to say that in 1910 the fund was showing a tendency to become insolvent ?—Yes, our expenditure was within £200 or £300 of our total contributions. It was bound to get worse as each year passed ?—Yes. You think it was not in your interests for the Police Provident Fund to be taken over by the Public Service Fund ?—lf the Police Provident Fund had been treated in the same way as the Public Service Fund, we were better as we were. You mean it was necessary in the Police Provident Fund for the Government to pay all the amounts for back service, and then the fund would have remained sound ?—lf we had received a contribution from the Government in proportion to the number of contributors, as was paid into the Public Service Fund, we would have been better off with our own Fund, because there were stricter conditions as to retirements. On page 2 you refer to the report of Lord Desborough's Commission, and state that a man must have a sound constitution, be fully developed physically, have general intelligence, memory, and powers of observation, have an unblemished character—all distinctly above the average. Is that any reason why he should have special treatment ? Is that not a blessing rather than a disadvantage ? —That statement is in relation, to some extent, to his pay. I quoted the whole of that portion of the report. It was put in to show that, although a man had special qualifications, he also had special disabilities due to his occupation, which affected his general efficiency at an earlier age than the average man. The case you are making for differentiation between the Police and other members of the Service is that they start very late in life —25 years of age—the peculiar and particular danger of your form of service, and it is not advisable to carry on after attaining 60 years of age, and that they should have the right to retire at 60 years of age ? —Yes. Sir Apirana Ngata.] The Force is not asking for a separate fund now, is it ? —We are not asking for it, but we would be pleased to have it, if thought advisable. The conditions in the Police Force are different to the rest of the community. It is a semi-military body almost, and special terms and conditions should be included in the superannuation scheme as were in the Police Provident Fund. There are no special provisions now ? —No. Under the Police Provident Fund if a man was punished that affected his pension. That regulation does not apply equally to the general Service, and we lost that hold over our men. They serve a comparatively short term, of service and retire at an earlier age. Are those conditions recognized in the superannuation benefits ?—-Yes, in the Police Provident Fund. I mean the combined fund now ? —No. At present a member may retire earlier with the consent of the Minister, but that has been made so much use of that it has affected the fund detrimentally. We are not asking for that. We think that is rather a disability, and places too great a load on the fund.

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The Chairman.] You refer to the age of retirement. Have you ascertained the age at which the police retire from the Force in other countries ?—ln England after thirty years' service. That is in England «—Yes. ~ c , Do you know anything of any other country «—ln Australia I thmk it is after thirty-five y ea r s service. In Victoria retirement is compulsory for senior constables and constables on attaining 55 years of age ; Superintendents, Inspectors, Sub-Inspectors, and other officers in different grades and sergeants on attaining 60 years of age ; and the Chief Commissioner on attaining 65 years of age. You refer to the arduous nature of the work of the constables. We have had the Prisons Board before us and the Mental Hospitals representatives. Would you say that would apply to those cases ag we n 2—Our men are more exposed to the weather ; they have to do their duty whatever the weather may be. They have to attend to wrecks and dead bodies ; _ they are subject to riots and all thosa kind of things. No doubt the prison warders and warders in the asylums have to meet danger m connection with their work, but they do not have to deal with armed criminals or drunken men. You think the case of the police is worthy of greater consideration « I think the police Have claims for such consideration. You. ask that the £300 be substituted by £600 «—Yes. .... What is the object of arriving at a figure in that way «—That the £600 pension is a fair pension. That means up to £600 «—Yes. It was a suggestion as to what would be a fair balance between what we considered was too small in the £300 and the very large pensions which have been paid out in some cases. Therefore you arrived at that figure, £600 «—Yes. On page 1 you refer to the Police Provident Fund, and say that it was taken over by the Public Service Fund without the consent of the contributors, is that so «— It is. They had no say in the matter ?—We had none. Provision was made m the Police 1 rovident Act for a poll and the papers were sent out, but the result was never made known, although the Force was well aware that a very considerable majority were opposed to the fund being taken over Opposition was met with in the House when it was proposed to merge the Police Provident Fund into the Public Service Fund and the matter was dropped for that session, and Ī understand that at the close of the succeeding session it was put through without our being aware of it, and our wishes were not made known. You had no opportunity of opposing it or anything else ?— JNo. _ On page 3 you say, I It is generally, and quite correctly, a condition of service that he may not be concerned, directly or indirectly, in any trade or business." Is that general m regard to the Police Force ? —That is so, and also applies to members' wives. . That is laid down emphatically «—lt is. Men have been punished and even dismissed from the Service because their wives have been engaged in some business. Mr. Nash.l That does not apply when they are out on superannuation E—JNo. The Chairman.] On the same page (3) in subclause 2 you refer to the number of deaths and those who retired. You say, " the average length of service of those who died being twenty-two years six and a half months." What would be the cause of death. Would it be through exposure or wounds or lust ordinary causes «—The combined deaths, natural and those due to the nature of their duties. You refer then, to those who retired, and say the average length of service was twenty-seven years eight and three-quarter months. That is an average struck over all those who retired «-Yes, over a period of four years. . Would they be about 24 or 25 when they started «—lhe average is 25. They would be about 52 when they retired then ?—Yes. _ . Would you say that those men were not in a fit state to continue or did they retire compulsori y. Did they retire on account of their health «—Most of them were medically unfit. You refer to Sunday service. What hours do the police work « Can you tell us how many days in the week «—They work seven days a week for about eight and a half hours duty each day. Seven days a week «—Yes. They get one Sunday off in four. Do they not get any time off during the week to bring them down to six days a week . JNo. They are liable to work seven days in the week, with one Sunday off in four . Yes. Mr W Nash 1 A sixty-hour week « — Yes. A constable parades fifteen minutes before the hour of going on duty, and is dismissed fifteen minutes after the hour when his duty terminates. He does eight hours beat duty, less half an hour for a meal. He is therefore actually on duty eight and a half hours less half an hour—a total of eight hours. He is granted twenty-four days annual leave and a maximum of one Sunday in every four off duty : total, thirteen Sundays, plus twenty-four days thirtySvfn days per annum off duty and 328 days per annum on duty. This includes day and night shifts. The Chairman.] He works 328 days in the year «—Yes. q or „ ipp Mr AnselU Of eight hours «—Yes. I have taken out a comparative table with the Civil Service clerk He commences duty at 8.30 a.m. and finishes at 4.30 p.m., with one hour off for lunch This equals seven hours per day for five days per week and three hours on Saturday, a total of thirty-eight hours per week. He is allowed a minimum of fourteen days annual leave (disregarding bank and other public holidays). His annual maximum service therefore is fifty weeks, of thirty-eight hours, or 1, hours, so that a constable in thirty-five years performs 91,840 hours work, and the Civil servant m forty years, 76,000, a difference of 15,840 hours. Mr Gostelow.] On page 1 you refer to the merging of the Police Provident Fund with the Public Service Fund, without the consent of the contributors and m conflict with their wishes Was it not true that they got better benefits from the Public Service Superannuation Fund «—They got some fl d v?i,nt/rj, oi 'es and. lost some cidv&irtcisjes. . They got better benefits, especially as regards widows and children «—They got larger pensions . that is quite correct.

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And better allowances for widows and children ?—Yes. You mention that the Police Provident Fund had a reserve of £32,000 which they handed over, but, on the other hand, they handed over liabilities. At 31st March, 1909, there were seventy-nine pensioners with pensions amounting to £7,530 a year, with a capital value of £68,150, so that although they handed over £32,000 that was only 10s. in the pound for existing pensioners alone. The last valuation made of the Police Provident Fund shows a deficiency of £250,000, so that in being taken over they did not really give £32,000 to the fund. What actually happened was that the Public Service Fund took over a deficiency of £250,000. Mr. Veitch : Is that an actuarial deficiency ? Mr. Gostelow: It is a deficiency. Mr. Veitch : It is an actuarial one though ? Mr. Gostelow : Yes. Mr. Wohlmann : The other public servants are not in the same position as the police. They had been contributing for a year when we were taken in and there were liabilities in their case. We had no " back service," and we started off scratch without donations from the Government, and if we had received corresponding support from the Government our fund would have been in a much better position. Mr. Gostelow : I wanted to make the point that the Public Service Fund took over more liabilities than assets. Mr. Ansell: Had the Government paid anything towards the Police Fund up to the time when it was handed over ? Mr. Gostelow : I do not think so. Mr. Wohlmann : All that was paid in was ail amount of £200 or £300 from the Police Reward Fund. Mr. Gostelow : I do not think there were any Government contributions to that fund. Mr. Ansell: The point lam getting at is that you are speaking about the liabilities which the Public Service Fund took over, but the Government already had a liability in that connection which it was not standing up to. The Chairman: You mean by way of subsidy ? Mr. Ansell: Yes. Mr. Gostelow : As far as I know, the Government's intention was something like its attitude to the Railways Fund: to guarantee the fund, and wait until the funds were exhausted before they gave any support. Mr. Dickie: But for eleven years they had not paid in anything ? Mr. Gostelow : That is correct. Mr. W. Nash : Prior to that there was a limit of about £200 for constables. They got a pension running from £100 to £200 per annum. They got a maximum of twelve months' salary by way of a compassionate allowance and that was changed for the Police Provident Fund ? Mr. Gostelow: Yes. Mr. W. Nash : They had an infinitely better proposition, but they had to contribute from 5 per cent, to 10 per cent, for the extra benefits ? Mr. Gostelow: Yes. Mr. W. Nash.] In regard to the question of special retirements. Would your organization be satisfied if a special fund were started for special retirements, and leave the Superannuation Fund and its moneys exclusively for those that have paid into the fund for the full benefits they are getting ?— Do you mean special retirements due to reductions in staff ? From any cause whatever. It is the special retirements that have apparently put the load on the fund ? —Yes. That load does not belong to the fund, and it should not be carried by the contributors. Would you be in favour of a special fund into which all moneys relative to special retirements should be paid, and from which all special retirement pensions should be paid ?—That is a matter that requires consideration. The Chairman: But the police are not on " all fours " with the other Departments in that respect. Mr. W. Nash : I am trying to get Mr. Wohlmann's opinion in regard to a special fund being set up for special retirements. It might apply to some of the Police Officers and would cover early retirements, medically unfit retirements, and special retirements. I am not suggesting in any wav that there should be any reduction in their payments. lam asking whether Mr. Wohlmann would be in favour of a special fund to which all contributors who have not paid the full amount for their benefits could be transferred. That would leave the Superannuation Fund on its own feet to meet its own liabilities and own commitments. Mr. Hargest: What would you do with their contributions ? Mr. W. Nash : Transfer them to the Special Retirement Fund. Mr. Hargest: And the subsidy ? Mr. W. Nash: At that point the Government should meet its liabilities for its own decisions. The Chairman : In the other Departments we have had so many compulsory retirements, but that does not apply to the Police. Mr. W. Nash.] Suppose some of the members of the Police Force have to be retired medically unfit or are retired with the permission of the Minister—justifiably retired ; if their contributions and the value of their contributions were transferred to a special fund the Government would then be responsible for its own decision with regard to medical unfitness and special retirements, and in the ultimate it would mean that the Government would be paying out a special charge for special retirements and the ordinary contributors' money would be conserved for their benefit entirely ?—lf it does not prejudicially affect the medically unfit retirements, I think it is a good idea.

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Ido not think it will prejudice them in any way. lam suggesting that at that point we would know where we were with regard to the special retirements and their cost and the existing contributors would be freed from a load that they should not carry. Mr. Verschaffelt: You would not suggest that the hours you quoted for the Public Service applied to the whole of the Public Service—for instance, the Mental Hospitals staff work an average of fifty-one to fifty-two hours a week every week of the year, even allowing for holidays. The Prisons staff work much longer hours than those you quoted for the Public Service, though not quite so long as the hours worked by the Mental Hospitals staff.

Rupekt Samuel Wogan, Acting-Secretary, Public Service Superannuation Board, recalled. (No. 32.) Amended Table showing the Amount of Interest on Investments actually collected, less the Expenses of Collection ; the Total Amount invested (the Mean for each year) ; and the Rate per Cent. Interest bears to the Investments. Public Service Superannuation Fund. 1. A statement submitted to the Select Committee, Government Superannuation Funds Bill, 1932, by the Acting-Secretary to the Public Service Superannuation Board contains on page 7 a table, " Interest earned on Mean Funds.". Mr. Wilkinson, a member of the Select Committee, asked, " Would it not be possible to get an amended table showing the actual net returns, not gross returns for that period (see statement, page 7), 1921-1932." 2. The following table is submitted containing the desired information : —

Mr. W. Nash: Could we get the half-year figure, from 31st March to 30th September 1 Mr. Wogan: Yes. Police Provident Fund. 1. This fund was merged in the Public Service Superannuation Fund on the Ist April, 1910, by the Public Service Classification and Superannuation Amendment Act, 1909, which provided that the contributors to the Police Provident Fund should become contributors to the Public Service Superannuation Fund, and that the money belonging to the first-mentioned fund should be transferred to, and that the pensions should be payable by, the latter fund. Under this arrangement 773 members of the Police Force, contributing £7,828 19s. per annum, were taken over, also eighty-five ex-inembers drawing an aggregate annual allowance of £8,231 Bs. 3d., while the funds transferred amounted to £32,785 15s. 4d. —viz., £32,204- 7s. Id., the balance shown in the final report of the Board of Administration of that fund for the year ending -31st March, 1910, plus contributions due for the month of March. The Government subsidy to the Public Service Superannuation Fund of £20,000 per annum was increased by £3,000 per annum, owing to the inclusion of the Police Provident Fund, as provided by section 30 of the Public Service Classification and Superannuation Amendment Act, 1909. 2. On investigating the accounts of the Police Provident Fund it will be noticed that during the five years prior to the merging of this fund in the Public Service Superannuation Fund the accretions to the Police Provident Fund were less and less each year. Year. Amount of Increase. Year. Amount of Increase. £ s. d. £ s. d. 31st March, 1906 .. 2,245 11 4 31st March, 1909 .. 1,276 2 3 31st March, 1907 .. 2,004 18 9 31st March, 1910 .. 390 19 3 31st March, 1908 .. 1,411 4 4 At the date the fund was merged the pension liability was £8,231 Bs. 3d. per annum. The total income for the year ending 31st March, 1910, from all sources, amounted to £9,447 Bs. Id. It will thus be noticed that in order to pay current allowances from the Police Provident Fund, 87-13 per cent, of the year's income was absorbed, and, as a result, an adequate fund could not be built up to provide for future pensions. 3. The following particulars are taken from the accounts and statistical records as at the 31st March, for the years indicated : — 1910. 1929. 1932. Contributors .. .. . ■ • • • • 1 > 146 1,134 Annual contribution .. .. •• •• £7,828 £18,943 £18,286 Pensioners (*including widows and children) .. 85 240* 247* Annual pension liability .. .. •• £8,231 £29,706 £30,997 4. A contrast of contribution rates, benefits, &c., of the Police Provident Fund and the Public Service Superannuation Fund is attached hereto.

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Total Amount Interest collected. Year. invested. Mean for less Expenses of Rate per Cent, the Year. Collection. £ £ £ s. d. 1921 .. .. 1,519,217 75,580 4 19 6 1926 .. .. 2,262,703 129,532 5 14 6 1930 .. .. 2,728,421 152,680 5 11 11 1931 .. .. ■ 2,879,940 151,124 5 5 0 1932 .. .. 2,930,120 143,533 4 18 0

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Police Provident. Fund and Public Service Superannuation Fund. —Contrast of Contributions, Benefits, &c. Contributions. Police Pbovident Fund. Public Service Superannuation Fund. Section 30, Police Force Act, 1908. Section 19, Public Service Superannuation Act, 1927. 1. 5 per cent if his age not more than 30 years at the 1. 5 per cent, if his age does not exceed 30 years at the time when first contribution payable. time when the first contribution becomes payable. 2. 6 per cent, if his age then exceeds 30 years but does Member joining before Ist January, 1908. not exceed 33 years. ~ „ n t, , 3. 7 per cent, if liis age then exceeds 35 years but does 2; 64 per cent, if his age is then more than 30 but not UQt exc^d 4Q yearg> * m T 0 an y ear jf', . . ~ .Ai, , 4. 8 per cent, if his age then exceeds 40 years but does l P6r na 11 not ex °eed 45 years. inore iaii o years. g g cent, if his age then exceeds 45 years but does 4. 10 per cent, if his age is then more than 50 years. Qot exc £ ed 5Q yeaßj _ « * Member joining on and after Ist January, 1908. 6 " 10 P or cent " if his a S e tllen exoeeds 50 y ears " 1. 5 per cent, if his age not more than 30 years at the time when first contribution payable. 2. 6 per cent, if his age is then more than 30 but not more than 35 years. 3. 7 per cent, if his age is then more than 35 but not more than 40 years. 4. 8 per cent if his age is then more than 40 but not more than 45 years. 5. 9 per cent, if his age is then more than 45 but not more than 50 years. 6. 10 per cent, if his age is then more than 50 years. Benefits to Members unfit for Duty, on Jietirement. Section 26. Section 32. (a) If his length of service is less than five years a Certificate of two medical practitioners approved by. refund of his contributions to the fund. Board that contributor by reason of mental or bodily (b) If his length of service is less than fifteen years but infirmity not caused by irregular or intemperate habits not less than five years, a sum computed at the rate of has become permanently unable to perform his duties, one month's pay for each full year provided that the Retiring-allowance : For every year of service onetotal sum shall not exceed twelve months' pay. sixtieth part of his annual salary and for every fraction (c) If his length of service is not less than fifteen years, of a year of service a proportionate part of one-sixtieth an allowance for the rest of his life at the yearly rate of of his annual salary, not to exceed two-thirds of such salary, one-sixtieth of a year's pay for each year's service, Annual salary average of the three years next preceding provided that the total yearly allowance shall not exceed retirement. thirty-six sixtieths of a year's pay. Section 61. Medically unfit for further duty owing to injuries Board inorease retiri allowance ble to received in the execution of his duties and by reason member of Polioe Porce injured Execution of liis duties to thereof retires with the consent or by the direction of the BUoh an almual aln(mnt as in tho ial oiroumstano6s Minister, the Board if of the opinion that the benefit Board thinkg . nQt exceedin | three-fifths of his above is not sufficient, may m lieu thereof grant out of the amMal gaJ ag d un(Jer f^fon fund an allowance for the rest ot his hie at such yearly 17 r rate as in the special circumstances of the case the Board Section 62 thinks just, not exceeding three-fifths of a year's pay. Pensions in respect of death or disablement of officers of police may be paid on scale prescribed with respect to war pensions. Retiring-allowances (Age or Length of Service). Section 27. Section 26, Public Service Superannuation Act, 1927. Length of service not less than twenty-five years and Forty years' service. 65 years of age. whose age is not less than sixty years may at any time Minister's consent required :60 years of age. Thirty thereafter retire from the Police Force at the expiration years' service and age not less than 55. Thirty-five years' of three months' notice of intention so to do, and receive service. from the Fund for the rest of his life a retiring-allowance Retiring-allowance for the rest of his life computed as at the yearly rate of one-sixtieth of a year's pay for each follows : For every year of service such contributor shall year's service, provided that the total yearly "allowance receive one-sixtieth part of his annual salary and for shall not exceed thirty-six sixtieths of a year's pay. every fraction of a year's service such contributor shall receive a proportionate part of one-sixtieth of his annual Section 34. salary, but in no case shall the retiring-allowance exceed ttti it n ,| _ iii two-thirds of such salary. Annual salary deemed to be Where any lite allowance or other money granted to a ~ , £ i • ii, i • i • +1, , . .. , . , , /u u • fi • the average rate ol salary received by him during the member on his retirement is computed on the basis oi his ~ ° , a- \ ■ +• + >m. ■ , i 11 i i i - f 4-i 4 f i three years next preceding his retirement or n his service pav, such pay shall be deemed to be the rate ot pay he was , J , , • j £ ~ & , t ■, . ~ • , i JL . J ~ -, . , -i -ix.- . 4.u has not continued for three years then during the period receiving at the time ot his retirement, unless within the g rv j oe or previous five years he has served in any rank beneath e ' Section 34 that held by him at the time of his retirement, in which case such pay shall be deemed to be the average rate of A contributor may on his retirement, or at any time pay received by him during the seven years next preceding before accepting the first instalment of his retiringhis retirement. allowance, elect to accept a sum equal to the total amount Section 32 (6). of his contributions to the fund in lieu of his retiringm, , t , , ~ allowance, in which case he shall be entitled to receive The grantee may on his retirement or at any time guch gum ' jnteregt nQ further before receiving his first instalment elect to accept m payable out of the Fund in the event of his lieu of his nte allowance a sum equal to the total amount d r•" of his contributions to the fund; and in such case he ' n ,• shall be entitled to receive that sum in lieu of the life ' e allowance. For the purpose of computing the retiring-allowance to be granted to a contributor his salary shall be deemed to be the average rate of salary received by him during the three years next preceding his retirement, or if his service has not continued for three years, then during the period of his service : Provided that where by reason of the age or infirmity of a contributor his salary has been reduced, or he has been transferred to a position inferior to that which he previously occupied, his retiring-allowance shall be computed on the average rate of salary received by him during the three years next preceding such reduction or transfer.

186

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Resignation of Contributor before becoming entitled to a Retiring-allowance. Section 30. Section 37. If a member is dismissed from the Police Force or ins If before a contributor becomes entitled to a retiringservices are otherwise dispensed with for misconduct the allowance he retires from the. P bhc> So vice whether Board mav, out of the fund, grant him such sum as it voluntarily or otherwise, lie shall be entitled to a refund thinks fit, not exceeding one-half the total amount of his of the whole amount contributed by him to the fund, contributions to the fund. 1*» any sums already received by him from the fund, but without interest. Section 31. .. .. __ , , ~ Section ōō. If a member whose length of service is not less than , ten years nor more than twenty-five years voluntarily If after his length of service exceeds years,, e resigns from the Police Force and his resignation is accepted compulsory retires from the Public' Service tei%ny by the Minister, he shall on his resignation be entitled to reason other than misconduct, he shall be entitled, m receive from the fund a sum equal to three-fourths of the addition to the amount due under section 37, to a fuither total amount of his contributions to the fund. sum by way of interest. aon+ i nTl \ (For details, see the section). Death of Contributor. Section 29. I Section 42. (1) If a member dies while in the Police Force from | If any male contributor dies, whether before or after injuries received in the execution of his duty, the Board ; becoming entitled to a retirmg-allowance, the following may out of the fund grant to or for the benefit of his widow j provisions shall, subject to the provisions of section one (if any) or allowance at the rate of not more than eighteen | hundred and fourteen hereof, apply : pounds per year so long as she remains his widow, and to ; (a) If he leaves a wife surviving him, there s a e or for the benefit of his children (if any) a further allow- paid out of the fund to the widow, at her election, anoe of not more than five shillings per week in the case either of each child until the child attains the age of fourteen (i) An annuity of eighteen pounds dunn B her widowhood; or y6 (2) If a member while in the Police Force dies from any (ii) The amount of the deceased contributor's cause other than injuries received in the execution of his contributions to the fund, less any sums received duty the Board may out of the fund grant for the benefit by him from the fund during his, lifetime. of his widow and infant children (if any) such sum as it (b) Any such election by the widow shall be final, and thinks fit not exceeding the total amount of his con- shall be deemed to be made when the first paytributions to the fund. § f ent from the fund is received' and accepted by If the grantee of a life allowance dies before the total her. ~1,1 1 -ia ™ amount paid to him in respect of life allowance is equal (c) If the said contributor leaves a child or children to the total amount of his contributions to the fund, the j under the age of fourteen years, there shall be Board may out of the fund apply for the benefit of his ; paid out of the fund to or on behalf of each such widow and infant children (if any) such sum as it thinks | child the sum of five shillings^a^week. untal such fit not exceeding the difference between the aforesaid child attains the age of fourteen years. - , , , (d) If the said contributor leaves no widow, the amount amounts. j oontr ji, u ti o ns to the fund, less any sums which he has received out of the fund in his lifetime, and less any sums which have been paid or may become payable in the future to or on behalf of any child or children under the age of fourteen years under the foregoing provisions, shall be paid to the personal representatives of the deceased contributor in trust for the persons entitled thereto under his will, or, in the case of his intestacy, for the next-of-kin or other persons entitled to his estate under the Statutes of Distribution.

Mr Dickie.] The Police Force say they could have run their fund by itself, and had better benefits than under the Public Service Superannuation Fund. Is there any reason why they should not have done so—a small body like the Police Force ? The Wellington Harbour Board only pay about 67 per cent., and their fund, I understand, is actuarially sound. The Police Force do not have the number of early retirements that the rest of the Public Service have. Is there any reason why the Police Force should not have been able to run the fund, with 67 per cent, from the Government Not if dealt with in the same way as the Wellington Harbour Board. The Wellington Harbour Board provides a pension for service prior to the inauguration of their fund. Is there any reason under the circumstances why they should not have been successful, like the Wellington Harbour Board ?—Not if placed on the same footing ; the Wellington Harbour Board scheme is limited to the £300 maximum. . I am thinking of the personnel of the Force ; they are a very strong body of men physically ; and they have not any early retirements to embarrass the fund. Do you think there is any reason why they should not have been able to run their fund, on a 67-per-cent. contribution by the State . It is quite possible they could have done it. , . . , ~ i jMr. Savaqe.] It appears to me the police are at a disadvantage on this point; under the heading, " Resignation of contributor," under the Police Provident Fund "if a member is dismissed :rom ie Police Force or his services are otherwise dispensed with for misconduct, the Board may, out oi the fund grant him such sum as it thinks fit, not exceeding one-half of the total amount of his contributions to the fund " ; whereas under the Public Service Superannuation Fund, "If before a contributor becomes entitled to a retiring-allowance he retires from the Public Service, whether voluntarily or otherwise, he shall be entitled to a refund of the whole amount contributed by him to the fund, less any sums already received by him from the fund, but without interest " ?—That is so. * Mr. W. Nash.] The Police Fund is not operative now—it has been abolished, and a new system substituted ?—That is what it was.. The Chairman (to Mr. Savage): You are endeavouring to show that the conditions now are better than what they were before ? Mr. Savage: That was the question put to me at the last meeting.

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Mr. Hargest.] On the first page you give a table showing the number of contributors, the annual contributions, the number of pensioners, and the pension liability. You have at the present time 247 police pensioners, accounting for approximately £31,000. That works out at £121 per year. That is much lower, I take it, than the average of the Public Service, for men who have all matured, with a fair period of service ?—I have not got the figures here to give you that. Is that a lower average than the average for the Public Service ? —I could not say off-hand. Mr. W. Nash.] On the first page you mention the fact that the allowances to retired members cost £8,231 per annum. That the balance of the fund was £32,786, and that the retired men were not paying anything in to the fund ?—-No. Were it not for the contributions that were being paid in by the existing members of the Force, the fund as a fund would have disappeared in six years and would not then be worth anything ? That is so. Mr. Dickie asked a question with regard to the Harbour Board. If the Public Service Fund were organized on the same basis as the Harbour Board Fund, under normal circumstances it would meet all the liabilities, assuming that the Government, as the Harbour Board has done, took all the liability for back service ? —That might be subject to qualification, because, if I remember rightly, the Government Actuary, in his last report for 1930, recommended a pound-for-pound subsidy. That was only to cover the existing state of the fund. The Harbour Board's servants would not be any more subject to early death, or anything like that, than the average members of the Public Service, and the Actuary has affirmed that the Harbour Board Fund is on a sound basis. If, then, the Harbour Board, having taken the liability for all back service, finds that a contribution of 65 per cent, is sufficient to ensure the full pension, would it not be right to assume that a like contribution, with a like payment for back service, would be sufficient to ensure full payment for the Public Service ?— Quite so. The only reason the Teachers' Fund, the Public Service Fund, and the Railways Fund are not sound is because of the fact that the back service has been a charge on the funds ? —Yes. Mr. Dickie.] And early retirement ?— — Mr. W. Nash.] And special retirements. Your experience of these funds is probably greater than that of mast people—what do you think of a scheme for the establishment of a special fund, to which those that are specially retired should transfer ; the fund to consist of the contributions of those who are specially retired plus the interest on their contributions and the subsidy paid by the Government ; and that fund to be responsible for the payment of the pension of those specially retired ?—To be supplemented by special provision from the Department or from the Government ? Yes ?—Yes, if it were possible to do that. If that were done, do you not think it would put the Public Service Superannuation Fund, the Teachers' Fund, and the Railways Fund in a position that they could meet their liabilities ? lam not suggesting all the liabilities, but meet the liabilities on the basis of their contributions—that is, you would have two funds. Assume that the existing funds were merged, and that a special fund was set up, " The Special Retirements Superannaution Fund," as well as the ordinary Superannuation Fund. The ordinary Superannuation Fund would be the fund to which all the contributors who had kept all the rules of payment for the number of years on the usual percentage basis would contribute. The Special Retirements Fund would be the fund into which those that had specially retired would have their contributions transferred, plus the interest on their contributions. Do you think that would tend to something like order, and a solution of some of the problems that they are facing now in connection with superannuation ? —lt would certainly assist. You would be in favour of a scheme like that if it were properly worked out ? —lf it were properly worked out. Mr. Dickie : Referring to Mr. Nash's idea, it simply means that it would put a further weight on the State ; it means that the State would simply have to push more into Mr. Nash's special fund than into the other fund. Mr. W. Nash : Oh, no. If the scheme I suggest were carried out, it would mean that the ordinary contributors to the fund would get the benefits they paid for, nothing more and nothing less, plus the Government subsidy. The contributors to the Special Retirements Fund would get the benefit of their contributions plus what the Government would put in. They could retire them early. Mr. Dickie : You mean, for retrenchment ? Mr. W. Nash: For special retirements that are made outside the Act, or by permission of the Minister, or anything like that. lam just trying to find how we can conserve to the contributors what they have paid for; and what can be done by having a Special Retirements Fund, and leaving the other. The Chairman: Mr. Millar (Public Service Association) and Mr. Stanley (Railway Officers' Institute) are here. Is there any one present from the Teachers ? The Committee have decided this morning to give one of you gentlemen an opportunity of being present if there is any question that you would like to put to a witness. You can settle it between yourselves who it is to be. The Committee have no wishes in the matter —they leave it entirely to you. Mr. Millar (Public Service Association) : Thank you very much ; that will help.

James McDebmott, Senior Vice-President, Post and Telegraph Officers' Guild. (No. 33.) 1. Tlie views expressed in this statement are those of the Post and Telegraph Officers' Guild (Inc.), an organization comprised wholly of Controlling Officers employed in the Post and Telegraph Department. 2. The Guild desires to congratulate the National Expenditure Commission on the masterly manner in which it has dealt with the superannuation question. The Guild accepts the facts set out by the

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Commission in regard to the history of the funds, but does not agree that it is necessary to go to the extreme length recommended by the Commission in order to rehabilitate the existing scheme. The Guild considers that if steps were taken to make the present scheme watertight by stopping the leaks started by the Government, there would be no necessity for some of the proposals contained in the new Bill; further, there would be no need to lay the Government open to the charge so freely made to-day of a gross breach of faith and of contract. 3. The position described in paragraph 1404 of the National Expenditure Commission's report illustrates one point at which the present liability on the funds could have been very greatly reduced. The Minister already has power to impose conditions upon retiring contributors who have not completed forty years' service, but he has rarely, if ever, done this. In view of the repeated warnings given by the successive Government Actuaries who have reported upon the various funds, it is astounding to find that the Government, as represented by its Ministers, has taken no steps whatever to protect the funds in respect to this particular aspect. This point is mentioned to show that the Commission might first have attempted to safeguard the existing rights of contributors without the necessity for alterations to the original Acts before it suggested conditions which demand the passing of a new Act. 4. There is very little, if anything, in the Commission's report, pointing out the depleted conditions of the funds, and describing the unsatisfactory methods of administration, that has not already been stated in the several Actuaries' reports furnished since 1908. The Actuaries, however, being Government servants, have been handicapped as compared with the Commission, in their use of language sufficiently forceful to suit the occasion. 5. It has therefore to be emphasized that the Government has always been aware of the position of the various funds and also of the condition into which they were being allowed to drift. The various Government Actuaries have on many occasions made the position clear. With the knowledge that the Government was quite aware of the position, contributors have been lulled into a sense of security by thoughts similar to those expressed by Sir Francis Bell in the Legislative Council on 11th September, 1930 (see Hansard, pages 823-827) when he stated, " There is the contract of the country with each of these men that in consideration of the contributions that he has paid he shall receive a pension calculated by a certain method. And who doubts that the pension will be paid ? Or who supposes that the actuarial insufficiency of these funds is going to affect the opportunity of the pensioners to receive their full pensions ? . . . Ido not believe that any Civil servant has the least anxiety on the subject of his pension." On the same occasion Sir William Hall-Jones stated, " I consider that the payment is a debt of honour, and I have not the slightest doubt that it will be paid . , . While we have the Consolidated Fund behind these Superannuation Funds, however, there is not the slightest fear of any one who is a member not receiving the pension he is entitled to when he reaches an age entitling him to retire." 6. In view of the position stated above and for the reasons mentioned below, the Guild definitely and emphatically protests against the breach of contract involved in the proposed Government Superannuation Funds Act, 1932. The Guild can find no just reason why public servants should be called upon at this stage to shoulder a liability which is entirely the Government's and which is not in any respect the contributors' or the annuitants'. 7. We desire to point out that the Government's contribution towards the pensions and benefits of those officers who will contribute to the funds over the full period of forty years is extremely small, and does not even amount to the 25 per cent, subsidy paid by the Government to privately managed Superannuation Funds through the National Provident Fund. In most of the private superannuation schemes in the Dominion the employer subsidizes his employees' contributions to the extent of £1 for £1, and this would appear to be the least that State servants should expect from their own employer. Several of the privately managed Superannuation Funds in this Dominion are perfectly sound, although the conditions governing contributions and annuities are almost identical with those obtaining in the State Superannuation Funds. The reason for this is that in the case of the private schemes the employer has honoured his obligations to the fund, while in the case of the State Superannuation Funds the Government has defaulted in its obligations, and in addition has used the funds for purposes foreign to any sound pension scheme. 8. At the inception of the funds the Government induced the officers who were then in the Service to join the superannuation scheme on the condition that all back service would be included for pension purposes. The contributions fixed for officers joining the fund were estimated to be sufficient to provide the pensions due for all future service, and the Government undertook to pay by way of subsidy for widows' and children's benefits as well as for the pensions due to the contributors for back service. It was in respect to the last-mentioned benefits that the Government undertook to pay an annual subsidy to the funds. 9. While at the inception of the funds the Government professed to act generously by offering to provide subsidies sufficient to pay pensions for back service, we now find that the pensions for back service are being paid for largely out of the contributions of those officers who joined the service after the inception of the funds, and who therefore are not interested in back service beyond realizing that their money is being used to pay those pensions. In addition, portions of the contributions have been used to pay for compensation rights enjoyed by those officers who joined the Service under the Act of 1871 although such compensation rights are really a liability of the Consolidated Fund and are in no way the concern of the present contributors. This position has been brought about by the failure of the Government to pay the statutory subsidy, combined with its use of the fund for retrenchment purposes. The contributors have not at any stage been in a position to prevent this misuse of the contributor's contributions,

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10. It seems reasonable to suggest that the Government deliberately planned to create a large and increasing future liability when it passed sections 49 (2) and 50 of the principal Act. These sections do not require that the Government's actual liability in the way of subsidy be correctly calculated, but they do provide in effect that liquidation of the Government's liability be deferred until the latest possible date. Now that the unpaid subsidy has grown to the large dimensions originally legislated for, the Government proposes that contributors be required to pay half of the Government's debt to the funds. 11. In connection with this matter, Mr. Percy Muter, Government Actuary, said in 1922, " It is a system of deferring the Government's payments till the last possible moment consistent with good faith to the bulk of the contributors " ; and Mr. Traversi, Government Actuary, said in 1927, " The Act appears to lay down a certain method of arriving at the State's subsidy, the principle being that while members contribute upon the basis of paying their share of the liabilities as they are incurred, the State pays only as they mature —that is to say, the State subsidy is based on the principle of deferring payment to the last possible moment, and in the past the State has even lagged behind this low standard." (See parliamentary papers, H.-26a, 1922 and 1927.) 12. In parliamentary paper H. - 26a, 1912, page 4, Mr. Morris Fox, Government Actuary, state that the expression " the actuarial reserve appertaining to the contributors' contributions " referred to in the original Act means " That part of the contributions intended to meet a portion of the future liability should be accumulated at interest, and not used for any other purpose." Mr. Fox adds, "I am confident that to do otherwise would be to bank up trouble for the future." 13. Successive Government Actuaries have repeatedly stated in their reports that Mr. Fox's early warning in regard to the future had unfortunately, through non-payment of the Government subsidy, become an actual fact, but in spite of these warnings the Government has allowed the fund to drift into its present position. 14. These clear, definite, and repeated warnings are contained in parliamentary papers EL-26a for the years 1912, 1915, 1918, 1922, 1927, 1928, and 1932. 15. The Guild whole-heartedly agrees that section 50 of the principal Act should be repealed, and that section 14 of the new Bill should be substituted therefor. We contend that this provision should have been included in the original Act. If it had been and the subsidy called for had been regularly paid by the Government, there would now be no question as the solvency of the funds. Adherence to the policy of reasonable and regular monthly payments by the employer and the absence of abuse of the funds for retrenchment purposes, are the two main reasons for the soundness of the several privately managed funds in the Dominion. 16. On the basis of justice the Guild is compelled to protest in the most definite terms against being called upon to share with the Government on a fifty-fifty basis the liability now existing in connection with the funds. The Government now proposes that its half-share of the liability be liquidated over a period of approximately fifty years in the future, but the present contributors and annuitants are being asked to immediately commence the liquidation of their half-share by sacrificing their rights and benefits. As it is the almost general practice of employers throughout the world to subsidize superannuation schemes £1 for £1, it seems most unfair that present-day contributors and annuitants should be penalized in order that the Government of this country fifty years hence should be freed from the responsibility of contributing to the State Superannuation Funds of that period. The Government should in fairness assume that the pound-for-pound subsidy will be payable in perpetuity, and that the State's liability in respect to the funds is not to cease at the end of the fifty-year period mentioned. If this assumption is accepted, there is no need to penalize the present contributors and annuitants in order to provide increased benefits for contributors fifty years hence. 17. We suggest that if the " leaks " in the present superannuation scheme were absolutely stopped and the Government pays a pound-for-pound subsidy by regular monthly instalments, the Government's liability could at least be held at its present figure and probably could be considerably reduced over the aforesaid fifty-year period. If the provisions of the new Bill were now made to apply to all future entrants to the Public Service, a time would be reached in the not distant future when all contributors would be paying in full for their pensions and benefits and a continuance of the Government's pound-for-pound subsidy would then wipe out the Government's present (but deferred) liability without in any way penalizing either the present contributors or posterity. We include posterity, because, as is mentioned elsewhere, surpluses which should have been paid by way of subsidy to Superannuation Funds were transferred instead to the Public Works Fund, and posterity will receive the benefit of this expenditure. 18. Paragraph 1448 of the National Expenditure Commission's report, in which it is suggested that the Actuary be authorized to value the funds on a 5-per-cent. basis, shows how by almost " a stroke of the pen" the Government liability of £23,000,000 can be reduced to approximately £18,000,000. As the funds have for some years been earning more than 5 per cent., contributors are surely entitled to the benefit of this paper transaction, when the extent of the Government's liability is being quoted to their disadvantage. 19. Since the inception of the Public Service Superannuation Fund in 1908 the budgetary surpluses in the Consolidated Fund have totalled £33,961,289, while the shortage in subsidies paid to the three Superannuation Funds over the same period totals approximately £3,250,000. In 1920-2], when the Budget showed a surplus of over £6,000,000, only £64,000 out of the £376,000 owing by the Government to the Public Service and Teachers' Funds at that date was paid into these two funds by the Government of the day. A table showing the shortage of subsidies to the funds as compared with the Budget surpluses is attached. 20. Table No. 11, published with the Budget for 1932, shows how the surpluses have been applied since 1920, and shows that the exact amount of £3,250,000 due to the Superannuation Funds was

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transferred to the Public Works Fund. Surely the public servants have the right to claim that they should not be called upon to finance the Public Works of the Dominion—which in effect is what the proposed Bills calls upon them to do. 21. Even if the Government is determined, as would appear from the new Bill, to force contributors to pay a portion of the Government's debt, there can be no justification for including that portion of the debt which has already been incurred during the period when the Government accumulated over £33,000,000 in Budget surpluses. We consider that the Government should pay its past debt to the funds by handing over inscribed stock to the value of the unpaid subsidies plus compound interest to date. If this is done and authority is given to the Government Actuary to value the funds at 5 per cent., the whole aspect of the superannuation question is changed, because the Government's liability over approximately the next fifty years is immediately reduced from £23,000,000 to a sum considerably under £15,000,000. It must be remembered that at the inception of the funds the Government had a liability in respect to compensation rights and back service amounting to approximately £6,000,000. 22. In parliamentary paper H-26a for the year 1927, page 3, Mr. Traversi, the Actuary appointed to report on the Public Service Superannuation Fund, states, — " I should state here that in arriving at these results it has been assumed that retirement is compulsory at age 65 only, and that on the earlier attainment of forty years service it is merely optional to the employee. This system has latterly been departed from to the extent of compelling a considerable number of retirements at the end of forty years' service irrespective of age. If this marks a permanent change in policy, a very considerable addition to the liabilities will have to be allowed for." In regard to the ascertainment of State subsidy, Mr. Traversi further states, — " The above figures give an average subsidy requirement of £193,000 per annum for each of the above years. In addition to this amount, however, the State will require to make provision for redeeming the arrears detailed in Table X appended. As will be seen from this table, these arrears (up to the 31st March, 1925) accumulated with interest at 4 per cent, to the 30th June, 1926, amount to £528,588, and I consider that at least £27,000 per annum will require to be added to the future subsidies on this account. To this must be added a further sum of, say, £12,000 per annum in respect of unexpected forced retirements in the past not provided for in the Actuary's past estimates of outgo. If the same policy regarding retirements is to be maintained during the next three years a still further sum should be added on this score. " I have sufficiently indicated that, apart from any addition to the liabilities due to possible continuance of a policy of compulsory retirements at the end of forty years' service, and without reckoning the additional liabilities due to the inclusion of house allowance, &c., the State's liability in respect of present members is (at 4 per cent.) equal to a subsidy of £221,367 per annum in perpetuity (see paragraph 8). The subsidy for the next three years ascertained under the directions of the Act is £232,000. As the Act aims at extinguishing the liability for present members during their lifetimes, the subsidy thereunder will clearly have to amount to a higher figure than £232,000 before long, and it is certain that, with the present deliberative method of fixing the subsidy trouble will constantly arise." 23. Mr. Traversi thus points out that large numbers of retirements with forty years' service were not truly voluntary, but were carried out compulsorily for retrenchment purposes, and were therefore for the purpose of relieving the Consolidated Fund. He also shows the inadequacy of the method defined by the Act for calculating the subsidy. There is no doubt that less than 10 per cent, of the retirements with forty years' service are truly voluntary and that 90 per cent, are " retrenchment retirements." In other words, 90 per cent, of those completing forty years' service would prefer to remain in the service for varying extended periods if they were left free" to choose. If Commissioners were appointed to administer the funds and they were "empowered to prevent " retrenchment retirements," the option to retire voluntarily with forty years' service could safely remain. 24. " Retrenchment retirements " under the old Act have been effected at the expense of the fund. Unless rigid safeguards are provided, there is a very grave danger that under the new Bill " retrenchment retirements " will be effected at the expense of the individual and particularly at the expense of those who have completed their contract with the State by performing forty years' service. The barest justice demands that men who have completed forty years' service and who are compulsorily retired through no fault of their own should not be loaded with actuarial retiring-allowances. 25. The Guild considers that the temptation to Ministers to load the Superannuation Funds in order to relieve the Consolidated Fund should be removed by providing that the control and administration of the funds be placed in the hands of Commissioners or Trustees (of whom the Government Actuary should be one) who should be empowered to control the granting of pensions and to dictate any terms or conditions which it is necessary to impose in order to protect the Superannuation Funds. In the past, Ministers have allowed many officers to retire with less than forty years' service, without imposing conditions in accordance with the powers given to them under section 26 of the 1927 Act. One cannot imagine the Minister in charge of the Government Life Insurance Department arranging for a person who had purchased an annuity from that Department to commence drawing the annuity before the termination of the original contract entered into, without imposing some terms and conditions, and yet this is actually what the Ministers in charge of Departments have permitted in

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connection with the Superannuation Funds. If Commissioners or Trustees were appointed, as suggested, and were empowered to prevent " retrenchment retirements " and also to ensure that all retirements with forty years' service were truly voluntary, the option to retire voluntarily with forty years' service could safely remain. As an alternative to the appointment of independent Commissioners, we suggest that the advisability of placing the funds under the control of the Government Life Insurance Department be investigated. 26. We contend that a section, similar to section 4 (2) and (3) of the new Bill, should have been included in the original Act and should have been used on every occasion that a contributor retired with the consent of the Minister, prior to the completion of forty years' service, or prior to attaining 65 years of age if with less than forty years' service. 27. We are loth to think that the words " actually received " in section 4 (3), line 25, of the new Bill have been inserted for the purpose of penalizing those officers who are contributing to the fund on the basis of a higher rate of salary. We would urge that the latter group of officers be protected by providing that the words " the average rate of salary on which contributions are paid " should be included. We would also urge that the formula or basis on which actuarial retiring-allowances are calculated should be stated, or included in a schedule, as has been done, we understand, in similar Acts in Australia. 28. The proposal to alter the " final salary " period from three years to ten years is almost vicious in its effect upon both present and future annuitants in that it involves a direct monetary sacrifice on the part of the individual which could neither be anticipated nor provided for. Many annuitants, present and, future, relying on the reputation of the State, have made commitments which under the alteration proposed by section Bof the bill, may possibly land them in the Bankruptcy Court. An extension of the " final salary " period even to five years would be a very severe penalty to apply to the great majority of annuitants. 29. In view of the fact that returned soldiers are considered to have a shorter expectation of life than the average man, the Guild considers that some preferential treatment should be extended to these men, and that in any case there should be no suggestion of requiring them to retire after completion of forty years' service irrespective of age, with an actuarial retiring-allowance. 30. If the proposal in the new Bill to arrange retirements at 60 years of age instead of on completion of forty years' service is given effect to, very considerable hardship will be inflicted upon the officers of the Post and Telegraph Department. For several years past it has been almost the universal practice to retire men with forty years' service, and if this practice is suddenly stopped, there will practically be a total absence of promotions for about seven years, and at the end of that period the majority of the most junior officers in the Service will be receiving the maximum salary of the rank-and-file class. If service under 60 years of age is to be enforced in the future, the Guild considers that a transition period should be arranged for, between the past and the new schemes by providing that men, who on the Ist January, 1933, had attained the age of 50 years or had completed thirty-five years' service, be allowed to retire voluntarily upon completion of forty years' service on a full two-thirds pension. It is considered that voluntary retirements during the transition period would probably ensure 10 per cent, of the normal number of promotions and would also assist the boy unemployment problem of the Dominion, by ensuring that there would be at least some new entrants to the Service. 31. Throughout this statement we have quoted the ages and length of service of male officers only, in order to obtain brevity and clearness of expression. We desire to make it clear that we wish the rights and privileges of women to receive the same consideration as those of men, but with the same margins as regards age and length of service as are set out in the original Acts. 32. While we are fully appreciative of the desire of the Government to put the Superannuation Funds on a stable basis —a desire which is shared by the contributors and annuitants—we are convinced that this can be done without a breach of faith or of contract with the existing contributors and annuitants who joined the funds under the original Acts. Stabilization of the funds can be achieved by taking the following steps : — (1) Place the funds under the control of Commissioners or Trustees, who should be empowered to prevent " retrenchment retirements " to the detriment of the funds. (2) Ensure that all retirements of officers with forty years' service are truly voluntary. (3) Ensure that all officers retiring with less than forty years' service or prior to attaining 65 years of age if less than forty years' service, are paid only an actuatial retiringallowance, except in cases of medical unfitness. (4) The Government to pay by monthly instalments the pound -for-pound subsidy provided for in section 14 of the new Bill. (5) The Government Actuary be authorized to value the funds on a 5-per-cent. basis as provided for in section 16 of the new Bill. (6) The Government to hand over to the funds inscribed stock to the value of the unpaid subsidies, plus compound interest. 33. Finally, we desire to say that we do not condemn the new Bill in toto. Some of its provisions are admirable ones, and should be made law, particularly sections 14, 15, and 16. In so far as the sections relating to the conditions of retirement of present contributors are concerned, we consider that they are unnecessary if the powers already contained in the original Act are rigidly exercised and used to conserve the interests of the funds. Contributors as a whole do not desire that the funds be used, as they so often have been, to bestow special privileges upon a favoured few, or to relieve the Consolidated Fund, and we cannot protest too strongly against a continuance of these abuses of the past. We are convinced that the rehabilitation of the funds is possible without the Government breaking fajth with the present contributors and annuitants,

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193

Shortage of Subsidies paid to Superannuation Funds compared with Surplus or Deficit in the Consolidated Fund Year by Year since the Inception of the Funds.

Note. —The shortage in subsidies paid to the Railway Superannuation Fund is not available, as the Railway Fund is State-guaranteed. Mr. Dickie.] There is a good deal of protest regarding early retirements. Have there been any protests made by men in the Service in the past concerning early retirements ? I have never heard there was any organized protest regarding early retirement from your Service ? —No, there has not been. I suppose it really facilitated promotion, and so naturally you did not make any organized objection to it ?—We considered, of course, that the Government knew what they were doing—they had the Actuary's reports which we have relied on ; and we had the same thoughts in our minds as Sir Francis Bell and Sir William Hall-Jones. We thought it was all right if the Government agreed to it. You say 90 per cent, would prefer to remain on in the Service ; and yet you say later on that you object to going to age 60 if it entails going beyond the forty years' service. Is that the attitude you take up ?—That is because the other 10 per cent, have probably made arrangements for retirement, and under these conditions they look forward to it; and the few, the 10 per cent, who would prefer to retire, we think should be allowed to retain the right to do so. You sav 90 per cent, would prefer to remain on. That is, I take it, a lot of them would prefer to remain on beyond the forty years ? —Yes, that is what we mean. They commence in your Service at a very young age, and so many of them retire at just a little over 50 years of age with forty years' service ?—lt runs to about 55, perhaps—the general run. One man I know retired at 52, but that is an extreme case. You say on page 11 that if the men are allowed to go on to age 60 a great deal of hardship will result on account of the total absence of promotion. Still, it would be in the interests of the fund, would it not, to go on to age 60 ?—Yes, it would certainly be in the interests of the fund, but we think that it would not be necessary to compel the 10 per cent, who want to go to remain. Allow the 10 per cent, who wish to go to go, and leave the others free to remain ; leave it optional, as it is—as it should be. You make no mention of the £300 limit clause. What is the attitude of your organization with regard to the £300 limit ?—We have not mentioned it, deliberately, because we do not want to ask for anything that would be breaking the arrangement on our side, but we have discussed the £300 limit, and we consider it a most unfair thing—the £300 limit should be removed ; but, as I say, we deliberately did not ask for it.

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.,,o .. 1T.J Surplus or Deficit in the Consolidated Shortage of Subsidies paid to Superannuation Funds. | und Year by Year since 1908 _ Yerfr. Surplus (Excess of - fi ., , E f Public Service. : Teachers' Total. Expenditure over for Year). Receipts for Year). £ £ £ £ £ 1905-6 .. .. .. -5,000 -5,000 1906-7 .. .. .. 2,000 2,000 1907-8 .. .. .. 5,000 5,000 850,024 1908-9 .. .. Nil 5,000 5,000 106,654 1909-10.. .. Nil 1,000 1,000 247,995 1910-11 .. .. Nil 4,000 4,000 954,167 1911-12 .. .. 25,000 10,000 35,000 720,792 1912-13.. .. 25,000 10,000 35,000 652,232 1913-14.. .. Nil Nil Nil 392,397 1914-15 .. .. 18,000 16,000 34,000 72,142 1915-16 .. .. 18,000 16,000 34,000 2,017,030 1916-17.. .. 18,000 16,000 34,000 4,308,777 1917-18.. .. 38,000 26,000 64,000 5,085,934 1918-19.. .. 38,000 26,000 64,000 3,678,773 1919-20.. .. Nil Nil Nil 2,299,416 1920-21 .. .. 39,000 25,000 64,000 6,132,232 1921-22.. .. 39,000 25,000 64,000 .. 339,831 1922-23.. .. 39,000 2,084 41,084 1,315,683 1923-24.. .. 95,000 29,167 124,167 1,812,365 1924-25 .. .. 104,000 69,000 173,000 1,243,800 1925-26.. .. 154,000 69,000 223,000 1,155,679 1926-27.. .. 154,000 69,000 223,000 587,142 1927-28.. .. 199,000 105,000 304,000 179,076 1928-29. .. 199,000 105,000 304,000 .. 577,252 1929-30.. .. 99,000 105,000 204,000 148,979 Total .. 1,301,000 j 735,251 2,036,251 33,961,289 | 917,083

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The Chairman.] But you would not object to it being removed ?—We would consider it was doing the right thing if it were removed. Mr. Dickie.] There is one matter that has not been discussed, and that is in connection with the allowance made to the widows of officers. Do you think it would be a good idea if the superannuitant's retiring-allowance was made a little smaller, and an increased amount given to the widow in the event of the officer dying ? It is a very small amount, is it not ? —Yes. Actually it costs a lot of money, though. But do you think it would be a good idea to increase the widow's allowance at the expense of the retiring-allowance of the officer ? —We have not considered that, but I think that very many of the officers would like that. I cannot speak for them altogether, but my own impression is that very many officers would very much like to see better provision for the widows, even if they had to take a little less themselves. I would rather like some of your organizations to let us know what they think on the point ?•— It has been discussed in one or two of the Actuary's reports. One of the Actuaries was asked to report on the matter of increasing the widow's allowance ; and also dividing the pension between the husband and the wife. A lot of information is in one of the Actuary's reports concerning that. Mr. Hargest.] You refer on page 10 to the appointment of independent Commissioners ; and there is a definite and specific recommendation to that effect on page 12. You mean that these Commissioners should take the responsibility of the fund ? —Yes. The investments of the fund ? —Yes ; and it would be their responsibility to see that it was not abused. We contend that the Ministers having the present power do not take the interests of the fund into consideration. If Commissioners had it, it would be their duty to see that the fund was protected. In your opinion, would that not tend to eliminate the Government's responsibility for the fund ? — It would depend on the constitution of the Commission. The point I want, to make is this : Just now the investments of any fund are extremely hazardous so far as safety is concerned —there is great danger that any investment may earn very much less interest than was anticipated. The question lam asking you is this : In the event of these funds being placed in the hands of Commissioners, who would be responsible for the investments, would not the reduced earnings of these funds fall heavily upon the superannuitants —upon the fund ? —I take it that the Government would still subsidize it, and guarantee the 5 per cent, interest. Mr. Ansell.] On page 2, paragraph 4, there is a reference to the Commission's report " describing the unsatisfactory methods of administration." What, in your opinion, are the outstanding examples of the "unsatisfactory methods of administration " ? —Allowing retirements at the expense of the fund, and the deliberate method of not providing the subsidy. They would be the most serious phases of it ? —Yes. In your reference to the enforced early retirements, what you state is that they have a very severely adverse effect on the funds. In your Department have there been any enforced retirements recently ? —Not within the last twelve months, but prior to that there were a number. You also stated the percentage of men who retired voluntarily from your Service as being very small. I presume you make that statement to indicate that your fund would be safeguarded by that action, and that men serving the full period would naturally preserve the fund ?—Yes ; and if they serve over forty years they continue to pay their contributions, and they draw pensions for that many years less. A high-salaried mail staying on for five years over his forty years might be worth £5,000 to the fund, due to his paying contributions over that five years and not drawing his pension over that five years. You suggest that Commissioners should be appointed to administer the fund. Do I understand from that, that your suggestion is that it should be a Board completely free from political control ? I will give you this instance from your statement, where you refer to the Minister having allowed these retirements. Your intention is, then, to create a Board that will be free from the directions of a Minister ? —That is our point. The Chairman.] With the qualification that if the Government pay £1 for £1, you do not want the Board, do you ? —We want it safeguarded from political uses —or misuses, we might call it. Mr. Ansell.] Take the position of a Department where they cannot possibly employ a man. Where in your opinion should the rest of that money come from to assist the Superannuation Board to grant that man. an adequate allowance ? Actuarially, actually you can only grant him a certain amount, which would not be sufficient. Is it your suggestion, then, that the Department that employed that man should bear that extra burden ?—Yes, the Department, or the Consolidated Fund. The Superannuation Fund is purely a pension fund. It is not a fund that should be used for promotion, or retrenchment, or any other purpose —it is purely a pension fund ; and if the Government desire to use it for promotion, or retrenchment, or other purpose, then the Government should foot the bill. Have you discussed whether the Consolidated Fund should bear it directly, or whether it should be a departmental liability ? —No, I have not discussed that with our people. We have simply agreed that the Superannuation Fund should not bear it. On page 9 you refer to Ministers having allowed many officers to retire with less than forty years' service. Has that been fairly general ?—Yes. There is a permissive retiring-point that, with the consent of the Minister, a man with thirty-five years' service can retire in accordance with conditions to be fixed by the Minister. But the Minister has never made conditions —he has allowed the thirty-five-year men to go on thirty-five sixtieths, just the same as a man with forty years' service goes with forty-sixtieths. That is a heavy burden on the fund ? —A very heavy burden.

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You refer to special privileges to a favoured few. Just what do you mean by that ?—The men with less than forty years' service—these thirty-five-year men who are allowed to go out—at the expense of other contributors, you can almost say, because the fund has to carry them ; and in addition to those who have been allowed to go with thirty-five years' service there are other men who have had special legislation passed in order to give them that. They were included in the Public Service Association's evidence, in a list giving the names of a number of the men. You also referred to the total absence, under the proposed Bill, of promotion for seven years. How is that going to affect the Department so far as the employment of boys is concerned ? And if you do not employ boys, would it not be a case that you would have comparatively highly paid men doing boys' work ?—We would still have the telegraph message-boy staff, probably. We call them " boys " now, although some of them are 20 years of age. But between those message-boys and the maximum salary of the rank-and-file clerk we would have nobody. I mean by that that the junior officers in the Department would get their regular annual increments during the transition period. A young man might be, say, on £80 a year to-day ; in seven years he would be getting £240, or whatever would be the maximum salary of the rank-and-file class. And still doing the same work ?—He would still be doing the same work ; and because there is nobody going out of the top classes in the Department, except by death, of course, there would be nobody coming in at the bottom. You consider your suggestion for a transition period would overcome that difficulty ?—lt would only give, say 10 per cent, of the normal retirements. We are asking for the transition period to prevent a total stoppage of promotion—that is if this new Bill were passed, which we hope it will not be, in that respect. If, however, it were passed as it is now, there would be no promotions in our Department for seven years. And then the cost of administering the Department would be more, because of the higher salaries of the juniors—seniors doing junior work, you might call it. You are quite certain of that ? Of course you would not make a statement like that without thinking the matter right out ?—I cannot see it in any other way, unless we have some kind of a boom, some big improvement in the country, which does not seem to be likely. I have mentioned seven years. I notice that some others, in giving evidence, have mentioned five years, but we are in the peculiar position that we have very few men just at the moment with forty years' service—a lot of our men are round about thirty-seven and thirty-eight years' service, and that is why I mentioned seven years instead of five years, as mentioned by some of the others when giving evidence. Your suggestion that these men be allowed to retire voluntarily upon completion of forty years with a full two-thirds pension would entail a further burden on the fund, would it not ?—That would only be the 10 per cent, again ; that would only be the 10 per cent, of the men with forty years' service who wished to retire. What we have in mind is that the pushing of everybody out immediately they complete forty years' service should be stopped, and that only those who have a strong desire to go after forty years' service should go. If the Commissioners or the Trustees, or even the present Boards, could be given the power that we suggest; if those Boards have the power to call a man before them and ask him to state his case for going, ask him whether there is a push behind his going, satisfy themselves that he is going truly voluntarily, there would be so few going that I think the fund would not suffer if they went, and I feel sure the 90 per cent, would remain. Mr. W. Nash.] On page 1 you say, " The Guild considers that if steps were taken to make the present scheme watertight by stopping the leaks started by the Government "—are they the detailed leaks on page 12 ?—Yes. You think one of the main difficulties that the fund is experiencing is due to the fact that the Minister did not impose any conditions in connection with special retirements, although he had the power to impose conditions ?—Yes, that is one of them. You have had a fairly lengthy experience in the Public Service. Do you know from your own experience if the Public Service placed a lot of faith in what Sir Francis Bell said in 1930, and in what Sir William Hall-Jones said at the same time ?—Yes, we did. But we had that impression previously. We have always had the impression that the whole thing was State-guaranteed. You never had any misgivings about the fund ?—Not the slightest. Do you think the liability in connection with making the fund to-day sound is the Government's liability ?—Yes. You mentioned " several privately managed Superannuation Funds." Could you give us any details of one or two of them ?—A. S. Paterson's fund is subsidized £1 for £1 by that firm. And they are sound ?—They are sound. Have they any early retirement provisions ?—I do not think they have any. Of course, they are backed by the firm. They have their own conditions. Their pensions are not as big as ours. You mention on page 3 that the Government has defaulted in its obligation, and has used the fund for purposes foreign to any sound superannuation scheme. You believe that ?—That- is, for purposes of retrenchment. You say the benefits of pensions for back service are now being paid out of the contributions of those officers who joined the Service after the inception of the fund ?—Yes. They have used the money of the existing contributors to pay somebody else's pension ?—That is what has happened. You also say that the Government has also used the contributors' funds for the purpose of meeting liabilities due to their own retrenchment scheme ?—Yes. What do you base your statement on that the Government is asking the contributors to pay onehalf of the Government's debt ?—Mr. Forbes, the Prime Minister, made the statement that the Bill was designed to provide that the contributors and the Government would share the liability on a fifty-fifty basis, or thereabouts.

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Do you not think it would be wise for the fund to be put on a sound footing now ? —lt is very desirable that something should be done to straighten the thing out, to prevent a continuance of the present conditions ; something should be done. You prefer a fund to a guarantee ?—The fund without the guarantee might be precarious. We would want the fund plus the State subsidy—plus the £1 for £1 ; we would want some assistance. You say the fund is precarious. But the guarantee is pretty precarious to-day, is it not ? —Yes. You say the Guild largely agree that section 50 of the principal Act should be repealed, and that section 14 of the new Bill should be substituted therefor ? —That is to give us a regular subsidy month by month, instead of the mythical subsidy which we never got. You prefer a monthly payment into the fund equal to the amount of the contributions, rather than some sum to be ascertained by the Government Actuary that ought to be paid, but has never been paid ?—That is so. That is the secret of the Harbour Board's success with their scheme. You mention on page 6, paragraph 17, that there ought to be a special provision whereby the provisions of the new Bill should apply to future entrants to the Public Service ? —That is a qualified statement, and we have given some thought to it. If new entrants were put under the provisions of the new Bill, and another Government or somebody else in another ten or fifteen or twenty years wanted again to " monkey " with the scheme, they would have less people to monkey with, because the new entrants under the new scheme would be at least looking after themselves, and they would be safe. It would be only the old hands that they could " monkey " with. You say, " It must be remembered that at the inception of the funds the Government had a liability in respect to compensation rights and back service amounting to approximately £6,000,000." Where did you get the figure of £6,000,000 from I—Mr.1 —Mr. Fox's estimate of the liability for the Public Service Fund was round about £1,750,000, I think, and the Teachers—l forget just what the amount was. Then I made my own estimate of what the Railway Fund should have been, having regard to the other two. It is not an exactly calculated amount, it is our organization's estimate of what we think it would be. Could you give us an idea of your working of it ? Because it is an important point. With a liability of £6,000,000 at the beginning of the fund, say, twenty-five years ago, to meet the requirements for back service, that £18,000,000 or £23,000,000 will have gone ? —The amount was taken from Mr. Morris Fox's report. The Public Service amount is mentioned in a Public Accounts Committee report, 1907, parliamentary paper 11a, when evidence was given before the parliamentary Committee on the original Public Service Bill. The payment that should have been made to the Public Service Fund on its inception was £1,816,719. You estimate, taking that as one base, that £6,000,000 would be the sum for the three funds ?— For the three funds. You mention in paragraph 23 that a lot of the public servants would be quite content to go on beyond forty years. Would that remove all objection that you would have to the extension of the period to 65 years ?—No, we still think that the men should have the option, so that the few who did wish to go should and could go, but that those who did not wish to go should not be pushed out. We think they should be allowed to go if they wish to go, but that there should be no compulsion. Assuming that you could prove, from the existing contributions and the pound-for-pound subsidy, that it was still necessary to go on to 65 to make the fund sound, would your Guild be in favour of going on to 65 years to ensure that the fund would remain sound ?—Yes, if we are satisfied that that is necessary in order to put the thing right, then we want it put right. You say, " One cannot imagine the Minister in Charge of the Government Life Insurance Department arranging for a person who had purchased an annuity from that Department to commence drawing the annuity before the termination of the original contract entered into." I wonder if you liken what the Government has done in connection with the fund to Sinking Fund Commissioners : Assume that they had had some money paid into the fund that they were controlling, for the purpose of redeeming the debt at a certain time, and that they had used the money to redeem some other debt—• would that be what the Government has done in connection with the Superannuation Fund ? —lt would seem so. You say, " We would also urge that the formula or basis on which actuarial retiring-allowances are calculated should be stated, or included in a schedule, as has been done, we understand, in similar Acts in Australia." Could you let us have the Australian Acts, or give us some reference to them, in which there are formulae I—l1 —I could get the information. Your Guild definitely and specifically is in favour of giving special treatment to returned soldiers ? —Yes. You consider that their nerves in some way have been shattered, and if it is necessary for returned soldiers to retire early, or have special consideration, your Guild is of opinion that it should be given to them I—lf1 —If it is possible to give it to them, we would be glad to see them given every possible consideration. We particularly desire, if the rest of us have to be put under the conditions of staying till 60 years of age irrespective of service, that the returned soldiers, at any rate, should be allowed to retire at forty years' service. You stress on several occasions in your statement that the special retiring provisions have been the main cause, or one of the main causes, of the difficulty, other than the payment for back service 1 — Yes ; allowing men to retire with thirty-five to forty years' service without conditions, compelling them to retire at forty years' service when they do not want to go, and the absence of the subsidy, seem to be the whole cause of the trouble. Can you give me the opinion of your Guild on the establishment of a Special Retirements Fund for special retirements, to which those annuitants who retired before they were qualified to retire under the same conditions as all the other public servants would have their funds transferred and from which

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their pensions would be paid—what would be the opinion of your Guild with regard to a special fund for that purpose ?—The special fund would consist of the contributions plus interest of all the members of the Civil Service who are retired other than after paying their full contributions as provided by the Public Service, the Teachers', and the Railway Superannuation Funds, and subsidized by such an amount as the Government may determine to make ; and from this fund those on special retirement would have their pensions paid. That removes from the ordinary Superannuation Fund all charges for special retirements, and conserves the contributions of the contributors to the Superannuation Fund exclusively for their benefit; they are not then used for special retirements. You would be in favour of taking the special retirements right- out of the Superannuation Fund ?—I think it would be a good idea —it would leave the ordinary superannuation scheme to stand on its own feet; provided, of course, that the Government did not let either of the funds down again over the subsidy —-as long as the subsidy was forthcoming. If they failed to subsidize a scheme into which the medically unfit men and so on were put, it might be more disastrous for those men than it would be if they failed with the ordinary fund. With this difierence : that in the case of the contributors to the ordinary fund they would then be conserving their own moneys. In the case of the Special Retirements Fund, any deficit there would be the responsibility of the Government, because they were legislating and providing for those special retirements. The fund would then be responsible at all times according to the Government's action in the one case, and in accordance with the contributors' payments in the other case. You would be in favour of a Special Retirements Superannuation Fund if it could be worked out ? —I think so. Mr. Ansell.] In regard to your suggestion that some preferential treatment should be extended to returned soldiers, have you discussed any plan ? Have you a plan to put up to the Committee in regard to that matter ?—No. We did not discuss a plan. All we were concerned about was that if the new Bill went through and we were all to be penalized by sacrificing what are to-day our rights, the returned soldiers should not have to make that sacrifice. The Chairman.'] Of course the returned soldiers are to give evidence to the Committee, but it is very nice of you to make that suggestion. What you are concerned about at the moment —it does not matter where it comes from or how it is brought about —is that you want the subsidy paid ? We want the funds put right. If the Government does what you suggest and hands over inscribed stock that would come to a good deal of money. What about the interest ? —-It is the interest we want. I know you do, but supposing the Government cannot pay it. Supposing they carry out what you are asking for straight away and they are not in a position to meet that liability, what about that I —It would then be interest that is due by the Treasury ; it would not appear as a subsidy to the Superannuation Fund. But the liability would be there all the time, would it not ? —Yes. When replying to a question put to you you said that 90 per cent, of the men in the Post and Telegraph Department would prefer to remain in the Service rather than retire. Is that correct ? Is there not a tendency on the part of the members of the Post and Telegraph Department to retire as early as they can ? —No, they would prefer to remain. I always had the feeling that they are very anxious to retire. You surprise me when you state that only 10 per cent, retire voluntarily «—They put in applications to retire, but they are the most dissatisfied men imaginable. They put in their applications because they are given the tip that their applications would be welcome. They are voluntary retirements, but if their applications were sorted out you would find that they were obliged to retire. The Post and Telegraph man is a youngish man when he is retired, because he starts at an early age, and I have always been under the impression that they were anxious to get out ? —A great majority of them wish to stay. I know of two that retired at about 53 years of age and they both were anxious to retire. I am just mentioning those two cases. I know of others, too, and it comes as a great surprise to me to know that 90 per cent, would prefer to carry on. However, you should know ? —ln the General Public Service where no push is suggested or no push is made I think Mr. Verschaffelt would tell us that less than 10 per cent, for of their own free will and 90 per cent, stay till they are 60 years of age. Mr. Veitch.] That opinion is based on past experience ? —Yes, on experience. Of course, men have gone at 40 vears, but we know by talking to them they they are broken-hearted at having to go. The Chairman.] When the cuts came and you had the election to carry on your contributions at the old rate, I presume that under the £300 it did not concern the Guild ? —No. It would not concern them if it was £600 or any limit ?—No, but there might be one or two cases affected. I think if the £300 were removed that they should be given the option of the re-election. There is one case at any rate that I know of. You have answered several questions to the different members of the Committee about the fund being placed under the control of Commissioners. You have only one idea in your mind in doing that—that you want the fund taken away from political interference and you want the Government subsidy ? —Yes. You want the fund put right and the Government subsidy and the whole thing handed over to a Board free from political interference or control ? —-Yes. We mentioned Commissioners, but we want the thing arranged so that there can be no monkeying with the money. lam not speaking about that. You want the fund put right, you want the subsidy paid, and you want the whole thing free from political control ? —Yes, absolutely. lam not saying you should not do it; it would be a splendid thing. Mr. Gostelow.] On page 6, paragraph 17, you say, "We suggest .that if the 'leaks' in the present superannuation scheme were absolutely stopped and the Government pays a pound-for-pound subsidy by regular monthly instalments, the Government's liability could at least be held at its

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present figure and probably could be considerably reduced over the aforesaid fifty-year period." The National Expenditure Commission mentioned a deficiency of £23,000,000. It is probably more than that, as a matter of fact, but, taking the £23,000,000, that would require an interest income of £1,000,000 a year to keep that stationary, that is at 4| per cent. ? —Yes. And a pound-for-pound subsidy only amounts to £500,000, so how can the Guild state that the liability would be reduced. The liability would commence to increase ? —The £23,000,000 is calculated on a continuance of the present abuses. If the abuses in regard to retirements were removed then the £23,000,000 would be considerably reduced. It would only reduce part of it ? —Yes, a portion of it. Has your Guild considered what action should be taken in regard to past " leaks " —men who went out after thirty-five years' service, for instance ?—All that water has run through the leak and got away. That is the question, does your Guild consider that if this Act goes through the past annuitants with thirty-five years' service should continue to get their present pensions ? —We did not give any thought to the superannuitants, because we gathered that they were going to have a lot to say on the matter, and we left it to them. The Chairman: They are to appear before us next week. Mr. Gostelow.] On page 7 you mention that the National Expenditure Commission's report suggested that the Actuary be authorized to value the funds on a 5-per-cent. basis, and say that shows how by almost a stroke of the pen the Government liability of £23,000,000 can be reduced to £18,000,000. Where did you get the difference of £5,000,000 ?—That was as near as I could calculate the value or the difference in value between 5 per cent, and 4| per cent. The difference between 5 per cent, and 41 per cent, would not exceed 10 per cent., would it ? —- No. And the liabilities are round about £25,000,000, so that it would be about £2,500,000 not £5,000,000 ? —Probably. There were two or three mathematicians working that out and we made it £18,000,000. We thought that was somewhere round about what it would be. On page 10 you mention the advisability of placing the funds under the control of the Government Life Insurance Department. Have you discussed that with the Commissioner of the Government Life Department or heard how he would view the proposition ? —No. We were hoping to suggest something that would depoliticalize the thing —prevent interference. We do not care who it is as long as these interferences are prevented. You could not very well imagine the Government Life Commissioner being sanguine about taking over liabilities of £24,000,000 or £25,000,000 with £5,000,000 of funds ? —No, but he would work it out actuarially of course, the same way as he does a life-insurance policy. He takes a risk of £100 on a life-insurance policy with a premium of ss. to start with, and he might have to pay out the next week. The Chairman.'] He would want that inscribed stock ? —Yes. Mr. Gostelow.'] He would want very definite guarantees of future income ? —Yes, he would have the pound-for-pound subsidy and all our contributions and all or very nearly all that the Bill provides for us. I suggest that you put it up to him, and see what the result will be. On page 11 you mentioned " In view of the fact that returned soldiers are considered to have a shorter expectation of life than the average man, the Guild considers that some preferential treatment should be extended to these men." Have you anything to support that statement ? There must be a number of men who benefited physically by their military training. There are some, I suppose; but, of course, there is a large number of wrecks who have shortened lives. Mr. W. Nash : Would some of them live longer because they went to the war ? Mr. Gostelow.] Yes. There must be quite a lot of men who physically benefited to an extraordinary extent by their military training ? —On the other hand there are a lot who have suffered. That is so, but the point is that the people who were detrimentally affected should be a liability of the Pension Fund, not the Superannuation Fund. Mr. W. Nash : That is a point. Mr. McDermott: Yes, that is another side of it. Mr. Gostelow.] That is the point we have to consider. If extra concessions are to be given to different classes they should come from some other source than the contributions of contributors ? —Those men could come under the scheme Mr. Nash suggests for special retirements. That would be the proper place for them. I just wanted to make the point that it was not a fair charge on the Superannuation Fund. Mr. Verschaffelt.] Is it not a fact that in the Post and Telegraph Department you have very few men left with forty years' service ? Was it not really the policy before the Guild was a Guild to push the men out of the Post and Telegraph Department with forty years' service, irrespective of their age ? —Yes. Your men retire, on an average, much earlier than the Public Service men ? —Yes. Was it not on account of representations made from the Post and Telegraph officers themselves that they went out on the forty years' service ? —I could not say, but we want it optional. It was really the representations of the staff of your Department that pushed that point more than any one ? —My impression is that it was an idea of Mr. Coates. Pushed from behind by members of the Post and Telegraph Department in the beginning ?—I could not answer for that. You refer to the Commissioners, and say they would prevent retrenchment retirements. How would they prevent them ? Supposing the head of the Post and Telegraph Department said he had

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forty men to spare. How are you going to prevent those men from being retired ? Who is to determine whether they are required or not ? —That is not the meaning we attach to the words. What we call " retrenchment retirements " are those affecting the Superannuation Funds. We just mean that the Superannuation Funds should not have to carry the retrenchment policy of the Department. The Department should find some other way of looking after its retrenchment policy. That would mean keeping the men on or the Department paying the pension itself ? —lf they keep the men at the top they would have to put some one off at the bottom. They would have to get rid of the men in some way. The policy was all right if the funds were all right, but to-day, when the funds are threatened with ruin, it is not fair that those of us who are left in the Service should have to pay the pensions of those who have gone out. That is what it amounts to. You could not have two authorities—the Superannuation Board and the head of the Post and Telegraph Department —saying which men are going to be retired from the Department. It has to come down to one authority. Supposing the head of the Department or the Minister says, "We are going to retire forty men," you cannot have another Board saying those men are not to be retired ? — The Board could not say that. It would only say that it was not authorized to pay the pensions of those men, and if the Post and Telegraph Department wanted those men retired the Board would pay them pensions on an actuarial basis and the Department could make up the balance. There would be no balance to make up if they were paid actuarial pensions ?—But if our claim to retire at forty years' service remains—it is not the forty-year men but the thirty-five year men put out to make room for others who are not entitled to full pension. You practically agree with the Public Service Association that the thirty-five to forty year men should be actuarially valued ? —Yes. Mr. Millar.] You stated that 90 per cent, of retirements at forty years' service were compulsory. In the Post and Telegraph Department there is a big percentage of retirements at the permissive points, thirty-five years' service or 55 years of age and thirty years' service ?—Not the fifty-five years of age and thirty years' service. But there would be a large number with thirty-five years' service ? —Yes, I should say so. It would be safe to say that probably 98 per cent, of those particular persons were retired compulsorily ? —No. I do not think it would be that proportion, it would be hard to say. It wouid be in excess of 90 per cent. I—l do not think so. I think that 50 per cent, of those with under forty years' service have a reason and a wish to go. Is it not a fact that in the Post and Telegraph Department certain officers with thirty-five years' service have been given the tip that their resignations would be acceptable ? —They were never written to. But they were advised ?—I do not know how it is done. But they hear about it ?—Yes. If this Bill goes through as it stands at the present moment and the present policy of your Department of retiring on completion of forty years' service continues, is it not a fact that no officer at all in the Department will retire on anything but an actuarially calculated pension. No officer can get the full pension ? —Not if the present policy continues. Exactly. It was mentioned that at the present time the retiring-age of a man with forty years' service is about 55 years of age. That is at the present moment, but in the future will not the age be nearer 57 or 58, by reason of the fact that messenger service has not been counted for superannuation purposes since 1908 ? —lt will be closer to 60, probably 57 or 58. That liability on the fund will lessen in the future ? —Yes. The keynote to your case as presented is that it is not necessary to alter the conditions of the original superannuation contract, is that not so ? —lt is not necessary to alter them ; it is necessary to tighten them right up. Not the original basis, I suggest. The permissive retiring-points were created in 1909? — That is so. You mentioned in the summary on page 12 that you believe amendment to the Act is necessary for two things only, to tighten up the permissive retiring - points —i.e., thirty years' service with 55 years of age and thirty-five years' service, and to ensure to a greater extent that the Government provides the necessary subsidies. Is that not correct %—That is about what it amounts to. In clause (1) you suggest that the funds should be placed under the control of Commissioners or Trustees who should be empowered to prevent " retrenchment retirements " to the detriment of the funds. That is your suggestion for stopping leakages in the future ? —Yes. Stopping what we might term as " abuses " ? —Depoliticalizing the whole thing. Other than those two provisions the Bill is not necessary ? —No, it is not necessary, with the exception of sections 14, 15, and 16 in regard to the payment of the subsidy, and which are mentioned in my statement. Mr. Nash asked you a question that if after payment of the pound-for-pound subsidy in the future it was shown to be necessary to save the funds for officers to work on to 65 years of age, would officers be prepared to do so, and you answered in the affirmative. Your statement appears to mean that in addition to paying the pound-for-pound subsidy in future the Government should pay the amount that is due to the fund at the moment ?—We show that. I just mentioned that to make it quite clear. That is inscribed stock to the value of £3,500,000 or interest on the inscribed stock I—Perhaps1—Perhaps I did say to Mr. Nash that they would be willing to work up to 65 years of age, but I think the very most that the contributors should be asked to do would be 60 years of age with forty years' service. Mr. W. Nash : Sixty-five years of age is what the Bill provides. The Chairman : You said there would be no opposition to that I—-—

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Mr. Miller : That is always provided the Government pays what is due to the funds at the moment, roughly £3,500,000. Mr. W. Nash : £4,500,000 is what is required for the three funds. Mr. Millar.] Mr. Dickie asked a question in regard to increasing the widows' pensions by reducing the pensions due to the contributors ?—Yes. Could not something of that kind be arranged by an officer, when he is retiring from the Public Service, having the power to deduct a certain portion of his own pension and vest it in his wife, without causing any extra burden on the fund ? —That calculation has already been made and is contained in one of the Actuary's reports. My point is that it can be done by the officer electing so to do when retiring from the Service, but it would require a calculation from the Actuary in each case, because it would depend on the age of the wife ?—Yes, that would be an important point.

STATEMENTS PRESENTED. Ikwin Faris, Inglewood. (A.) As an annuitant of the Railway Superannuation Fund I wish to bring under the notice of your Committee, for its consideration, the fact that section 34 of the Bill deals harshly (in fact, unfairly) with those contributors who were, by service or age, qualified to retire on or before 31st March, 1921, but who patriotically rendered further service to the State. This extra service was usually, perhaps always, given by contributors at the request of the Department, and invariably at considerable personal loss to themselves. I give herein facts in proof of the need in equity for the amendment of this section of the Bill, and request that your Committee will recommend Parliament to — (1) Extend section 34, subsection (1) (a) to make it applicable also to annuitants whose length of service was not less than forty years or, in the alternative, whose age was not less than sixty years, on or before the 31st day of March, 1921 ; or, alternately,— (2) Amend section 34, subsection (2), to provide that every existing retiring-allowance payable to a contributor whose length of service was not less than forty years, on or before the 31st day of Maxell, 1921, shall be recomputed on the average rate of pay received by such contributor during the ten years immediately preceding his or her retirement, or upon the rate of pay received during the year ended on the 31st day of March, 1921, whichever is the greater. I trust that, in view of the fact set forth herein, together with such others as are brought under notice during the course of the inquiry, your Committee may find that the greater measure of equity rests with request (1), or, failing this, will realize the bare justice of request (2). In considering request (2) I ask that the period for averaging pay be reduced from ten years to a more reasonable period. It is apparent that section 34, subsection (2) of the Bill is based upon the statement in clause 1440 of the final report of the National Expenditure Commission, that " annuites are calculated on the average salary for the last three years of service." This statement is, I believe, incorrect in so far as Railway Fund annuities are concerned : to the best of my knowledge these were, from March, 1920, until November, 1931, calculated upon the last salary received, and I further believe that this system was pursuant to the opinion of the Solicitor-General. Section 34 was evidently intended to do justice to, and preserve the full rights of, contributors who qualified for annuities prior to 31st March, 1921, but being based upon an incorrect assumption, or incomplete information, it fails to effect its purpose, and requires to be amended. It would be difficult to put explicitly before your Committee the need for amendment of the Bill, without quoting the facts of some specific case. I therefore give the details of my own case not for individual or special consideration, but as an example, and in the interests of all contributors similarly placed. On 31st March, 1921, with forty years service in the Railway Department, and a salary of £650, my retirement then would have resulted in an annuity of £433 6s. Bd., and that annuity would now remain unaltered in terms of section 34, subsection (1) (a) of the Bill. The obvious intention of section 34, subsection (2), was to ensure that the annuity then obtainable should not now be reduced but, as before stated, a misconception has occurred as to the method of calculation then in force, and the intention of the Bill is thereby defeated. I submit that, at least, no existing annuity should be reduced below the amount that could have been obtained by the annuitant on 31st March, 1921, and that such a reduction was not contemplated by the Bill. It may here be remarked that the cost to the fund of granting either request, (1) or (2), would be negligible, in that but few annuities would be affected and, necessarily, only annuitants of advanced ages —viz, those who had had not less than forty years of service or were 60 years of age on 31st March, 1921, eleven years ago, and who cannot in natural course long continue to draw annuities. Also, there should be considered, as a set off, the fact that these annuitants paid contributions to the fund for a longer period, and drew from the fund annuities for a shorter period, than did those similarly circumstanced contributors who retired on or prior to 31st March, 1921. I wish to emphasize the fact that extra service, after 31st March, 1921, was in most, if not all, cases, given in the interests of the Department and at its request, also at considerable personal loss to the contributors. I quote my own case to examplify this :

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After allowing for two cuts under the Public Expenditure Act, the average rate of pay from 31st March, 1921, to 14th April, 1924, was £725, which after deduction of (I think) 7 per cent, as contribution to Superannuation Fund, gave a net remuneration of £675, this being only £242 more than was obtainable as annuity without service, and probably less than half of the amount that could have been earned outside the Service, and enjoyed in addition to the annuity. On this basis the loss to contributor was about £800 during the three years, without consideration of the fact that during this period income-tax was payable on £675 (less exemption) instead of on £433 (less exemption)—i.e., on £375 earned income instead of on £133 unearned income. Demonstrably, this extra service resulted m a cash benefit to the Superannuation Fund of about £I,4so—'viz., three annuities of £433 6s. Bd., and three years contributions amounting to about £150. These three years of service, from 31st March, 1921, increased the annuity by about £76, an increase which would require to be drawn for over twenty years before the increased payments equalled the £1,450 gain to the fund. If interest be considered, the gain would meet the increases for a much longer period than annuitants could hope to receive them. My request (1) is that such increased annuities be not now reduced. Again requesting your full and favourable consideration of tbe matters referred to.

Aeoh. L. Menzies, 3 Firth Road, Grey Lynn. (B.) I was compelled to retire after thirty-two years' service owing to ill health, my salary at that date being £400 per annum. . My sick pension amounted to £216 per annum, practically half of my salary or equal to appromixately a 50 per cent. cut. , The Coalition Cabinet (I will not say the Coalition Government) now proposes to put on a 20 per cent cut on my pension which with my 50 per cent, cut on my salary owing to ill health make a 70 per cent' cut for me—truly a most unjust proposal. Nor is this all that is proposed—an average of ten years on my sick pension prior to retiring, in lieu of three years, which is equal to approximately a further 15 per cent. cut. It would appear the Coalition Cabinet had better take the whole of the amount from me at once, rather than slowly strangle me by reducing me to a state of want and desperation. The idea of an 85 per cent, cut is monstrous, and words fail me to express my contempt regarding such a proposal New Zealander bom and bred who wag taught to at all times honour any contract; but here we have a Coalition Cabinet proposing to repudiate an honourable undertaking, and it makes one shudder at what their next proposals may be. Unfortunately, I cannot vote them out because the ballot-box has been removed from my reach by the other proposal to lengthen the life of other Cabinet members, who may thank God, and should do so, that they are not on a bread-and-butter sick pension, such as mine and others. . I have given good service and have gone through a very rough period of early backblocks work whilst a field officer, and those hardships of early service are directly responsible for my having to retire on sick leave when I did. ...... ... , My home is only half paid for, and God knows what will happen if such a grave injustice is inflicted. I have an invalid son, and although 30 years of age can earn only Bs. per week. My other son aged 25, is unfortunately out of work. My two daughters, one at school and the other earning very little, comprise, with my wife and self, the total members of the family. We are almost desperate and will lose our home ; my wife is almost demented, while I myself, although trying to stand up to it, cannot do so very much longer. We have gone short to keep up my superannuation payments, forced payments at that, believing I would receive the ultimate benefit of same It would appear that those still in the service have a better opportunity than those of us already retired and especially those who have retired owing to ill health as there is no opportunity for us to make any provision whatsoever, and must accept just whatever is forced upon us, a helpless suffering section ° f t^We > of > have been bled white, and still to be bled further by such a proposal dastardly in the extreme To be reduced to want and desperation is not only unjust, but uncalled for, especially as I have shown that compared with the salary I received the cuts now proposed in my pension will represent 85 per cent, approximately. In other words, my salary was £400 (my pension now £216), a further 20 per cent, as is proposed gives me £173, and a further cut by about 15 per cent, will equal about £150 • when I have to pay £2 weekly ofi my home this leaves me £50 yearly to carry on, a truly and impossible position brought about through no fault of my own, but by a repudiation proposed which is entirely wrong in principle, be it any Government or individual. I. cannot repudiate my liabilities simply because I wish to institute an economy measure. After all, we should not criticize Mr. Lang, of Australia, as here we have m New Zealand our own Cabinet bringing down repudiation proposals in a like manner. We are told economy needs no law, this is all right for a Government, but not tor the individual, who has to honour his contracts ; and I venture to say that if any repudiation proposal becomes law the death knock of any Government is sounded. I supported, and strongly, a Coalition Government, but I did not support a repudiation Government and as it proposes to strike hard at the hand who supported it so shall my efforts in future be to exterminate every member if I could who would repudiate proposals such as is suggested in sick superannuation payments.

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When, the first cut of 10 per cent, was made from salaries it was considered such a hardship that a Hardship Committee was appointed to deal with individual cases ; but in my case where the proposals will mean 85 per cent, from my original salary it is not considered that a Hardship Committee should be necessary in order that I may place my individual complaint before it. The proposal to raise the amount from £300 to £500 suggests anomaly regarding the necessity for economy, as such a proposal which immediately raises further liability against the funds which we are told already are in a bankrupt condition. Had there been a proposal to raise the amount payable to widows and children by a higher deduction being made, I would be able to follow such a proposal as being one to strengthen the funds accordingly, and render a greater service to the wives and children of deceased Civil servants. However, the raising from £300 to £500 is certainly not in the interests of the majority of contributors, and as a financial purpose must force the breakdown of the fund. There are many like myself who would like to state their particular case before the Select Committee now sitting, and if possible it would appear to be a pity that the Committee could not sit in the four chief centres to take evidence. I regret I have been so lengthy, and trust that you will accept this as written by me under very strong personal feeling, especially so as my home must go and my family and myself made desperateby such an unjust and inequitable proposal. I did not receive one penny when I retired as retiringallowance owing to having six months' sick-leave before my retirement, notwithstanding it was on half-pay for the whole of that time, with the exception of one month. I really think the Department might have made some recommendation in my favour ; however, if you could assist it would be appreciated, as I feel I should have received something in recognition of my services. In retiring as I did, with my salary at £400, I saved the Consolidated Fund £800, it being roughly two years since I retired, since then I have been drawing a pension of my own money, and will not until about March have exhausted my own payments to the fund. The proposal to have the law become operative from Ist January next will mean that the Coalition Cabinet would take 20 per cent, and a further 15 per cent, (by making the ten-year average) off my own money in the fund —well and truly, this is, in my opinion, the most unjust of all, to take 35 per cent, of a man's own money ; it is impossible of understanding, and at present I leave it at that. You are at liberty to use this in any way you consider necessary, and in the meantime I shall be grateful for any help you can render. I have communicated with you as you were Minister in Charge of the Department from which I retired.

Geo. K. Sinclair, Bridge Street, Hamilton. (C.) I wish to bring before the Committee some points in connection with the teaching profession that make the position far more serious than for the Civil Service generally :— (1) Present annuitants cannot possibly comply with any altered conditions. (2) Teachers have always had to pay their own removal expenses when desiring promotion. (3) Many teachers have been unable to take promotion of going up only one grade when the vacancy occurred a considerable distance from the position held, as the difference in salary would take a long time to make up the expenses of removal. Two chief removals of the writer cost from £80 to £100 each. (4) Previous to the grading of teachers each Education district was a " watertight compartment" and teachers in other districts had to accept a lower position in the new district for health and other reasons. Even in a teacher's own district sectarianism was rampant when School Committees had the choice of applicants. Hence the unfairness of basing superannuation on the last ten years of service. (5) If a reduction in superannuation has to take place a much fairer method would be to deduct the same percentage from the present annuitants. (6) Further teachers require a longer preliminary education than Civil servants and retire later. I know a Postmaster who retired at 52 after forty years' service. I retired within a few weeks of 65.

E. Connell, Wellington East Post Office. (D.) As the matter of superannuation is at present under review, I should like to present my case to your sense of fairness and your sympathetic consideration and effort towards securing amelioration of very great hardship. I am in my sixty-fifth year, an ex-teacher, and an annuitant of the Superannuation Fund, having spent thirty-three years of active service in the profession which I entered in 1885, forty-seven years a g°After fifteen years I married, and owing to misfortune had to rejoin the service in 1908. Intending to remain in the service I applied for a permanent position, and continued in the service for eighteen years, fifteen of which were spent in a country district where the hardships were not few, having to travel six miles for everything except bread which was brought twice a week. The man on the bread-van brought my mail for which I paid him £1 10s. a year, the mail including Education correspondence. During the fifteen years I was in charge I was instrumental in benefiting the school and the district in many ways, all of which I need not enumerate.

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The Chief Inspector stated in his report that a feature of the school-work was the practical work done in the garden. This was the reward for hard work in taking out loads of boulders before any attempt could be made to lay out and prepare the soil for the growth of the successful display of grasses and vegetables that merited the encomium. Of the indoor work in nature-study, the Agriculture Instructor told the school-children that in seventy schools he visited he saw no better work, and the work of only one could compare with their efforts in the drawing and colouring of specimens from the school-garden. At the A. and P. Society's Shows their exhibits, including needlework and darning, gained prizes year after year. Mr. Watkins of the Training College being the judge of some of the sections. With the proceeds from school concerts a good piano was obtained for the school and prizes were given each year for improvement in work in each class. The district was benefited by the inauguration of the Rural Delivery Mail Service, and a party-line telephone service. During the whole time I was in charge the school was not closed on account of sickness, nor of weather conditions. It was open in the worst weather even if only one child was in attendance, which seldom was the case, the scholars regarding the school as a pleasant place to be in. After giving thirty-three years of faithful service in this work I receive only £73 per year from the Superannuation Fund. My first fifteen years of service is not taken into account for the purpose of calculating the amount of annuity. If this were conceded it would give me a modicum of life s necessities. After paying the levy I have £1 6s. a week to cover everything and my health is at the point of a breakdown. On several occasions I have endeavoured to obtain some relief, and almost invariably have received this answer, " Yes ! It is hard. Conditions are not equitable ; but lam afraid nothing can be done —there is no money. It is a question of finance." A reply I received from one who is in receipt of, it is understood, a dual salary of £800 a year, including annuity from the Teachers' Superannuation Fund, was that there was always the Old People s Home to go to. Sir James Parr, when Minister of Education, said that lady teachers who left the service to marry, and had, later, to rejoin should be allowed to count " back-service " years for the purpose of calculating the retiring-allowance. As no teacher contributed for any years of service prior to the inauguration of the superannuation scheme, should I not be placed on the same footing as those who are privileged to count those years, if only at half-rate, for the purpose of calculating the retiring-allowance ? I feel sure you will give this matter sympathetic consideration, and shall hope for a favourable conclusion.

Arthur C. Carver, 48 Princes Street, Musselburgh, Dunedin. (E.) I trust you will kindly give my remarks your earnest consideration as regards my superannuation, to get to bed-rock, first and foremost. lam a son of one of the early settlers ; my father arrived in Dunedin, Otago, in January, 1864, and had erected the first brick building in George Street, Dunedin ; and as years rolled on, sickness of a very protracted nature came into the old home, and being young at the time things were very acute, and in the year 1888 I had to go to Australia to seek employment, and things were bad over on the other side. I returned to Dunedin and struggled along for a number of years, and in the year 1902 I was fortunate in getting a position as carriage-painter at the Hillside Railway Government Workshops, Dunedin, and as I have paid into the Superannuation Fund on the high scale to the extent of £1 10s. Id. per month, and as I voluntary retired from the service at the age of 60 years and receiving £130 per year superannuation, and still have sickness in my home, I consider that to interfere with my small superannuation would place me in a very difficult position indeed. Sir, at my time of life, just on 64 years of age, with about 16,000 young people finishing up at school each year, I have no chance of seeking employment, as the late Richard Seddon stated at the Princess Theatre, Dunedin, at one of his meetings; alluding to the elderly people, _ namely : " You have had the heat and burden of the day, and I will stand by you. What Ido think, sir, is that if there is to be a cut into the superannuation I suggest not to interfere with one who is getting £2 10s. per week ; let the men who are getting the high annuity be made to share the sacrifice. I can only say, " Live and let live." I will put it this way, sir: when one has worked very hard as I have, and put implicit faith in the Governments of the day to administer the right thing as regards the Superannuation Funds, it is truly very disconcerting to read in the daily papers as regards the position of the Superannuation Funds. I ask you, sir, manfully, do you think you could pay your way on £2 10s. per week and feel happy, after the " Hard battle of life " ? And you will readily agree, sir, that as the journey of life is getting near the end, I trust you will apply the golden rule to those that deserve fair treatment. I was born in Dunedin, Otago, 20th February, 1869, and as a New-Zealander first, am proud of it. If I had not had so much sickness to contend with, sir, I would not feel the pinch so acutely. I trust you will realize my position, and extend to me every consideration as lam sure there are not many men who would have stood by the old folks and the old home in their old age as I have done. You know, sir, circumstances alter oases. In conclusion, sir, I have put the same energy into my work as I did at cricket and football; in other words, I tried to play the game and be a man in the true sense of the word.

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Resolutions op New Zealand Post and Telegraph Employees' Association. (F.) The following resolution, dealing with the proposed amendments to the Superannuation Act, was carried at a large meeting of the Dunedin Section of my Association, and is forwarded for your information : — " That this meeting of members of the Dunedin Section of the Post and Telegraph Employees' Association views with the utmost concern the drastic nature of the provisions of the Superannuation Bill now before the House of Representatives, in so far as they affect the existing contributors. While admitting that the fund at the present time is not on an actuarially sound basis, it is considered that the present-day contributors should not be penalized for the failure of successive Governments to honour a contract that contributors are compelled to honour. In view of the proposals contained in the Bill, we respectfully request Government to legalize the voluntary withdrawal from the fund of officers already in the Public Service and refund to officers desiring to withdraw the total amount of contributions standing to their credit. Considering the premiums payable, we are of the opinion that the benefits to be obtained from the Public Service Superannuation Fund compare very poorly indeed with those offered by the various insurance companies."

Miss Annie C. Finlayson, 82 Bealey Avenue, Christchurch. (G.) In view of the fact that the Select Committee has been set up to investigate the question as to whether " undue hardship " would be entailed on the contributors by the operation of the proposed new Teachers' Superannuation Bill, I beg leave to submit my case, as being one where hardship would be entailed. The facts are as follow T s :— 1. I went straight from the high school to the University (1897) taking there my M.A. degree (1901), and spending one extra year (1902) on science subjects, with a view to gaining a second degree. 2. I commenced teaching as an assistant in a primary school in November, 1902, and remained there till July, 1905. I left primary work before the Superannuation Act came into force. 3. I was teaching in a high school (Waitaki. Girls' High) July, 1905-July, 1909. I did not join the Superannuation Fund in 1908 when it became available for secondary-school teachers. 4. I returned to a primary school (West Christchurch District High) in July, 1909, and have been there ever since. I joined the Superannuation Fund in July, 1909, then having a salary of £165, and was at that time vaguely under the impression that the former primary years would count, as I had returned to the primary service. 5. I therefore did not avail myself of the opportunity given to teachers in 1912 to join as original members, by paying back contributions. 1 should have done so, had I realized the position. Many of us did not, in those days, grasp the workings of the Act. No opportunity has been given us since 1912, of paying for these back years of uncounted service. Several times the Executive of the New Zealand Educational Institute has made representation to. the Education Committee of the House of Representatives on our behalf. We have offered to pay for them with compound interest; but no legislation exists at present, to allow us to do so. I understand that the Education Committee has been sympathetic with us in the matter, and has thought our request not unreasonable. 6. My present position is : I have just completed thirty years of unbroken teaching service. Twenty-three and a half years only are counted for superannuation purposes. When I have taught thirty-five years, only twenty-eight and a half will be counted for superannuation purposes. Further, I shall not be 60 years of age. So if I propose to go out on thirty-five years' teaching service, I will be subject to severe actuarial deduction under the proposed new Bill. Yet I have paid superannuation on all my years of counted service, and during the last several years on my maximum salary. Under the existing Act I could retire, as by right, on reaching the age of 55, drawing as superannuation as many 60ths of my salary as I had completed years of payment into the Superannuation Fund, with no actuarial deduction. The fact that I completed my degree course before beginning to teach, while it has helped to make my teaching more efficient, will certainly help to make the new proposed conditions much harder for me.

Ds. Herbert Chesson, Russell, Bay of Islands. (H.) I have the honour to place my ease before your Committee, but cannot afford the expense of a journey to Wellington to appear before you personally. lam residing in Russell for motives of economy and health, so trust you will accept this statement of facts. I joined the Government Service in 1909 as Medical Officer in Charge of Hanmer Springs and in the following year accepted the appointment of Chief Medical and Health Officer at Rarotonga. In 1911 I returned to New Zealand owing to illness caused by tropical conditions, and was appointed to the Department of Health as District Health Officer for Wellington at a salary of £500 per annum and compulsorily joined the Superannuation Fund. I have since occupied the positions of District Health Officer, subsequently termed Medical Officer of Health at Christchurch, and finally Auckland, in charge of the North Auckland and Thames-Tauranga Health Districts from which I was retired on attaining the age of 60, after twenty-one years' service in the Health Department, last year. My salary during

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these years rose to £900 in 1920, but when the cut of 1922 came into operation was reduced to £837, and only rose subsequently to £851, to be again reduced to £766 last year by the 10-per-cent. cut. I continued to subscribe, however, on the higher rate. The salary throughout my service was a very poor one for a medical practitioner with special qualifications. Custom requires that one should live at a standard commanding the respect of the profession and the people with whom departmental business brings one in contact. I gave my son an expensive education at Christ's College and as a Civil Engineer at Canterbury College at my own expense without seeking Government bursaries or other assistance. I also had to maintain for twenty-five years my aged and infirm mother-in-law. I have had no opportunity to save money, and when you consider that approximately £60 was compulsorily deducted annually from my salary and a high and increasing income-tax and I have a . life insurance policy to keep up for the benefit of my wife should I die before her, it did not give much chance for saving in my late position. I must point out that in order to qualify for the position of District Health Officer or Medical Officer of Health it was necessary for me to go back to England to take my D.P.H., entailing an extra year of study at University college. This diploma was not in those days obtainable in New Zealand, and the number of medical men possessing it were very few. To do this I gave up a growing practice at Rakaia which was then bringing in £1,100 per annum in cash. I spent all my savings in the expenses involved in connection with my course in London. Taking into consideration the loss of income during the period entailed actually a loss of nearly £2,000. It was not a pleasure trip, but hard study and work all the time. On entering the Department I commenced at a salary of less than half my previous income. A very poor proposition, you will admit, and which I now bitterly regret. I, of course, depended entirely on the agreement and the guarantee of the Government to pay me a retiring-allowance in accordance with the provisions of the Superannuation Act then in force, and my ability to rise in the Service to a position which would at least secure me the £300 allowance which was and is the existing limit— surely a small enough allowance for a professional man whose education has cost a considerable sum of money, and, in addition, a further large outlay to secure a special qualification, and who could have easily made a considerably larger income than he received in salary, outside the Government Service, without much extra outlay, had he elected to remain in private practice. Actually my retiringallowance is only £296 55., not much recompense after spending the very best years of my life in the Government Service and consequently missed all opportunities to have built up a private practice or specialized, as I would otherwise have done, in clinical work. My contributions to the fund amount to a sum which will pay my allowance for four years without any subsidy, and not taking into account accumulating interest. I have nothing beyond my allowance to live on and my wife will be dependent on my life assurance policy for which I still have to pay premiums, should I predecease her. Having missed my opportunity, I cannot, at my age and after so many years away from clinical work, start in on general practice nor would it be reasonable to expect it either on my own account or in fairness to patients who might rely on me. Departmental administration is totally different to clinical practice, and unfits one for such work. Is it not unfair that, having served the country faithfully and conscientiously, depending entirely on the good faith of the Government regarding my ultimate retiring-allowance, that in my advancing years I should be faced with financial worries which it has not been possible to foresee or would even be thought possible ? I was aware some time prior to my retirement that it was contemplated to retire men who had arrived at the age of 60 and therefore qualified to receive their superannuation allowance. There was no suggestion then that the allowance would be computed on an actuarial basis, and having ascertained that I was entitled to receive an allowance of £296 ss. which was so close on the maximum allowance of £300 allowed by the Act, and realizing that further service would not materially benefit my ultimate allowance, although I would still have to contribute to the fund, I made no protest which I most certainly would have done had there been any suggestion that I would not receive the allowance to which I am legally entitled, and was, through the Act, the agreement between myself and your Government when appointed to the Service. My retirement was for the purpose of economy to relieve the conditions resulting through appointments made subsequent to my own. It is hard to believe that after joining the Service under the conditions provided in the Superannuation Act, having contributed to the fund for twenty-one years, having complied with all requirements for an allowance definitely specified in the Act, and then retired to suit the financial convenience of my Department, that it should be contemplated for one moment to alter such allowance by substituting an entirely different method of computation. I further point out that Medical Officers must necessarily enter the Service comparatively late in life, and, therefore, can never qualify on the forty years' service basis. That they enter the Service fully educated and qualified for their position, and in the case of Health Officers with an extra and special qualification obtained at their own expense and considerable hard work. I would also mention that apart from my age I am not now in a physically fit condition to start out on a private practice in opposition to younger men who already have the start of me, and I could not stand the strain mentally or physically of such work. Some years ago my life assurance society refused to pass me for an increased policy on account of the condition of my heart, and advancing years have certainly not improved this condition. I could not now stand the racket and night work of general practice and through my service with the Government I have lost my opportunity for special work. I may also mention that within the last four years I refused an opportunity of a much better position in another Dominion which I would not have done had I any doubt regarding the question now under review.

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To summarize, hardship in my case would be occasioned by any change in computation of my allowance owing to— (1) Twenty-one years of service, twenty-three years including service in Hanmer and Rarotonga, during the prime of life from 37 to 60 years of age, during which I could have been sure of making an income of at least twice and probably three or four times the salary received from the Government. (2) During this time I would have had opportunities of providing more effectively for my retirement and possibly earlier. (3) That I am entirely dependent on my superannuation. (4) That I am too old now and physically unfit to commence a private career. (5) That I have liabilities which even now I find difficult to meet and which I could not do if my allowance is in any way reduced. (6) The expense incurred in qualifying for my position as Health Officer which could have been spent to better advantage to myself. (7) Owing to the present conditions my son is now out of a position, and may be a further liability until times improve. Trusting that my case will receive your favourable consideration.

J. D. Gbay, 25 Arney Road, Remuera, Auckland. (I.) As I am unable, owing to ill health, to appear before you in person, I ask your permission to place before you in writing my representations on the recommendations of the National Economy Commission, now embodied in the Bill under your consideration. In the first place, I protest most solemnly against placing so great a dishonour on New Zealand as the adoption of these legislative provisions, without amendment, will impose. It is surely unthinkable that our Dominion should be the first amongst the Commonwealth of British Nations to seek and follow the easy path of breaking faith when faced with the test of hard times. I can see no resemblance between this very personal and confiscatory measure, drastically penalizing a section only of retired public servants, and the general remedial legislation which Parliament has felt it necessary to pass in recent months. The latter has applied to all sections of our citizens (including State annuitants) and they have benefited or suffered by it, or both. But in the case of the Superannuation Amendment Bill, we leave one party to a contract recommended to use the might which it alone possesses to cancel that contract and repudiate its provisions. That is proposing something entirely new and evil in our legislative and administrative record. The National Economy Commission, which has sponsored these proposals, admits that the State, by its past defaults and by other acts of nature detrimental to the Superannuation Fund, is responsible for the unsound condition in which the fund stands to-day, yet the only remedy these gentlemen can suggest is that the State should commit a most dishonourable act and cast upon its innocent servants the whole burden resulting from its own actions. It is admitted, then, that the plight of the fund is due not to any breach of conditions by contributors, but to the inability of the State, in this period of acute financial stress, to make good the guarantee it gave to its servants in past years. Having regard to this fact, and recognizing that State annuitants, in common with other classes, should bear their just share of retrenchment during the continuation of these difficult times, I protest most strongly against this amending legislation, because it proposes to drastically alter the retiring conditions of certain annuitants for the rest of their lives, instead of calling on all State annuitants to bear a share of hardship, while the need exists, proportionate to the value of their pensions. That is surely the only just and logical method of treating retired public servants. These proposals of the Commission, now embodied in the amending Bill before you, are, so far as they relate to annuitants, unjust, inequitable, and anomalous. It is impossible for them to be otherwise. The Commission proves this by first proposing that all pensions should be " adjusted " according to " actuarially computed principles," and then immediately recommending exemptions for reasons which have no relation to actuarial principles. The Commission actually recommends, and this Bill provides for, the exemption of the very class of annuitants who have contributed for less years to the fund than any other class. For the above reasons, I respectfully ask that retired public servants be exempt from the operation of the Bill, and that any sacrifice they may reasonably be expected to make at this time should be in the form of a cut in all pensions, graduated in proportion to the value of the pension received and continuing only until the end of this economic depression. That will be a sacrifice as other classes of annuitants are being asked to make.

P. G. Withers, Limpfield, Geraldine, Canterbury. (J.) I beg to request that your Committee will consider the case of compensation officers under the Civil Service Act, 1866, and amendments thereof. My own case is typical. 1. Before joining the existing fund I was compelled to surrender all my rights accrued and accruing under the before-mentioned Acts. 2. My accrued rights amounted to £762 Bs. 9d., which sum was credited to the fund. 3. My accruing rights, which at time of my retirement amounted approximately to £2,676 10s., were surrendered to the Government.

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4. Altogether I had to surrender rights accrued and accruing amounting to £2,676 10s. 5. These rights surrendered were a bona fide consideration paid for my pension, and the Government was released of its direct obligations to me under the Act of 1866. 6. I need hardly point out that in addition to the foregoing I had to pay into the fund at the rate of 8 per cent, per annum on the amount of my salary.

A. E. McGregor, 201 Featherston Street, Palmerston North. (K.) Without prejudice to any claims or rights I may have under the Public Service Superannuation Act, 1908, or acknowledging the right of the Government to repudiate its responsibility and liability to its present and past employees, I beg to submit the following facts to the parliamentary Committee set up to take evidence in connection with a Bill now before Parliament proposing to amend the Act referred to above. I joined the Public Service in 1885 and became entitled to certain compensation for loss of office or on retirement. Before joining the superannuation scheme in 1908 I had to agree to forgo my rights to compensation and to consent to the paying into the superannuation scheme of an amount of over £400 that had accrued to me. In addition to this I had to pay 1 per cent, on my salary up to the time of my retirement, after forty years and nine months' service. I had more than fulfilled all examination and other requirements, yet after twenty years' service I was receiving a salary of only £200 per annum, although I was then in a responsible executive position. At thirty years' service I was receiving £300 per annum. Promotion was then delayed because officers who had reached retiring-age and maximum of service were retained in the Service during the war and for some time thereafter. Of course I did not complain of such action, but it had the effect of bringing much of my promotion into the last few years of my service, and it would be manifestly unfair that the amount due to me as superannuation should now be calculated over a period in which I was held up to meet the exigencies of the country, and in which I with others suffered a substantial cut in salary. If my superannuation is calculated on the last ten years of my service I will suffer a loss of approximately 30 per cent, of my allowance. I gave my very best services to my country, and by careful management and foresight I helped materially to produce the surplus of receipts over expenditure that characterized the Department in which I served for many years. On retirement I was thanked specially by the Department for outstanding services I had rendered ; and now the Government proposes to single out its late faithful servants and penalize them in their declining years with a cut much beyond what members of Parliament have suffered ; a cut on moneys to which they have contributed, and which the Government has agreed to pay to them. I have before me a list of persons receiving gratuitous payments from the public purse. I have not noticed that any of these persons are to suffer a cut, although they made no direct payment to the allowance they are now receiving and their services were in many instances comparatively short. I would remind your Committee that superannuitants pay income-tax on the highest scale as on " unearned income." Let me also say that I know from personal experience as an executive officer that it is the Superannuation Fund that is the sheet-anchor of the Public Service. Disturb the confidence of the Service in this fund or the management of it and the Government will have gone a long way in the direction of destroying the efficiency of the Service. It has been the belief that superannuation was certain at the end of faithful service that has caused many good officers to decline tempting offers of outside employment, and your Committee will probably realize that it is nearly always the tried men of good ability to whom such offers are made. A great deal has been said and written lately on the sanctity of contract. If it has not already done so it would be as well for the Government to pause and consider what moral effect its repudiation of the written word and bond would have upon the community. Has the Government realized that if its proposals largely to reduce the superannuation allowances are carried many men who have hitherto refrained from taking private employment will be forced on to the labour-market to the detriment of those persons now filling positions. In other directions where the Government has made reductions in various payments some limit both as to amount and time for which such reductions are to be made has been stated. Would it not be fair that it should provide equal limits in proposed reductions to servants who have served it faithfully ? Further, in all other reductions that have been made the reduction has been on income only. In the case of a reduction of an annuity a reduction is being made in a case where a capital contribution has been made for such annuity, and it is clearly a case of confiscation of capital. I understand it is being provided that payments to the fund should be made from the earnings of revenuing-producing Departments ; this, of course, is as it should be, and such payments should be made before any declaration of a surplus is made.

Abthuk G. Reece, Te Aroha West. (L.) Now that the superannuation position is under review, could I place before the Committee the claim for recognition of back service where such was continuous and conditional on back payments plus interest being made for the period disallowed. Certain teachers are disallowed the first two years so-called " temporary " service, even though they carried out the full duties of a teacher's position and continued in that position. Those in the Service before a certain date are allowed from the commencement of their service, while present " probationers " are bound to contribute. In some cases the disability is twofold in that not only are the two years disallowed, but an increased percentage has to be paid when contributions become due.

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Miss Ethel G. Dugleby, 114 Frederick Street, Hastings. (M.) As an annuitant whose retiring-allowance will be aflected should the ten years' service clause be adopted, I beg to place before you the following facts : — (a) I commenced teaching, as a pupil-teacher, at the Napier Main School in 1893, at a salary of £20 a year, during my pupil-teachership often commanding classes of forty pupils and upwards. (b) I retired in my fiftieth year at the end of February, 1926, after 32§ years of service (all in Hawke's Bay) on a retiring-allowance of £223 lis. per annum. (c) In 1898 I was appointed to a sole charge country school (Tamumu) at a salary of £80-£9O per year. (d) In 1901 I was appointed to a larger sole charge country school at Omahu (Fernhill) at a salary of about £140. This position I held for twenty-five years, during half of which time I had no assistant, the high roll numbers fluctuating on account of many Maori pupils with ages varying from 5 to 16 years, numbers of them knowing very little English. After years of strenuous work, under difficult conditions, this school rose to a state of high efficiency, with excellent reports —every pupil presented by me in Standard VI gaining a certificate. My work, particularly among the Maoris, was far more than that of an ordinary teacher. (e) The ten years' service clause will affect me because during the years 1916--26 (when I retired) my salary rose by degrees from £210 to £370 per annum (exclusive of house allowance), and only during the last five years of service did I receive the maximum salary. When cuts were made I paid superannuation contributions on the higher salary, and also paid (in one sum) on house allowance. (/) Having heavy family responsibilities during the greater part of my teaching career, it was only when the salaries increased that I was able to save. My retiring-allowance therefore is the principal part of my income. (g) My sole reason for retiring when I did (for I was devoted to my work) was on the advice of my medical adviser, as very serious and costly illnesses in 1922-23 impaired my health and permanently affected my heart. In conclusion, I wish to point out that by computing retiring-allowance on a ten years' average, hardship will be imposed on all those teachers who, like myself, gave the very best of their lives and their abilities to the profession, working under much more difficult conditions than prevail to-day, and for most of the time on lower salaries. With the fullest sympathy for the Government in its difficult position to-day, and, while willingly submitting to all other reduced income and increased taxation, I do feel that the permanent reduction of my retiring-allowance will be a hardship, especially if taken on a ten years' average. Had I thought the conditions on which I contributed to the Superannuation Fund would be altered, I should have sought, during the last ten years of service, a higher salary, to which my position on the graded list and my record would entitle me. Maximum salary received, £370 plus £40 house allowance : £410.

J. Dalziel, Wellington. (N.) I really cannot understand the attitude taken up by quite a number of members of Parliament in regard to superannuation. Ido not think that it can be called a breach of contract on the part of the Government to adjust those that got pensioned off on boom-time wages. It would be unreasonable to expect others to keep them in luxury, while themselves struggling in poverty. In regard to the £300 limit, if this Act of 1908 is allowed to be cancelled it proves conclusively that there is nothing a Tory Government would stop at. Those who have had a good salary all their lives in permanent work in a sheltered industry, promotion guaranteed by length of service, should be well satisfied without becoming a burden on the rest of the community for the rest of their lives. They have never proved themselves men of ability to my satisfaction. The superannuation was never intended to be more than a pension for old age, and it appears that this gift is going to be at the expense of the lower paid worker and the poor taxpayer. It is also ridiculous to suggest working old men in the service up to advanced years while young men are idling about without a job. First the Government have put a considerable number off on thirty years' service. Now they are jumping the other way — looks as if they do not know where they are ; and I think it is only fair to those who have been paying in for a good number of years if the 1908 Act is cancelled, they should have the privilege of withdrawing their superannuation, compound interest, and placing it in a provident fund where we are sure we are protected. In my opinion the attempt to cancel the 1908 Act is criminal at a time like this, and would not be considered by any other Government in the world to-day.

William Costeb, 188 Sydney Street West, Wellington. (0.) As a Post and Telegraph superannuitant, requested to retire in 1921, about thirteen years before expected, thus surrendering further chance of promotion, I naturally find fault with proposed measures to build up the fund. Though I realize that a cut is reasonable, in the difficult condition of affairs, the main proposal of a " ten years' average " appears drastic in my case. For fourteen years I paid 7 per cent, into the fund. This and compensation credited me would more than amount to 7 per cent, for the whole of my forty years' service.

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I know of at least three officers besides myself who protested against retirement in 1921—one successfully—and I think it was the liberal terms offered that the majority of these loyal officers were led to accept so readily. The injustice amounts to this : Immediately on our retirement senior officers received quick promotion, and not being " required" to retire at forty years their ten years' average service must show up to their special advantage. The table appended (from memory) shows my record, and those retired in 1921 would disclose a similar record. Salary for Forty Years. £ £ £ £ £ Ist .. 36 9th .. 100 17th .. 170 25th .. 180 33rd .. 230 2nd .. 36 10th .. 105 18th .. 180 26th .. 180 34th .. 245 3rd .. 36 11th .. 110 19th .. 180 27th .. 180 35th .. 260 4th .. 40 12th .. 115 20th .. 180 28th .. 180 36th .. 275 sth .. 50 13th .. 120 21st .. 180 29th .. 190 37th .. 350 6th .. 75 14th .. 130 22nd .. 180 30th .. 200 38th .. 400 7th .. 100 15th .. 145 23rd .. 180 31st .. 210 39th .. 450 Bth .. 100 16th .. 160 24th .. 180 32nd .. 220 40th .. 450 First 8 eight years : Average, £63. Intermediate 24 years : Average, £160. Last 8 years : Average. £332.

William Cooper and 2 otheks, Dunedin (P.) On behalf of ourselves and other superannuated Government servants, we beg to submit the following points for your earnest consideration : — First, respecting the compensation which had accured to officers prior to 1908 when the Superannuation Fund was initiated and the equity of taking same into consideration if adjustments are contemplated : — Comparison of Cost to Fund between a " Compensation " Officer and a Non-compensation Officer. "A" is a compensation officer with £600 to his credit as accrued compensation which goes into the fund on his joining. " B " is an ordinary contributor with no compesnation. Both join the fund at its inception in 1908, and they pay the same rate of contritubtion, 7 per cent. " A " retires four years earlier than " B," but they both retire at the same age, say 54, and both draw £300 per year from the fund after retirement. Both live for twenty years after entering on superannuation, and during these twenty years they have cost the fund as follows : — Cost to Fund. £ £ "A " twenty years at £300 .. .. .. .. .. 6,000 Less his compensation paid into fund .. .. .. 600 5,400 "B " twenty years at £300 .. .. .. .. .. 6,000 Less four years' contributions in excess of what " A " paid on, say, £450 at 7 per cent. .. .. .. .. 126 5,874 Thus " A " has cost the fund £474 less than " B," and in equity the compensation should be allowed to " A " against any reduction that is made now in his superannuation allowance, to be returned in a lump sum or by monthly payments. The fact that more has been drawn out of the fund than has been paid in has not been lost sight of. We are also aware that we agreed to surrender any accumulated compensation, but that agreement may now be broken. As there are now very few " compensation " officers left, and the number is diminishing, the cost to the fund would be as light (in time lighter) than that caused by the abolition of the £300 retiringallowance. Second, undue burden placed on retired men under proposed readjustment:— Officers still in the Service have recently suffered two cuts of 10 per cent, each (equal to 19 per cent, on the salary drawn before the first cut). It is now proposed (presumably with a view to " equalizing " the sacrifice to inflict a 20 per cent, (maximum) cut on retired officers. This is inequitable. A present servant drawing £500 before the first reduction would now draw £405 ; a retired man drawing £333, based on a retiring salary of £500, is reduced by a 20-per-cent. cut (=£66) to £267. The latter is not in a financial position to stand a 20-per-cent. cut; or, to put it another way, 20 per cent, off a retired man is 20 per cent, off two-thirds annuity, whereas 20 per cent, off an active servant is arithmetically 19 per cent, off three-thirds, or full salary, an injustice to the retired man as against the active servant. Furthermore, those active officers not yet near retiring-age will, on retirement, in most cases have recovered the amount of the reductions made, by increments under the Public Service classification, and will meantime only pay to the fund on the salary drawn if they have chosen to do so. Thus, at retiring-age, they will not feel the effect of the late reductions. They may have to stay in the service

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for five years more, but in most cases this will be viewed with equanimity. Quite a large number of prematurely retired men would have welcomed the additional service. Thus the present servants of the State (who have most interest ahead) are, on the Commission's recommendations unduly favoured at the expense of retired men. Another reason why present public servants should bear a greater part of the burden of strengthening the fund is that the removal of the £300 maximum limit of future pensions will be an immense benefit to large numbers of present employees. When a reduction is once made on superannuated men, it will never be restored. For the foregoing reasons we contend— (1) That no cut at all should be made on present superannuitants. (2) That if any reduction is made, the accumulated compensation (on the basis of present expectation of life) should be allowed against such reduction. (3) That the relative interests between those now in the Service and those on superannuation should be more equitably adjusted than is proposed in the Bill. (4) That the following alternative methods be adopted only in the event of a cut being necessary :— (a) 10 per cent, off all retiring-allowances from £400 upwards. (b) That a graduated scale be followed, beginning at 5 per cent. (c) That is a percentage reduction is to be made, it be on the basis of the amount contributed by superannuitants to their funds during the last five years of their payments. The contents of this letter are not in any way an admission that we agree to surrender any part of our superannuation, which surrender, if forced upon us, would in our opinion be a clear breach of contract, but our suggestions are suggestions as to lightening the burden on superannuitants.

James Graham, 33 Rahiri Road, Mount Eden, Auckland. (Q.) As one of those superannuitants interested in the proposed changes in the method of calculating the amount of retiring-allowances, I wish to point out how I should be affected by a reduction in my annuity. I was one who entered into the contract with great confidence in the Government, and complied with all the terms without any hesitation. After completing forty years I retired from the teaching profession in my 60th year, and my allowance was calculated on the last three years of service. Still trusting the Government, I built a house to suit requirements of myself and family at that time, and, in order to meet the expense, borrowed various sums of money without difficulty. The payment of interest, rates, taxes, and other fixed charges has been a heavy drain on my resources, but there has been no real cause for anxiety, and I have looked forward to the end of my days with confidence in the ability to pay all debts and honour all agreements. I began teaching on a salary of £30 per year with £10 board allowance, and when married at the age of 32 my salary was still very low, and I assisted in rearing and educating five children the youngest being now twelve years of age. When I retired nearly seven years ago my grading was as high as at any time in the past, and the school had been placed in a higher grade and I might have remained in the service for over five years on a higher salary. However, there was a general desire for the retirement of the older teachers, to leave room for younger men. When I retired I was quite satisfied with the conditions, but any proposal to reduce the allowances of those who have already retired recalls the hardships of many years on a low salary, and, a New-Zealand-born pioneer, I am now faced with the probability of losing my home should the proposed change in the calculation of allowances be made retrospective. In my 67th year I am no longer elegible for employment in the Education service, and it would be difficult to find other work to bring in any money. I still hope that allowances will not be reduced, so that we may be able to meet our obligations as in the past.

A. T. Cavell, 55 Hatrick Street, Wanganui. (H.) As a superannuitant I beg to be allowed to submit some figures and remarks oil the accompanying sheets in support of the recommendation of the National Expenditure Commission that superannuation allowances granted before 31st March, 1921, should not be reduced. I have taken my own case, as a type for comparison and on sheet No. 1 I have shown examples of increased superannuation to officers personally known to me, but which are types of a very great number of cases which have made the strain upon the fund abnormally great. I have throughout

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endeavoured to avoid quoting oases where officers may be credited with special merit, so that the deductions may be as fair as possible.. Generally I wish to show—(1) That officers who retired before March, 1921, lost part of their superannuation by the subsequent inflation of values. They paid in at par value out of very small salaries, and found, after retirement, that the purchasing value of their superannuation was anything from 25 to 40 per cent, below par. We cannot complain of the altered conditions which were unavoidable, but we wish to point out that a further reduction would be a double infliction. (2) These officers received normal superannuation allowances which must have been in close accord with the estimates of the Actuary, and therefore their allowances are not responsible for the more recent exceptional drain on the fund. (3) The fund is unduly taxed by inflated allowances, and this I claim to show by the accompanying figures, which are examples of the general position. (4) The inflated allowances are due to — (a) The general increase of salaries. (b) The rapid promotions following on the policy- of retiring all officers with forty years' service and facilitating the retirement of so many officers with less than forty years' service. Sheet No. 1 is a few examples of officers with whom I have personal knowledge. Sheet No. 2 gives a block of officers who are shown in consecutive order as they appear on the list for 1917. By taking a group such as this, a fair indication of the . general position is shown. Sheet No. 3 is intended to show in another form the improved opportunities for promotion, the average increase of salaries, and an illustration of the rapid changes in Chief Postmasters. I wish to assure you, Sir, that I have not any personal grievance in this matter. My reasons for quoting officers with whom I have- been personally acquainted were that any statements made by me should be absolutely reliable. Your Committee will, I am sure, be glad to view the unfortunate position from every angle, and if the figures I submit are helpful in any way I shall be pleased that I have submitted them to you. Extracts from the List of Persons employed in the Post and Telegraph Department on the 31st March, 1917; also from the Report of the Public Service Superannuation Board for the Financial Year ended 31st March, 1926. Type Case: A. T. Cavell, Inspector, 1917, Salary £360; Superannuation, £257. Retired, 1919, after Forty Years' Service.

Note. —These three are quoted because they were on the same salary, and include the type case for comparison. No. 23 (Cavell) retired in 1919, and therefore received a relatively low superannuation. Nos. 21 and 22 remained and received promotion at the tail-end of their service. Their increased contributions for so short a time could not possibly justify the great difference in superannuation. It will be seen that Nos. 21 and 22 by staying in three years longer than No. 23 drew superannuation almost equal to their salaries in 1917. To do this their salaries must have averaged £541 and £516 respectively for the last three years of their service—a very solid increase in each case, considering that their position after forty years' service did not indicate any special merit. Three other Cases, quoted to show Effect of Large Increase and Effect on Superannuation.

Note. —These are quoted because they are local cases and are known to the writer personally. The first two were routine officers who gained by increased salaries, but mainly by the result of rapid promotions occasioned by abnormal retirements forced and voluntary. The six to seven years they had to spare in 1917 gave them time to take advantage of these promotions and the extra tax on the fund is obvious. These, after all, are only examples which could be added to very lengthily of officers who gained materially by the older officers being retired. The main point, however, is that the Superannuation Fund has to carry a very much greater load than any one anticipated. No. 102 was transferred to Marton and the salary at this office was raised from £305 to £470. He had to retire in 1922 on account of service. Even in his ease his salary had to average £451 for the last three years of his service to make him eligible for £304. This was another promotion at the tail-end of service similar to Nos. 21 and 22 quoted above.

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C 'no IV Name. Position. Service. Salary, 1917. annuatiōn Retired. Yrs. m. £ £ 21 Wylie .. .. Postmaster .. .. 43 0 360 361 1922 22 Willcox .. .. Postmaster .. .. 40 7 360 344 1922 23 Cavell .. .. Inspector .. .. 37 11 360 257 1919

Name. Position, 19 Service. Salary, 1917. annuatiōn Retired. Yrs. ra. £ £ 24 Roberts .. .. Officer in Charge, Telephone 32 2 305 433 Before 1926. 100 Cork .. .. Postmaster .. .. 33 10 305 433 Before 1926. 102 Kennedy .. .. Postmaster .. .. >. 38 4 305 304 1922

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A group of eleven officers receiving £315 in 1917 who all retired within nine years at an average superannuation of £348. Their average service in 1917 was thirty-one years. Nos. 33 to 37 could not have completed forty years' service by 1926, so that they must have retired on short service, indicating that the average superannuation is really higher than £348 : —

Note. —This group is taken because it represents a sequence of officers on the list having no great difference in service and who received the same salary in 1917. As special merit cannot be claimed with a bunch of eleven officers numbered consecutively, it is a fair indication of the rapidity of promotion which enabled these officers to receive such substantial superannuation, and has caused the heavy strain on the fund. Remembering that with full service the superannuation is two-thirds of the salary for the last three years of service, the £348 means an average salary for that time of £522. As some retired with shorter service, the average salary must have been greater than £522.

Opportunities for Promotion.

»Of the 220 holding these positions, at least 170 had retired by 1927, the remainder passing on to higher positions. In 1917 about forty-six of the 220 positions were held by officers whose service ranged from forty years to forty-nine years nine months. In 1927 there was only one officer over forty years' service. Some Examples of Increases to Salaries in Standard Positions. 1917. 1927. Chief Postmasters —• £ £ Wanganui .. .. .. • • • • • • 500 665 Napier .. .. . • • • • • • • 525 665 New Plymouth .. .. ■ • • • • • 500 615 Postmasters — Marton .. .. .. • • • • • • 305 470 Feilding . • ■ • • • • • ■ • • • 330 470 Waitara .. . ■ . • ■ ■ • • • • 260 380 Manaia .. .. .. ■ • • • • ■ 260 380 Ohakune .. .• • ■ • • •• • • 260 380 Patea .. .. ■• •• •• •• 275 380 Waverley .. .. . • • • • • • • 275 380 Hunterville .. .. . • • • • • • • 275 380 Woodville .. .. . • • ■ • • • • 275 380 The postmasterships are selected from places handy to Wanganui where the population has not varied materially for some time. Similar increases throughout the Service could be quoted by the thousand. Chief Postmasters (equivalent to district managers) were seldom changed, and therefore promotions to that position were infrequent. _ . It was understood that a Chief Postmaster's knowledge of his district was important. An astonishing change has taken place. Wanganui, for instance, has had six Chief Postmasters within eleven years—Messrs. Beswick, Cork, Bree, _McLean, Dawson, and Madden (just appointed). This is a rapidity of promotion which is hardly believeable, and it shatters all actuarial calculations in connection with superannuation. In addition to the foregoing information compiled by me in connection with the question of superannuation may I suggest the following points for consideration : — (1) That superannuitants leaving the Dominion should have deducted from their allowance some amount, say, 10 per cent., in consideration of the fact that the fund is partially supported by taxation which they miss paying by being absent. (2) That in the event of the £300 maximum being removed officers receiving over £450 per year should be called upon to pay an extra percentage of, say, 2| per cent, to provide for the higher amounts they expect to draw. (3) That superannuitants in receipt of, say, £200 per annum should, if they take up outside employment, be subject to a reduction of, say, 5 per cent, to compensate in some way those other taxpayers not receiving superannuation against whom they are competing. No. 2is really an actuarial matter. Nos. 1 and 3 are intended to cover matters on which there has been much public as well as private comment.

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Class V, Name Position, 1917 Service. Salary, 1917. Superannuation. Retired. No. ' |[ I Yrs, m. £ £ 27 Anderson . . .. Supervisor .. .. 33 10 315 388 Before 1926. 28 Bennett .. .. Supervisor .. .. 32 2 315 380 ,, 29 Forest .. .. Supervisor .. .. 35 0 315 311 ,, 30 Menzies .. . • Second M.O. Clerk .. 32 11 315 257 ,, 31 Smith . . .. Chief Clerk, Telephone .. 34 2 315 300 „ 32 Aston .. .. Supervisor .. .. 32 7 315 395 „ 33* Craig .. .. Supervisor .. .. 30 11 315 373 ,, 34* Elliott .. .. Assistant Supervisor . . 30 0 315 343 „ 35* Esson .. .. Supervisor .. . • 28 4 315 366 ,, 36* Gillespie .. .. Supervisor .. .. 24 3 315 305 ,, 37* Broadfoot . . .. Postmaster .. .. 25 11 315 410 „ Average .. .. 31 0 | .. 348 * Retired on less than two-thirds of their salaries.

Salaries. £300 and over. £400 and over. an | 6 0 °" er . andover. '£1,000 and over. 1917* .... 220 50 14 2 1 1927 .. 714 216 51 8 Not shown. " I .

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G. D. Cameron, 64 Islington Street, North-east Valley, Dunedin. (S.) As a retired railway superannuitant I desire to place my case before the Committee. I joined the Railway Traffic Department as a cadet (1879) and retired after forty-two years' service in February, 1921, at Winton. The most of that time I was Stationmaster at nine different stations, the last ten years at Winton. Owing to being on retiring leave, my superannuation did not start till the 19th June, 1921, so that I am not exempt from reduction as I would have been if I had come on the fund in March, 1921. At the date of coming on the fund my salary was £355 and my allowance was fixed at £236 14s. per annum. If the proposal to take the average salary on the last ten years is carried, it will mean a reduction to £189 Bs. (that is, £47 6s. per annum). During the earlier stages of the railway history salaries were poorly paid, hours were fairly long, and for some period of years there were no promotions. At one station I was five years at the one rate of pay before I received promotion to another station at £10 increase. Seeing that I have put in more than the length of service required of me, I think my case deserves some consideration. lam now 68, and have been off ten years and may have difficulty in making up the reduction. Trusting that I will receive fair treatment. G. D. Cameron, Late Stationmaster at Winton, 1921. No. 21315, Superannuation List. —Salary : Year 1912, £220 ; 1913, £230 ; 1914, £245 ; 1915, £260 ; 1916, £260 ; 1917, £260 ; 1918, £260 ; 1919, £305 ; 1920, £355 ; 1921, £355 : total, £2,750 for ten years. Average salary, £275 ; reducing pension to £183 6s. Bd. Cut, as 40 per cent, is the maximum reduction, the yearly pension would become £189 Bs.

D. Harris Hastings, 33 Moreau Street, St. Kilda, Dunedin. (T.) Although according to my reading of the Superannuation Amendment Bill before the House, I shall not lose any of my retiring-allowance, I think that the class of annuitant that I belong to will, in some cases at any rate, need special consideration. I think that I can best explain the position by outlining my own case to illustrate the disadvantages that a casual employee, who has had to buy into the fund, might suffer through no fault of his own. I joined the Railway service in 1900 as a casual clerk, and, through no fault of my own, was unable to be placed on the permanent list when the original Act came into force. In fact, the late Sir Joseph Ward told me that the Act would have to be amended before I could become a contributory of the fund. In 1931, the Government made me and others a generous offer to the effect that if we could find the money and pay up arrears from the date we joined the Service we would be placed on the permanent staff. In my case I had to pay 9 per cent., which amounted to £530, and in order to raise this money had to mortgage my house. My retiring-allowance in round numbers is £150 per annum, and when interest and rates are paid, there is no more than a bare living left, and if anv reduction is made in my superannuation allowance the property would have to be sacrificed. There are to my knowledge in Dunedin other similar cases where men have not been able to serve the whole forty years, yet have bought in, and had to borrow to raise the money. My reason for thinking that the Act will not affect me is that I was over 70 years of age when I retired. In conclusion, I would respectfully ask the Committee to consider the cases of casual hands who have bought into the fund, paying down lump sums, and have had to retire with less than forty years' service.

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STATEMENTS ONLY. Lieut.-Colonel E. D. Smythe, D.5.0., late Defence Department. (U.) The evidence I wish to place before you is that of my own personal case to show how the Bill you are considering will affect me personally. There are many others whose cases are similar to mine, so that in representing my own case I may to some extent be representing theirs also. The evidence dealing with the Bill impersonally and on general grounds will, I think, come better from the representatives of associations of superannuitants. I was an original subscriber to the Public Service Superannuation Fund, and under the provisions of the Superannuation Act I subscribed a percentage of my salary over many years in the anticipation of drawing a retiring-allowance of one-sixtieth of the pay averaged over the last three years of my service. This was my provision for the future of myself and family during my lifetime, and if the New Zealand Government had kept to its contract this would have been adequate. The Superannuation Fund did not, however, make adequate provision for the widow and family of a contributor, and I therefore took out as much life insurance as I could afford —£2,000. I worked hard in the Department for thirty-one years and a half, and during the first fifteen years was called upon to pass examination after examination which entailed incessant study. I qualified for the Staff College, which is perhaps the stiffest examination in the military service. I served in the South African War and the Great War, and came through with a good record, and had reasonable expectation of retiring on a competence. Contrary to expectations, however, the Superannuation Act which I had relied upon to safeguard my declining years has proved to be the cause of misfortune. Through it I have lost my position and lost the security which it promised. I was retired on the 31st March, 1931, under the provisions of section 39 of the Finance Act, 1930 (No. 2), which provided that members of the Defence Forces who were within five years of the normal age of retirement might be retired and become eligible for a retiring-allowance from the Public Service Superannuation Fund, the amount of the allowance to be actuarially determined. I thus lost a salary of £765 per annum, but did not get the retiring-allowance of thirty-five-sixtieths of my pay to which I had looked forward. I did not even get one-sixtieth of each year of the thirty-one years and a half service I had then completed, which would have been £401 per annum, but I got the actuarial equivalent. This term " actuarial equivalent " was not properly understood nor its effects known at the time. It meant that because I was forced out five years ahead of my time I would be drawing an allowance from the Superannuation Fund for five years longer than was expected. To prevent this cost falling on the fund the whole cost of those extra five years was placed on me. How drastically this was to affect me and others was not dreamed of by General Young, as he told me himself. Instead of the £401 per annum which my thirty-one years and a half service represented at onesixtieth for each year of service, I was given £283, a reduction of £118 per annum, or 26f per cent. Had this been realized before the retirements were carried out, I am satisfied that I and many others similarly affected would have still been in the Service and some other way of effecting the necessary economy would have been found. Had I been allowed to serve to the age of 55, as I had a right to expect, I should have survived the years when my liabilities with a young family were the heaviest and had an adequate allowance to retire on. If the Bill now under consideration is passed as it now stands, then on top of the hardship I have already suffered I am likely to have my allowance further reduced by 18 to 20 per cent., or £56, reducing it to £227 per annum. In the case of myself and others of the Defence Department, I consider that it should be taken into account that we have served the State in a profession which we cannot apply in civil life. We have worked and studied as hard as men in most other professions, we have made ourselves proficient in a profession very necessary to the State but useless to any other employer, and we are put out of the Service at a time when the depression is worse than it had ever been and when the likelihood of finding employment to supplement the inadequate retiring-allowance is at its lowest. I have been constantly alert for employment, but except for intermittent selling on commission have been unsuccessful. My life insurance has almost all lapsed, and even with the most rigid economy I can hardly make ends meet on my present allowance. Proposals. 1. There is in the Bill, I understand, provision that no allowance shall suffer more than 20 per cent, reduction. If the Bill is proceeded with I sincerely trust that this clause will remain and the figure be perhaps reduced to, say, 10 per cent. Without this clause the Bill will mean ruin to many. 2. I would request that any annuitant who has already suffered a reduction by actuarial computation of 20 per cent, or more be exempted from any further reduction, and that the Bill be amended accordingly. 3. I also request that, whether or not the amendment just mentioned is agreed to, that a " hardship clause," as recommended by the Royal Economy Commission, be included in the Bill. The Bill is so drastic and will influence the lives of so many people, many of them old people and people who have given long years of valuable service to the State, that it seems to me that justice demands that there should be at least a tribunal to which they can appeal —a tribunal with power to act.

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James O'Reilly, 68 Orakei Road, Auckland. (V.) I beg to bring under the notice of the Select Committee of the Government's Superannuation Funds Bill that I am a retired Civil servant, and my pension is only £162 Is. after thirty-five years' service. lam 68 years of age, and my wife is 66. We have no other means of support. Out of that amount I have got to pay £2 ss. 7d. every three months for emergency unemployment charge. I have also got to help to pay out of that towards a small house to shelter us. I pray that if the Select Committee do bring in a verdict to " cut " that it will not be as low as the amount I am in receipt of.

Lancelot Watson, Caldbeck, Oxford. (W.) I need scarcely say I am considerably perturbed in regard to the proposals as indicated in the press to-day. My experience as a teacher was in many respects unfortunate. My first school was Rotherham. I had not been there long when the Board of Education introduced a new scale of salaries, by which my salary was reduced from £128 to £96. I removed to Cooper's Creek, and there the salary again went down on account of the settlers leaving, the bush being cut out. I then transferred to Kirwee, where again circumstances brought about another reduction, which was repeated at Clarkville. In that school, after deducting superannuation and insurance, I had only £10 a month. It was not till I came to Oxford in 1910 thaj; I began to rise financially. On the 6th July, 1922, I retired after forty-one years' continuous service, during which time I had not been absent from work for one day for any cause whatever. I asked to retire on the 6th July, 1921, having completed then forty years' service. Had I then been allowed to retire I would have come within the provision of the new Bill that only those retiring after 1921 are being dealt with. I shall not be able to appear before the Select Committee, as I could do no more than I have here stated, except to give more fuller details. I think, under the circumstances, that I should be exempt. It is not unlikely that an average of the last ten years of salary would reduce my superannuation very considerably, much more than seven years, and my present commitments that are fixed will place me in straitened circumstances if my superannuation receives much of a " cut."

May Mackay, Newstead, Waikato. (X.) I beg to enter my emphatic protest against any alteration of the terms of contract into which I entered with the Government when I began teaching. It is most unfair to compel women teachers to continue their services for five years extra, and to deprive them of the right to retire after thirty years' service, or at the age of 50. It is especially hard on those who are within a few years of the present retiring-age. Despite one's real love for the work, and one's interest and enthusiasm for it, the strain is frankly too severe beyond a certain period for even the strongest of women. It seems to be another way of giving a further " cut " to the teaching profession, inasmuch if a teacher is compelled to retire through ill health before the proposed extended period the superannuation is accordingly reduced. If alterations are necessary, why not exclude from these penalties those who already have twentyor more years' service ?

T. L. Oswin, 23 Carnarvon Street, Dunedin. (Y.) With other superannuated officers I have signed a protest against the Bill dated 28th ultimo, which has been posted to you. There is, however, another matter affecting me which is not common to other superannuitants ; in fact, considering the circumstances surrounding my case, it probably stands alone for gross injustice. I refer to my compulsory retirement from the Service. Towards the end of 1921 I was informed by the then Valuer-General, Mr. F. W. Flanagan, that I had been retired from the Valuation Department. I started on superannuation (after protesting strongly) on the 9th January, 1922, at the age of fifty-three years and a half, with thirty-nine years of service. My premature retirement was an act partly of spite and partly to cover up the effects of some ill-advised appointments (against which I appealed) recommended by the Valuer-General. I wrote to the Prime Minister and others protesting against my premature and unjust retirement, but on all hands was denied any hearing and inquiry regarding the injustice. I now come to the point of protest against the Bill under consideration —this is in addition to the points raised in the letter signed by W. Cooper and others referred to earlier. In view of the circumstances of my retirement (fully set out in letters on record in Wellington), any alteration now in my allowance will aggravate the injustice done in 1921. A 20-per-cent. reduction in superannuation would take me back to the salary I was drawing in 1907, when a good, new six-roomed house could be rented for 15s. 6d. a week, and a tailor - made suit cost £5. Other commodities were relatively cheap. I respectfully suggest that the Committee consider deleting the clauses in the Bill that would inflict such drastic treatment as is proposed on superannuated men generally, and on myself in particular. To exempt those now on superannuation from the extended age of retirement and the " actuarial" computation clauses would give a measure of relief, but would still leave men already retired under a distinct disadvantage compared with those still working. This is fully set out in the letter signed by " W. Cooper " and others, posted to you yesterday.

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W. Nathan, 2 Vogel Street, Palmerston North. (Z.) * I saw by the papers recently that those superannuitants who retired from the Public Service prior to 1921 would be exempt from the present inquiry. With reference to the above, I beg to state that I reached the retiring-age, 65 years, on the 10th September, 1918 ; but as the war had intervened in the meantime, and a number of Public Works Engineers had gone to France, it was found that there was no one left available to take my place. I was notified in June, 1918, that the Department was desirous of retaining my services for a further twelve months, and possibly until the end of the war. In June, 1919, I was notified again that I was to continue in the Service until at least the end of the year. In January, 1920, I was notified that I was to continue for a further period, and did not finally retire until the Ist December, 1921, or three years after my sixty-fifth birthday. I would be glad, therefore, if in dealing with my case you will kindly give consideration to the fact that under ordinary circumstances and but for the war I should have retired in 1918. My superannuation amounts to £197 Bs., out of which I pay employment tax and emergency employment charge, £10 18s. ; advances to settlers, £43 13s. ; insurance, £3 12s. : total, £58 3s. It will be seen from this that when everything is paid there is very little left to live on, and as I am well advanced ia my eightieth year I cannot do much work. Documentary evidence can be forwarded if necessary. I enclose herewith a letter from the Under-Secretary, Public Works, of the 26th February, 1920, showing that I was to be retired on the 25th July, 1920, which retirement duly took place. After having retired for some time, I was again recalled to proceed to Gisborne, but as I had been paid up in full by the Department when I retired on the 25th July, 1920, and my return was only temporary, I take it that my retirement really took place on the date above mentioned. Trusting that you will consider this point, and thanking you in anticipation. Wellington, 26th February, 1920. Memorandum for Mr. W. Nathan, Assistant Road Engineer, Public Works Department, Wellington. I am directed by the Public Service Commissioner to advise that he has directed you are to be retired on superannuation on the 25th of July next, prior to which date you are to be granted eight weeks' accumulated annual leave, together with three months' special leave on full pay. While making this intimation in accordance with the Commissioner's directions, I desire to take this opportunity of thanking you for your very faithful and conscientious service which has extended over a period of twenty-six years. The necessary steps to have your case placed before the Superannuation Board will be taken in due course. (Signed) G. C. Godfrey, Acting Under-Scretary,,

Arthur Benton, Paterangi, Ohaupo. (AA.) I realize what a difficult task you have ill doing justice to all, and I state the circumstances of my own case in the hope that it may help such cases as my own. I am forty-five years of age, and have been engaged in teaching under the Auckland Education Board since February, 1909, and have contributed to the teachers' Superannuation Fund since March, 1911, a period of nearly twenty-two years. Up till 1918 I enjoyed excellent health, never having been ill, but in that year I contracted pneumonic influenza during the serious epidemic which occurred then. Some few months after I had apparently recovered I began to feel the effects of an illness which doctors diagnosed as rheumatoid arthritis. Several doctors have informed me that this was an after-effect of the attack of influenza from which I suffered. Ī have sought relief in every possible direction, and this has involved very great expense and loss of salary. During the last ten years the complaint has settled down to a chronic condition, and I have been able to continue my work, though under very difficult conditions—in fact at times against almost overwhelming odds. All this time I have required the aid of two sticks in walking, and my case appears to be very similar to that of the Hon. W. Downie Stewart, with whom, I take it, you are familiar. Should I find it necessary to retire from the teaching profession as medically unfit I would be entirely dependent upon my superannuation allowance, as with a family of four (aged respectively 17, 15, 13, and 11) and a wife to support it has been impossible for me to accumulate any savings. The question of superannuation is therefore a very vital one to me and the knowledge that I would be entitled to a superannuation allowance should I be forced to retire has been inexpressibly comforting to me. Under the Act now in force I would be entitled to a retiring-allowance of approximately twenty-two-sixtieths of my salary of £420—i.e., approximately £154. It caused me very grave consternation to learn from the Herald's account of the new Bill that contributors to the fund who retire through no fault of their own with less than twenty-five years' membership are not to be entitled to any retiring-allowance, but only to a refund of their contributions. Should this be the case I consider it to be most harsh and inhuman treatment for such as I who might conceivably be forced to retire as medically unfit with less than twenty-five years' contributions to our credit. I consider that if savings must be made in the Superannuation Funds they should not be made at the expense of the medically unfit, who have given perhaps the best years of their lives in the service of the State.

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Miss Ellen Coady, Barnard Street, Highland Park, Wellington. (BB.) I am writing to ask the indulgence of your Committee in the following matter : — I am a teacher with long service under the Wellington Education Board. At present I am in charge of the Hospital Side School at Newtown. When the first salary cut was made in 1931 I advised the Secretary of the Superannuation Fund that I wished my contributions to be made on my salary prior to that date. I received notice that this was arranged, and there I thought the matter ended. I have just learned, however, that I should have sent a second notification this year, and that now I can only expect superannuation on my reduced salary. Had I been in one of the other schools no doubt I should have heard of this rule—the Gazette does not always reach me. May I ask the favourable consideration of your Committee to allow me to pay all future contributions on my salary prior to 1931.

John Dwyer, 555 Manchester Street, Christchurch. (CC.) Having read the Government Superannuation Funds Bill, 1932, and clause 12 thereof, I thought I would briefly place my case before your Committee and respectfully ask that I be placed on the same footing as those members who retired from the Service on or before the 31st March, 1921. I retired from the Police Force on the 30th June, 1921 (on six months' leave), on attaining the age of 65 years, and after completing forty-three years' continuous service. For nine years prior to my retirement I occupied the rank of Superintendent, and the last departmental increase to my salary was in March, 1920. On my retirement I received a letter (copy herewith) from the then Minister of Justice (Hon. E. P. Lee) showing how I stood with the Department. In 1898 the Police Provident Fund was established, and during its existence I paid 8 per cent, into that fund. In 1908 the Civil Service Superannuation Act was passed, and the Police were merged into it, and the £32,000 that our fund had accumulated was collared by Sir Joseph Ward and put into the Civil Service Superannuation Fund, and the Police did not get one fraction consideration for their ten years' contributions to the Police Provident Fund. This was always a sore point with the Police, who were subscribers to the fund for ten years longer than Civil servants. This matter has no doubt been fully stressed by the members of the Police who have appeared before you, but, nevertheless, I might be permitted here to give expression to the view that all those members of the old Police Provident Fund should be placed on the same level as those superannuated servants who retired prior to the 31st March, 1921. In justice they fully deserve this consideration, as their sterling devotion to duty at all times, and their conspicuous loyalty to the Department and to the public, has been the admiration of all law-abiding citizens in the Dominion. No country to-day can afford to own a dissatisfied Police Force, but this is not to suggest that our Police Force is discontented, it is not, it is satisfied and contented, as it has been well treated by every successive Government for the past twenty years to my knowledge. I cannot travel, as lam practically a cripple from austo-arthritis. Office of the Minister of Justice, Wellington, 11th August, 1921. Deab Mb. Dwyee, I desire to express to you my regret at not being able to attend the presentation to you from the citizens of Christchurch on your retirement from the Police Force after forty-three years' continuous service. It unfortunately happened that only in the evening of the day the ceremony took place I returned to New Zealand from Samoa and Australia, and it would have given me pleasure to attend the function had it been possible for me to do so. You have had a long and honourable connection with the Police Force of the Dominion, during which time you have had to deal with, in the different capacities in which you have served, very many important Police matters, and I can express to you the recognition of the Department, and I think of the public, for the efficient manner in which you discharged your onerous duties. I very much regret that I had not an opportunity of attending the gathering in your honour to personally testify to your work and service to the country, and at the same time express to you my best wishes for your happiness and prosperity in your retirement. I trust that in the circumstances which caused my absence from the gathering you will receive this letter in the spirit in which it is intended. I am, yours faithfully, (Signed) E. P. Lee. Superintendent John Dwyer, Care of Police Station, Christchurch.

* 0. Christian, 64 William Street, Ashburton. (DD.) I have twenty-nine years' service in the Post and Telegraph Department to my credit, and as I am an original contributor to the Public Service Superannuation Fund I ask for a refund of all contributions, plus interest, compounded at fixed deposit rate, should legislation be passed which interferes with my original rights as a contributor. On account of being a voluntary contributor my claim cannot be refuted. In event of the Act l:>eing amended by legislation I ask that my request be granted.

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S. J. Taylor, 16 Archer Street, Timaru. (EE.) I beg to submit the following for your consideration. Officers of the Public Service who were retired under the Superannuation Act during the last two years with thirty-five years' to forty years' service have already had their superannuation reduced by being retired with less than forty years' service. It appears evident that those superannuated officers with thirty-five years' to forty years' service who were retired during the last two years as an economy measure have paid into the Superannuation Fund for a longer period than the majority of those who were retired with forty years' service since 1921. Therefore the thirty-five year to forty year superannuitants should be given the option of having their superannuation assessed on the average salary received during their last ten years of service. Trusting you will have the anomaly mentioned in the last paragraph rectified.

H. Binsted, Headmaster, Vauxhall School, Devonport. (FF.) I am very much concerned over the superannuation proposals, which are likely to seriously jeopardize my retirement. In 1925, when I went to the Cook Islands, one of the clauses in the terms of my appointment was that service in the Tropics would count as time and a half for superannuation purposes. The proposed amendments would appear to abrogate that clause. This would be unfair under ordinary circumstances, but in my case it would be extremely so. I overworked myself in the service of the Government in the Cook Islands, and as a result was compelled to take a year's leave of absence. During this time I had to pay my superannuation contributions on the full salary received in the islands. Not only so, but I have never fully recovered from the disorder contracted in the islands—a " dropped " stomach —in fact, a full recovery is medically impossible, while it always lays one open to more serious consequences. As you see, I shall be severely penalized if the proposals are carried into effect, as (1) Instead of retiring at the age of 54 years, I shall have to teach till I am 60 years, presuming my disorder allows me to ; (2) the unfairness of having to pay contributions at the full rate when on sick leave is enhanced by the cancellation of the time-and-a-half clause ; and (3) the six years' extra service required may easily lead to my having to retire medically unfit and on a reduced allowance. Is it possible for you to bring my case before the Commission dealing with this question ? If you can do so, I shall be most grateful, for I feel sure that your reputation for balanced views and avoidance of extremes will carry weight:

Mrs. S. J. Jones, Wood Green, Dillon Point Road, Blenheim. (GGr.) I would respectfully draw the attention of your committee to the necessity for making some provision for women teachers who have been compulsorily retired at the age of 55 years by the Wellington Education Board. I believe only two education districts, e.g., Wellington and Otago, forced their women teachers to retire at the age of 55, while the other education districts did not compel their women teachers to retire at that age. In my own case I was retired at 55 years of age though I was in excellent health and doing excellent work (as shown by the Inspectors' reports and my position on the grading list). I had only twentyone and two-third years' service in New Zealand, and my pension is only £133 Os. 2d., and if the Bill in its present form goes through I shall lose considerably.

Leslie McCartney, P.O. Box 1344, Auckland. (HH.) My father joined the Railway Department some fifty years ago and came in under what I understand was the compensation scheme. Later, when the present Superannuation Fund was inaugurated he joined that and contributed to the fund right up till his retirement in 1924. Although holding responsible positions for many years, it was only during the last three or four years of his service that he was paid anything in the way of a large salary, so that any alteration to the superannuation payments which would be based on increasing the number of years on which the retiringallowance should be computed would hit him very hardly. At the present time, owing to illness, he is quite incapable of attending to any business whatever, and it is doubtful if he will live for a very long period on account of the nature of his trouble. In the meantime he has certain commitments which it would be practically impossible to meet if his retiringallowance was materially decreased. He has suffered from his present trouble for upwards of ten years during which period surgical expenses, doctors, and hospital expenses have cost him several hundreds of pounds for his own trouble as well as a very considerable amount for similar expenses in connection with my sister, who was practically a permanent invalid for over twenty years, so that these expenses have left him in the position of having no income beyond his retiring-allowance. The bringing-up and educating of a family of six is a matter of considerable expense, and at one time in order to keep his superannuation payments going it was necessary for him to cancel some life insurance policies. During the war my younger brother was killed in action and at that time my mother was informed she was entitled to a pension on that account. However, she did not avail herself of this.

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The position is, therefore, if anything can be done at all to keep his present retiring-allowance at its existing figure of £510 per year while he lives, which according to our doctor's advice cannot be for long, such action would be a very great help and relief to my mother. If it is necessary for any one to give evidence in regard to his case before a Committee inquiring into the present legislation I shall be glad to have the opportunity of doing so.

William Adams, of Wanganui, a Superannuated School-teacher. (II.) I am 71 years of age and have drawn £195 per annum as superannuant since 31st March, 1922. I commenced teaching in 1874 in England and in 1887 I joined the New Zealand Education Department. In 1922 I was superannuated after having done thirteen years continuous teaching in England and thirty-five years in New Zealand, making a total of years forty-eight. Since then I have been a member of the Wanganui Education Board, a member of the Board of Governors of the Wanganui Girls' College, and Chairman of the Boys' and Girls' Agricultural Clubs of this Wanganui District — a continuous service in the cause of education and the State of fifty-eight years, and as the enclosed brief history will show, I have made (though I say it myself) an unparalleled success of it, and now my prospective reward is a reduction of my meagre pension of £195. This will be really a further reduction, as is well known in this district and to the Director and Chief Inspector that I have been a victim of circumstances in having to draw so low a sum of £195. This calamity to me was brought about by my transfer as Headmaster at Foxton to Mangaweka, where the latter school rapidly decreased in numbers and salary. From 1911 to 1917 I conducted the Teachers' Saturday classes at Mangaweka and Taihape, and although I paid at the rate of 8 per cent, on emoluments I got nothing for superannuation out of it. It must also be remembered that I had to pay 8 per cent, on a higher salary since the inception of superannuation with no corresponding benefit to me as my last twelve years was spent at the Mangaweka School with a consequent loss of salary and superannuation. Mine is an exceptional case, seeing that the usual annuitant draws on the salary for the last three years of service, which is usually the highest, whilst unluckily mine was down. Out of my present superannuation I have to pay : Unemployment, £9 16s. ; levy, £1 ; interest and capital, house, £66 4s. ; rates, £18 13s. 9d. ; insurance, £7 : a total of £102 13s. 9d., which subtracted from £195 leaves less than £100 per annum for my wife and self to live on —less than £2 per week. And this after fifty-eight years of faithful and honourable service to the State. It is now proposed to further reduce my income, and my object in appealing to your honourable Committee is that they may make a direction of the following ways, which I humbly beg they will agree to : — (1) That they will recommend the Superannuation Board to reconsider my case, and, if possible, increase my superannuation to £250 ; or (2) That they will not impose the serious hardship, after all my years of service, to reduce my superannuation, but will order that the annual grant to me remain unaltered. Brief History of William Adams. England : William Adams is an ex-English school-teacher, having entered the services of the English Education Department in 1874 as a pupil-teacher under the Hanslope Education Board. While serving his apprenticeship he was also a student at the evening classes of the Wolverton Science and Art Institute and carried off several Queen's prizes both in art and science. In 1880 he secured his teachers' art certificate. At the end of his pupil-teachership he was appointed assistant master at the Belgrave Higher Grade School at Darwen, Lancashire, where he successfully conducted the day and evening science and art classes. In 1885 he obtained his English Diploma of Education and a Royal Scholarship at the School of Science, South Kensington, London. New Zealand : In 1887 William Adams came to New Zealand and has filled positions as headmaster in various schools in Hawke's Bay, Taranaki, and Wanganui. In the Wanganui district he was successively Headmaster at Waitora, Turakina, Patea, Foxton, and Mangaweka. For thirteen years he was Headmaster of the Patea District High School, and for another thirteen years he was Headmaster at Mangaweka, where he had charge of the teachers' Saturday training classes for seven years. Ten years ago he reached the age for retirement and was superannuated. Altogether William Adams had completed fifty-eight years service in the cause of education, having passed through every grade in the profession, and still takes a great interest in educational matters, as is evidenced by the fact that he is a member of the Wanganui Girls' College Board of Governors, besides being Chairman of the Boys' and Girls' Agricultural Clubs of the Wanganui Education Board's District. Civic duties : In addition to his scholastic duties, he has in the past taken a great interest in the school Cadet and Volunteer movements. He has successfully filled the position of Captain of the Turakina Rifle Club, Captain of the Patea Rifle Volunteers, and Major of the Main Trunk Battalion of Cadets. Throughout his career William Adams has taken a fair share of civic life, for years he has conscientiously carried out the duties of Chairman of the Mangaweka Town Board, and only last year on account of ill health relinquished his duties as a member of the Wanganui City Council. He is also a member of the Wanganui Unemployment Committee. For many years he has occupied the position of Justice of the Peace. Literary services : In 1880 William Adams was a Queen's Prize man in Agriculture, and in 1905 he won a travelling scholarship in nature-study and agriculture, and toured the Australian States in consequence. Before he came to this colony in 1887, he was becoming well known in the educational world at Home as a writer of elementary school works, which commanded a ready sale and were highly

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spoken of by the Educational periodicals of that day, e.g., the School Guardian in reviewing one of his works (" Geography of England and Wales," 222 pages) said, " the writer is evidently a teacher of considerable experience, who knows exactly both what to teach and how to teach," while the Educational Chronicle, reviewing the same work, said, " a sensibly and carefully written book, exhibiting a thoroughly practical insight into the requirements and capacities of children, and a respectable addition to the best of school-books for class subjects." The School Board Chronicle, the Educational News, the Schoolmaster, and other newspapers of the day show that William Adams's other works elicited universal satisfaction from the leading educational journals of Great Britain and, as one newspaper stated, " plainly show that in the production of his books the author undoubtedly proves his knowledge of and insight into the art of pedadogy in a practical and useful fashion." To the teachers under the Wanganui Education Board William Adams will be remembered by his " Some aspects of Education in Australia," " Nature-study in New Zealand," " Experiments in the School," all of which he wrote specially for the Wanganui Education Boards' Schools and Teachers.

Amelia Bagley, " Naumai," 10 Turama Road, Royal Oak, Auckland, (JJ.) My length of service under the Department of Health was over twenty-two years. I was compulsorily retired at the age of sixty in October, of 1930. I always paid into the Superannuation Fund at the highest rate allowable for my grading in spite of salary cuts. When I joined the Service in 1908 there were few Public Service positions for qualified nurses, and these demanded qualifications which few nurses at that time possessed —namely, certificates of general and midwifery training and considerable post-graduate experience, in responsible public positions. These I was fortunate to possess. I will state my training and experience prior to entering the Public Service in the hope that some consideration might be granted to me in view of that. I entered the Dunedin Hospital as a probationer for training under the two-year certificate scheme in April, 1892, at the age of 2lf years, a systematic scheme of nurse training was then being introduced ; after one year of our training (we were a class of thirteen) the term of training was extended to three years, but as we had signed for a two-year term we were permitted to sit for the examination at the end of the two years, but could complete the three years if we wished, and most of us did. I still have my certificate and testimonials from Dunedin Hospital. In 1895 the Auckland Hospital was short of trained nurses, and that Board wrote to the Dunedin Board to see if a,ny nurses could be spared. The positions were offered to some of us by the Lady Superintendent, and I was one of two to accept, and came to Auckland Hospital in October, 1895, as a staff nurse, was promoted to the charge of a ward a few months later, after seven years in charge of wards and as night superintendent, I applied for and was appointed matron of the Masterton Hospital, 1902. In that year State registration for nurses was brought in, and I was one of the first hundred nurses to be registered. I resigned from Masterton Hospital in 1905, going immediately to St. Helens Hospital, Wellington, which was just being opened. (I was the first registered nurse to be qualified as a midwife in a New Zealand training school.) During the interval 1906 to 1908, I did a little private nursing, but was for some time employed by the Health Department in relieving the matron and submatron at St. Helens Hospital, Wellington. . I entered the Public Service as Assistant Inspector of Hospitals and Midwives m, I think, June of 1908. My active public work has extended over a period of 38| years, except for the few private cases I nursed in 1906 and 1907. I must apologize for writing so much about myself, but I think it will be very hard if I am now to be reduced to penury when Ī can no longer fairly compete with younger women in my profession (although my health is fortunately still good), but had there been any reason to fear upon my retirement, that the superannuation pension to which I had paid in was uncertain, I might, at that time, perhaps, have found another position. Also, for many years, I had arranged my life savings, which at best could be but small, in order that at retirement I might have a decent home for myself and relatives whom it was my duty to look after. Into this home I have put all my savings, and am now dependent entirely upon my superannuation pension.

T. B. Strong, Director of Education. (KK.) Teachers'' Superannuation Board. —The membership of the Teachers' Superannuation Board includes four representatives of the contributors who hold office for three years, and section 71 (1) (b) of the Public Service Superannuation Act, 1927, provides that, where necessary, the ballot shall be taken on the first Monday in March, the next election being due in March of next year. The month of March is a very inconvenient month in which to take the ballot, as owing to changes made early in the year in respect of teaching staffs of schools the Returning Officer is not aware of the addresses of many contributors, and consequently many would not receive voting-papers, and so be unable to vote. ' . In addition to this, the regular work in the Superannuation Office is particularly heavy in the early part of the year on account of the annual balancing of accounts, &c., and the Secretary of the Teachers' Superannuation Board asks that the Act should be amended to provide for the election in, say, September or October instead of in March. The Hon. the Minister of Education has approved of the proposal to alter the date of election, and the Secretary of the Teachers' Superannuation Board (who is also Returning Officer) will attend and give further information if you so desire.

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H. Leaper, 55 Majoribanks Street, Wellington. (LL.) As the Superannuation Act is at present under review by Parliament, I would appreciate your assistance in bringing before the Committee appointed to consider the Act, the matter of payment of interest on the contributions made to the fund by a Civil servant who is compelled to leave the Service before completing the period of twenty years as is at present laid down. It must, I think, be admitted that the contributions, together with accumulated interest, are the property of the contributor and as such should be refunded intact on his leaving the Service, instead of as has been done, only the bare contributions being refunded. As the contributor in such cases has received no benefits from the fund and is no longer a liability it is not equitable that any financial benefit should accrue to the fund at his expense, especially as the subsidies paid into the fund by the Government in respect of these contributions are retained, and, together with interest earned, must in the aggregate amount to a considerable fund, in connection with which there is no future liability. In my own case I fell short of the required twenty years by a few months. I raised the question of payment of interest at the time my money was refunded, only to be informed that as an amendment to the Act would be required to allow the interest to be paid it could not then be done. As, however, it is proposed to modify the Act and make some of the amendments retrospective, I would respectfully submit that the payment of interest on contributions refunded at any period of service should be included in the amendments and be made retrospective also. I would especially ask that this be done in my own case. lam at present unemployed and receive two days and a half work on relief of £1 ss. per week, which for a married man with one child of 16 is not sufficient to meet even rent, but if I could receive the interest which was earned on my own money during the period of nineteen years' service I would be in a better position to live until such time as things improve and work is available. Trusting that your committee will see its way to recommend the incorporation of this matter m the proposed amendments to the Act.

B. Mitchell, 276 Church Street, Palmerston North. (MM.) Re Civil Service Superannuation. I, amongst others, have given this matter considerable thought. I assume that the members of the Legislature are anxious to find a solution of the difficulty without the necessity of the Government having to make default in payment of annuities to contributors to the Superannuation Eunds. It has occurred to me that if the annuities cannot be paid in cash any deficiency could be made up by issuing to the annuitant Government bonds, bearing interest. The bonds could be issued in convenient denominations, say, in multiples of £10. In this way the annuitants of the fund would receive the full amounts to which they are entitled, and the Government would be freed from the odium of default. The bonds could be in the nature of consols or redeemable at such period as the Government thought fit. They would be negotiable by the annuitants, and if the full amount of his annuity was necessary to any annuitant for his livingexpenses he could negotiate his bonds as he received them. I have spoken to several business men in the city about this scheme and have told them that I am submitting it to you. They, with me, will be interested in the result of this proposal. I shall be glad to have your acknowledgment of this letter.

Charles H. Moose, Architect, Education Board, New Plymouth. (NN.) Superannuation Fund. I beg to bring before you my case in respect to my superannuation payments under the National Expenditure Adjustment Act, 1932, and enclose correspondence between the Secretary of the Superannuation Board and myself. I would draw your attention to the statement made that the Superannuation Board has no power under the present Act to alter matters, and I would respectfully suggest that the Special Committee insert a remedial clause in the Government Superannuation Funds Bill now before the House allowing an extension of time-limit in making an election. _ ; Correspondence attached will show the position, but I would like to add that six months contributions on the higher rate had been paid by me and accepted by the Education Department before I was notified that I was considered as not having elected to do so. I contend that is surely evidence of my intention and wish to contribute on the higher rate, especially following on my election of 1931. In fairness to me and probably others similarly situated I would again respectfully ask that the necessary steps be taken to allow me to comply with the actual wording of the Act. Tf necessary I am willing to appear before the Committee to give evidence on the matter.

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Superannuation Fund. Dear Sir,— 21st October, 1932. It was rather with dismay that I read your reply to the memorandum that was sent from this office on the 13th instant. When the first salary cut was made last year you sent to me later on a notice and form to fill in stating whether I wished to continue to contribute to the fund as if my salary had not been reduced; of course it was obvious, knowing that I had not more than four years to go before retiring, it was to my advantage to pay on the higher rate, and I immediately filled in the form accordingly and sent it to you. The matter was to my mind settled for the rest of the time I would be in the Board's services. I had not the slightest idea it was necessary to notify your Board again when the second cut came—my contribution was continued on the higher rate as before, and I thought everything was in order. I naturally expected if there was anything not in order I would be notified in a similar way to last year when the first cut came. I never see the Teachers' Gazette and never saw any notification that it was again necessary to state whether a contributor elected to pay on the higher rate or not. It is obvious it would be very foolish and stupid for one like myself not to pay on the higher rate. I was asked by our Assistant Secretary whether I had elected to pay on the higher rate, and of course I said, "Yes," and subsequently gave her the form which was filed ; unfortunately, the date was not noticed. Once having agreed to pay on the higher rate I had no power to alter it—in other words, it could not be revoked. I claim equal rights as the position is still the same as far as I am concerned, because it is quite obvious that I had no intention of paying at any lower rate as I have agreed to the deductions being made on the same higher rate, and this has been done since April last. However, I trust your Board will see my honesty of purpose in this matter and treat it as a special case. The matter is so important to me that I am placing it before the Hon. Minister of Education not in any antagonistic spirit, but because it may be necessary to have his decision to overcome a hard-and-fast regulation that would certainly be very unjust to me under the circumstances. I have to ask yfeu also to place this matter before the Superannuation Board. Yours, &c., Chas. H. Moore, Board's Architect. Mr. C. E. Crawford, Teachers' Superannuation Board, Wellington. Teachers' Superannuation Board, Education Department's Office, Dear Sir, — Wellington C. 1, 27th October, 1932. In reply to your letter of the 21st instant, I have to point out that this Office was under no obligation to notify any contributor as to the provisions of the Act regarding the election to continue to contribute on the unreduced salary. In order to help contributors, however, full information was given in the Education Gazette for June and a further notice was given in the issues for August and September. In no case, neither in 1931 nor in 1932, did this Office communicate with any contributor on the matter by letter or otherwise unless I first received some communication from or on behalf of the contributor relative to the matter. The reason of my sending my memorandum of the 13th July, 1931, was that the Secretary of the Taranaki Education Board wrote me stating that you wished to make the election (as I stated in my memorandum), and as no further communication was received this year before 30th September I naturally concluded that you had decided not to repeat the election this year. It is unfortunate that you were not aware of the position, but under the present provisions of the Act it is not possible to do anything to help you. The Act definitely limited the time for making of an election, and my Board has no discretion in the matter. I have, &c., C. E. Crawford, Secretary, Teachers' Superannuation Board. Mr. C. H. Moore, care of Education Board, P.O. Box 64, New Plymouth. Superannuation Fund—C. 11. Moore. Dear Sir, — 3rd November, 1932. In reply to your letter of the 27th ultimo, I have to say in common justice to myself I am unable to accept your decision as final, and respectfully ask you to place the whole matter before your Board which I understand meets on the 15th instant. I note you state that your Office was under no obligation to notify any contributor regarding the election to contribute on the reduced salary—as against that statement I have to say during the twenty-three years I have been contributing there was no obligation to deal with your office direct —all my business was done through the Secretary of this office as the Superannuation Board's agent or representative, and your Board has confirmed this in a broad sense by accepting statements from the Secretary of this office. In support of this, I refer you to the two cuts made in June and August, 1922, I dealt with the Secretary of this office and that was all that was necessary as far as I was concerned. When the cut in salary was made in 1931 you admit the Secretary of this Education Board wrote to you stating that I wished to continue paying on the higher rate, and you accepted that statement by forwarding to me a form to fill in. When the second cut came in April, 1932, I was asked again by the Secretary whether I intended to still pay on the higher rate and I again said, " Yes," and considered the form I filled in held good—my contributions were continued on the higher rate, and naturally I considered the matter settled. Unfortunately, the Secretary of this office did not notify you the second time, as probably the matter became confused with the election in 1931. Your own statement in the Gazette of 6th September, 1931, said, " that an election once made cannot be revoked." The 1932 Act should only apply to those who had not already elected to contribute on the higher rate. Your notice in the Gazette did not appear until Ist June, 1932, and, as already pointed out, I never saw the Gazette, and was not told about it —my work is quite different from the teachers, and I never receive or see the Gazette. When the notice did appear payments had been made, and it is reasonable to say that those payments should be accepted as proof of one's desire to continue on the same rate. I also submit that my claim is within the meaning of the Act, because the Secretary of this Board, acting as the representative of the Superannuation Board, accepted my decision to still contribute on the higher rate, and that decision was made when the first monthly payment of the second cut in salary was due in April last and well within the prescribed time limit of the Act, and the matter of signing a certificate should be a mere form. In conclusion, I put in the plea I am justly entitled to pay on the higher rate of salary, or otherwise it will be a distinct hardship, considering that I have only a little over three years to go, and the cuts in salary were through no fault of mine. I therefore respectfully ask your Board to grant me that privilege even if it is necessary to add an extension time clause to the Act which your Board has no doubt the power to do. I remain, &c., Chas. H. Moore. Mr. C. E. Crawford, Secretary, Teachers' Superannuation Board, Wellington.

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Teachers' Superannuation Board, Education Department's Office, Wellington C. 1, 7th November, 1932. Dear Sir, I have to acknowledge the receipt of your letter of the 3rd instant, which I will place before my Board at its next meeting as you d«sire. I may say, however, that my Board has no authority whatever to now allow you to contribute on more than actual salary. The Act states that the election must be in writing, and although the Education Board is the agent of this Office for many things in connection with the Superannuation Act, such agency does not allow it to accept a verbal statement when the Act definitely provides that an election must be in writing. I have, &c., C. E. Crawford, Secretary, Teachers' Superannuation Board. Mr. C. H. Moore, care of Education Board, P.O. Box 64, New Plymouth. Superannuation Fund—o. 11. Moore. Dear Sir, — 10th November, 1932. I beg to acknowledge your reply to my letter of the 3rd instant, and to add further that it is apparent you are relying solely on the wording of the later Act —you do not seem to realize that there was a- moral obligation on your part to notify me personally, considering that I had elected to pay on the higher rate and that it was obvious it would have been against my interest to do otherwise. 1 contend also that I complied with the 1932 Act to the best of my knowledge, and in a way that should be ratified by your Board. As already stated, I continued my higher payments on Ist April, 1932, and please note your notice in the Gazette did not appear until the June number, and my payments for the preceding two months entitled me to the privileges contained in that Act, therefore I should be allowed to sign the proper form to put this in order. Yours, &c., Chas. H. Moore. Mr. C. E. Crawford, Secretary, Teachers' Superannuation Board, Wellington.

M. Kelly, Roberts Street, Ellerslie, Auckland. (00.) I hereby submit for your Committee's consideration the evidence I wish to put before the Government Superannuation Funds Bill Committee. (No. 1) In 1901 I was shunting at Huntly. I was run over by an engine and my left leg was severed in two places. When I recovered I was given employment in the Parcels Office in Auckland ; that was in March, 1902, and from that date till the passing of the 1931 Act compelling men with over thirty-five years' service to retire I was in the same office. (No. 2) I was retired on the 23rd June, 1931, with thirty-eight years' service or two years less than I understood I would be allowed to work. (No. 3) During the greater part of the time I was in the Parcels Office I was only paid a porter's wage, which is the lowest paid by the Department. (No. 4.) My work and conduct must have been satisfactory or the Department would not have kept me in the one office before the public for over twenty-nine years. (No. 5.) From the time I met with the accident up to the present I have not had one penny compensation, and, notwithstanding this fact, the Department retired me; further, I would point out that there are men in employ of the Department who have had serious accidents, have got compensation, and are still in their positions. Now, gentlemen, that is what hurts me to think that I got no redress at the time and when reduction comes along I am one of the first to go. (No. 6.) With the present superannuation I am receiving I cannot make ends meet as I have still got a mortgage on my home and it takes me all my time to find the interest and the rates. I have still one boy going to school and to fit him for life's battle he should be at school for at least another year but I am afraid that if my pension is further cut he will have to go and get work somewhere. (No. 7.) Now, sir, a man at my age with only one leg has no hope of getting anything to do with things as they are, and with the prospect of a further cut in my pension I can see the position will soon arise when I cannot keep faith with the people who lent me the money to get a roof over my head. Now, gentlemen, I have done my best from the date I got hurt till the present to keep my family and my home, and I feel sure when you hear my case that I will receive humane and careful consideration at your hands. Mr. Jordan knows my case well, and he can give you any more information if you should require it. I was of the opinion that the Commission would sit in Auckland and I could not afford to go to Wellington therefore if any further information is required please write.

New Zealand Educational Institute (Auckland Branch). (PP.) Superannuation. Resolutions passed at a special meeting of the Auckland Branch, 29th October, 1932 : — This meeting of the Auckland Branch, N.Z.E.1., calls upon the Government to meet the obligation entered into by the State in the contract between the parties at the passing of the Teachers' Superannuation Act and its subsequent amendments, and claims that any further amendments aimed at the major provisions of the scheme should apply only to new entrants.

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This meeting believes that the main proposals of the present Bill are unjust to— (1) Those who have shaped the affairs of the whole of their professional and private lives on definite assumptions. (2) Those who have paid into the fund sums of money to enable them to make earlier retirements than at present proposed. (3) Superannuitants who retired in the belief of the good faith of Governments and who have now no possibility of fulfilling proposed new conditions. Finally, this meeting claims that, even granting some change in the basis of the scheme may be desirable for future entrants, before any proposals are put before Parliament a thorough actuarial investigation of the proposals should be made, to ensure such a stable scheme as to eliminate any possibility of future embarrassments to contributors or to the Government of the day.

John Mair, Wellington. (QQ.) I respectfully beg to place before you the case of professional men who, like myself, obtained their training and considerable experience elsewhere at their own cost and entered the Government Service at an age which carries a heavy superannuation contribution rate and which will enable them to have only twenty years, or less, of service by the time they reach the compulsory retiring-age. I also desire to submit a suggestion whereby they may be assured of a more equitable amount of superannuation in relation to contributions. Such contributors will have paid a greater proportion of possible withdrawals than the majority of officers with longer service, and with the present average expectation of life many will, under present and proposed regulations, not live long enough after retirement to draw even the amount of their own contributions. The salaries received have not been sufficient, after deducting superannuation, ordinary prudent life insurance, and instalments on a house property, to allow any margin for investment to appreciably augment the superannuation receivable, and such superannuitants will, owing to reductions, be faced on retirement with the alternatives of allowing life insurances to lapse or of selling their homes ; in either case injuriously affecting their dependants. The suggestion I have to offer is :— (a) Present contribution rates to be continued. (Ib) The £300 maximum clause to be deleted ; and short-period contributors to be credited with such a number of extra months for each year of service as shall be actuarially found will place them on a parity with officers drawing equal salaries on retirement who have contributed for a longer period but at a lower rate.

Tuesday, 6th Decembeb, 1932. Robert Browne Ryder, Delegate of the Superannuated Public Servants and Teachers of Palmerston North. (No. 34.) We approach you as the representatives of the highest Court in the Dominion with the plea that you uphold the rights of superannuitants and maintain the sanctity of contracts under the Superannuation Funds now in force. We believe that by so doing you will vindicate the honour of Parliament and contribute greatly towards the restoration of confidence and the upholding of the credit of the Dominion. The Legislature in framing these Acts was careful to safeguard and guarantee our rights, as, for example, in section 46 of the Civil Service Classification and Superannuation Act, 1908. The State, we submit, may be regarded as acting in a threefold capacity :• — (1) As the employer it is a party to the contract guaranteeing us our annuities. (2) Through its representatives on the Superannuation Boards it is largely in the position of a trustee responsible for safeguarding our rights and seeing that our allowances are duly paid in full. (3) As represented by Parliament it is the Court before which we must place our plea for the upholding of our right to the annuities we have earned and paid for. With due respect, we therefore urge that Parliament cannot but confirm our rights to the continuance in full of the allowances we have been receiving. We view with grave concern the growth of the idea that contracts may readily be broken. They are made, as were ours with the State, with full consideration of the circumstances and possible variation in the condition of afl'airs during the period of their duration, and we feel that, apart from any variation agreed upon for mutual benefit by the parties to them, they should be faithfully carried out both in spirit and to the letter. That they should be regarded as capable of being fundamentally varied at the behest of one of the parties to them is to make them nugatory. We submit that adequate provision was made for the maintenance of the Superannuation Funds in a sound condition, and that if to-day they are not in such condition it is not due to any fault of contributors or superannuitants. That we did not, when we learned that Parliament had been advised by its responsible officers of the need of strengthening the funds, harass

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those responsible by insisting upon immediate action being taken is to our credit; we believed fully that adequate steps would be taken in due time, and relied absolutely upon the guarantees embodied in the law. We believe that were the proposals in the Bill given effect to the results would inevitably be : — (1) Grave injustice to superannuitants. (2) Injury to the credit of the Dominion. (3) Loss of confidence in State guarantees and the sanctity of contracts. (4) A tendency to lower the standard of commercial honour. (5) Injury to the morale of the Public Service. (6) A setback to the habit of saving. (7) A compulsory lowering of the standard of living in some cases, with attendant hardship. We would urge that both experience and economic theory are opposed to such drastic proposals as are embodied in the Bill. We believe that the condition of affairs in the Dominion to-day gives evidence of the ill effects that may arise from the operation of well-intentioned measures permitting variation of contracts and monetary obligations. We submit that giving effect to the proposals would involve a serious breach of contract, and that the fact that similar breaches have occurred in other directions cannot be pleaded in extenuation or justification. There can hardly be matters of greater moment for the Government of the day than the restoration of public confidence and the upholding of the credit of the Dominion, and we contend that any proposals tending to oppose these aims should not receive the support of your Committee. Condition of the Funds. We believe that the National Expenditure Commission's report has caused a widespread belief that the funds are in a much worse position than is actually the case. The stressing of actuarial deficiencies has led to this, but from figures given in the report it would appear that £3,500,000 is a fair estimate of the actual shortage of funds arising from causes set out therein—causes for which superannuitants and contributors can in no way be held responsible. Even if there is this deficit the Boards have been able to carry on and accumulate funds steadily increasing from — On 31st December, On 31st March, 1921. 1931. £ £ Public Service Fund .. .. .. .. 1,717,000 to 2,917,000 Teachers' Superannuation Fund .. .. 682,000 to 1,272,000 Railway Superannuation Fund .. .. 464,500 to 1,454,000 A total increase from .. .. £2,863,500 to £5,643,000 The Bill before you proposes a pound-for-pound subsidy on contributions. Taking the figures for 31st March, 1931, these subsidies would be — £ Public Service Fund .. .. .. .. .. 270,316 Teachers' Superannuation Fund .. .. .. .. 143,392 Railway Superannuation Fund .. .. .. .. 142,239 A total of .. .. .. .. .. £555,947 Note.-—Railway figures for 1932 ; those for 1931, not available, would probably strengthen the argument. This would suffice to pay interest at 4J per cent, on the estimated shortage of £3,500,000, and leave £398,447 to strengthen the funds, an amount slightly more than the total, £397,467, paid for the year ending 31st March, 1931. These figures show that, admitting the Government's bounden duty to provide as soon as possible for placing the funds on a sound footing, and the need for providing in the meantime for the prevention of further " drift," the position is by no means desperate. The probable effects of the proposed adjustments and the figures from which they are derived have not been given in sufficient detail to enable us to investigate them. How the funds would be affected can at present only be roughly estimated in most cases, or merely conjectured ; but it appears to us that contributors and superannuitants may be called upon to make up more than half of the deficit. Below we submit remarks on three points : — 1. Additional Years.—At 31st March, 1931, 1,522 Public Service Fund superannuitants with allowances £326,936 and 1,118 Teachers' Fund superannuitants with allowances £210,682, a total of 2,640 with allowances £537,618, had retired on age or service. Assuming contributions of only 5 per cent., an added three years' service and the full two-thirds of average (three-year) salary, we get total salaries = £806,427. £ Savings to the two funds = three years' allowances = .. 1,612,854 To which add interest = three years' contributions = .. .. 120,964 Total .. .. .. •• •• £1,733,818

15—1. 15.

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As there were on 31st March, 1931, 28,106 contributors to the two funds and these figures deal with only 2,640, they suggest that the proposal would throw upon contributors considerably more than half of the burden. Railway Fund figures for 1931 are not available ; but in 1930 1,514 life allowances, amounting to £257,996, were current, and there were then 14,148 contributors. With the same assumptions as above, the saving to the fund would be — £ Allowances for three years .. .. •• 773,988 Contributions for three years .. .. .. ■ • 58,049 Total .. .. •• •• •• £832,037 to which add interest. This gives a grand total of savings for the three funds of £2,565,855, plus interest, on account of 4,154 superannuitants for three years, with a total of 42,254 contributors. These figures are to illustrate the point with regard to this present section of superannuitants. 2. Ten-year Averages.—The Commission in its report suggested that reductions in present annuities due to this should not exceed 20 per cent. ; but those retiring later if the proposal is adopted will not be thus protected, and it seems probable that in many cases their annuities will be lower by more than 20 per cent, than would be allotted under the present three-year averages. With regard to present annuitants the Commission gives in section 1468 of their report figures showing that 876 annuitants with allowances, from £200 to over £600 receive from the Public Service Fund an annual total of £274,775. If we assume an average reduction of 10 per cent, on this, we see that this particular fund will benefit to the extent of about £27,500 annually. We believe that the suggested alteration would throw a heavy burden upon contributors and superannuitants. 3. The Elimination of the £300 Limit. —This will, we believe, ultimately impose greater demands upon the funds than the Commission appears to realize. It appears to us remarkable that this should have been included with drastic proposals calculated to place heavy burdens upon contributors and superannuitants with a view to strengthening the funds. The illustrative figures given above suggest the necessity of a careful investigation of the probable effects of the proposals in the Bill. We note that the Commission in section 1449 of its report suggests that if its other proposals are given effect to the pound-for-pound subsidy will not be required later on, a considerably smaller one being likely to be sufficient. This strengthens our view that far too much is being asked of contributors and superannuitants. Inopportune Time. We desire to draw your Committee's attention to the fact that the present is a most inopportune time for making permanent readjustments such as those proposed in the Bill. Other drastic legislation passed recently has a time limit, but in the Bill it is proposed to inflict permanent disabilities upon a body of approximately 47,000 servants of the State and superannuitants. We would stress the fact that the present state of the funds is in no way due to abnormal conditions. At a time like this when the Government has the greatest crisis in the history of the Dominion to face, when public confidence is shaken and people dread the possibility of further unsettling legislation, it is surely not fair or reasonable to take such a step. The public servants have always been amongst the first to suffer by reductions when times have been bad ; the annuities they have earned and paid for have been misrepresented by the ill-informed as gratuities from the State, and the view has been fostered that they are deserving of drastic treatment. An atmosphere unfavourable to the maintenance of our just rights and claims has thus been created, and this constrains us to urge upon you that the task of making adequate provision for rectifying past errors in the management of the funds and honourably providing for the fulfilment of the State's obligations to contributors and superannuitants should be undertaken without interference with the Superannuation Acts now in force. We believe that without alteration in the present law our Government can arrange to carry on and at the same time provide against further " drift " till such time as it may be able to make permanent arrangements for discharging the State's obligations to the funds. Position of Superannuitants. Superannuitants are in a position far different from that of present contributors ;■ they have faithfully completed their part of the contract; their allowances have been fixed by the Boards in accordance with law, and have been declared by law not to be capable of being alienated either by the superannuitants' own acts or by operation of law. (See, e.g., section 109, Public Service Superannuation Act, 1927.) Their case is analogous to that of beneficiaries for whom the State, through its representatives on the Superannuation Boards, acts as a trustee, and whose rights it is bound both by honour and by law to safeguard and uphold. They have in most cases reached an age at which it is unlikely that they will be able to recoup themselves by entering other employ or professions if deprived of part of their annuities. The very fact of their being superannuated is a bar. Many of them have ordered their lives and taken upon themselves liabilities in absolute reliance upon the State guarantee that their allowances will be absolutely protected. The Bill before you by making its proposals retrospective unduly penalizes annuitants, for had they known that their allowances might have been based on a ten-year average they would in many cases have been able to remain longer in the Service at their maximum salaries, and thus have qualified for larger allowances than they will now receive should these proposals become law. At the same

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time, be it noted, the funds would have benefited by the continuance of their contributions and the retention of the amount of their allowances with interest for the extra years thay would have remained in the Service. Contributors to the funds naturally try to arrange for retirement so as to secure as high an allowance as possible combined with the prospects of a satisfactory period of retirement. The law now in force, we contend, has expressly made reasonable provision for this by the conditions relating to the three-year average and retirements on account of age or service ; but in the Bill before you superannuitants that have in all good faith availed themselves of this provision are to be penalized by retrospective readjustments. Further, it would seem that those who in times of depression, when cuts in salaries had to be made, elected to pay contributions on their original higher salaries in order to conserve their right to higher allowances are now to lose the benefit for which they expressly paid as permitted by law (e.g., the Public Expenditure Adjustment Act, 1921, section 11 (1) ). We would point out that as far as superannuitants are concerned the Bill affects a special section, mostly those retired after 1921. We submit that it is unjust to propose to deprive us of our rights and inflict disabilities upon us involving hardship, extra financial worry, and probable lowering of our standard of living when social, educational, and national development should be assisting to raise that standard. Though we believe that the Public and Educational Service includes a large body of thrifty, provident men and women, we must point out that the general range of salaries has never been sufficiently high to allow such persons to lay by substantial sums over and above their contributions to the Superannuation Funds. Even the incomes from the comparatively small amounts the more fortunately situated of them have been able to put by have been materially reduced or deferred with the prospect of considerable loss owing to the effects of recent legislation. As an illustration, take the case of a person with an annuity of £300 reduced under the Bill before you by 20 per cent, to £240. This reduction of £60 is equivalent to the income from an investment of £1,500 invested on fixed deposit at present rates. How many have been able to save even that moderate sum ? When it is remembered that a superannuitant on retirement suffers a reduction of about one-third of his previous salary it will be clear that he may not find it easy to maintain his standard of living, and that further reduction as proposed in the Bill will entail undue hardship. We desire to call your attention to the effects of the compulsory retirement of public servants under the regulations on the grounds that they had reached the age of sixty years and had forty years' service. Many of these were well fitted and able to continue, and in some cases expressed a desire to do so, but were barred by the regulations. In consequence, several years' service at their maximum salaries will be lost to them should the Bill become law and annuities have to be re-computed on a ten-year basis. We feel that they have in this fact an additional argument against reduction of their present allowances. Equality of Sacrifice. The Commission has recommended reduction in the allowances of certain superannuitants in order to secure equality of sacrifice. Strangely enough, when making this recommendation, it has swept away all possibility of attaining even remotely such desirable perfection by recommending that those retired prior to 1921 and others retired after that date whose allowances will not be altered by calculation on the ten-year average, no matter how high the allowances may be in either case, should not be liable to any reduction. The extreme difficulty of attaining even approximate equality of sacrifice is freely admitted by economists and framers of taxation schemes. It is generally agreed that so many factors have to be taken into consideration that the likelihood of success is not great. That the Commission has failed is evidenced by its own report and by its suggested conditions, now embodied in the Bill, concerning exemptions from reduction and the restriction of reductions to a maximum of 20 per cent, of the annuity. Promotion in the Public Service (including Educational) has been slow and irregular, openings being comparatively few, and a period of ten years may in the case of a superannuitant that has been unfortunate consist of seven years at a low salary and three at a higher one, say, seven at £260 and three at £360, and in the case of one more fortunate, say, three at £260 and seven at £360. Under the present law, assuming forty years' service, each would receive an allowance of £240 ; but under the Bill before you the first would have his reduced to £193, while the second would receive £220, though the first may have been quite entitled to earlier promotion had there been an opening. It is to be noted also that he would have had the added disadvantage of receiving £400 less in salary than the second, but would have had to pay less in contributions, say, £20, assuming the rate to be 5 per cent. It may further be noted that a person receiving an annuity of £100 will be exempt from reduction, while one deemed worthy of promotion and able to find openings every two years of the ten prior to retirement—say, two at £112|, two at £125, two at £140, two at £182|, two at £190 —would on the present three-year basis receive an allowance of £125, but on that proposed in the Bill this would be reduced to £100, his service being taken as forty years. The point there is that a man not showing very great ability for promotion would be placed on the same footing as one who had, in later years at all events, shown ability for it. We have no doubt that an investigation of the effects of the recalculation of superannuation allowances as proposed in the Bill would reveal the fact that grave injustice would be inflicted were it to become law. In three cases considered, the reductions likely on present allowances nearly equal are estimated at approximately 10 per cent, on the highest, 9 per cent, on the next, and 16 per cent, on the lowest; in another case of a smaller allowance the reduction probable is 3 per cent. 15*

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If reduction of superannuation allowances is to be insisted upon, we submit that some more equitable system than that proposed in the Bill should be devised. Further, we cannot agree with the Commission's recommendation that those retired before 1921 should be exempt. The proposal seems to imply a condition hitherto latent—namely, that allowances are to be subject to reduction on account of increases in salaries over those prevailing at an earlier period. Such an assumption, like the proposal to calculate allowances on a ten years' average, is entirely opposed to the whole spirit of the legislation now in force, which was expressly framed with a view to providing that annuitants should by taking the average of the last three years of service for the computation of allowances, receive some consideration for deferred pay and irregular and slow promotion. There seems to be no reason why a man retired before 1921 on an allowance of £500 per annum should suffer no reduction while another now receiving the same amount but retired later should be reduced to £400. The amendments embodied in the Bill do not, we contend, make for equality oi sacrifice, lney aim at placing a large part of a financial burden created by past errors of management upon the shoulders of those not responsible for such errors, and, as far as superannuitants are concerned, they propose to relieve one section from bearing any portion of the burden while distributing a part inequitably upon the other. To effect this, it is proposed to repudiate a contract of a class hitherto regarded as above all others sound and inviolable—one making provision for old age to which the State is'a party, and which is guaranteed by the State and expressly protected by its laws. Are other than State superannuitants, we ask, to be thus dealt with and have their annuities revised and reduced, and the thousands of our fellow-citizens that have entered into contracts for the benefits of themselves and their families in old age to have them thus amended ? We bear our share of heavy taxation in common with others, our annuities not being exempt, and our incomes from any savings that may have resulted from our thrift have suffered in common with those of others. In the past we have suffered repeated cuts in our salaries, and we submit that it is neither just nor reasonable to compel a section of us, or indeed any of us, to make good a part of a shortage of funds for which we are not responsible. Summary. To sum up : — 1. We enter a strong plea that our contract with the State and our rights be upheld. 2. We consider the passing of the Bill would have the harmful effects that we point out. 3. We believe that the position of the funds is not desperate, and that satisfactory arrangements to carry on and adjust matters can be made without altering the law. 4. We consider the time inopportune for making such sweeping proposals as are embodied in the Bin. 5. We feel that adequate information, time, and opportunity should be rendered available for those interested and likely to be affected by any proposals to alter the existing Superannuation Acts, so that they may be able to consider the effects of such proposals. 6. We are convinced that giving effect to the proposal to interfere with our lawfully allotted allowances would lead to great injustice and be entirely inequitable. 7. We urge that those that have contributed on their original higher salaries when cuts have been made should not now be compelled to forfeit the advantages they expressly paid for. In conclusion, we appeal to the individual members of your Committee for their personal consideration and support of what we are fully convinced are our just claims for the fulfilment of onr contract with the State and the maintenance of our rights. In connection with clause 3 of the Bill now before you, in dealing, with the computation of actuarial allowances it states, "... shall be deemed to have been qualified to retire as of right if and as soon as— " (a) In the case of a male, he attained the age of sixty-five years, or, not having attained that age, he attained the age of sixty years and his length of service was not less than forty years ; " (b) In the case of a female, she attained the age of sixty years, or, not having attained that age, she attained the age of fifty-five years and her length of service was not less than thirty-five years." Then it states, — " But (notwithstanding anything to the contrary in the law in force at the date of retirement) no person who has retired as aforesaid shall be deemed to have been qualified to retire as of right unless, in the case of a male, he satisfied, at the date of his retirement, the requirements of paragraph (a) of this subsection." Later on, in clause 12, it states that male contributors whose length of service is not less than forty years, or, in the alternative, whose age is not less than 65 years, shall have their annuities recalculated on a ten-year basis—that is, that they shall not be actuarial. Those two parts do not seem to fit in very well —I think there is some confusion. I may not have read them accurately, but it appears in the one place that if a person is retired with forty years' service at an age below 60 he may come under the clause relating to an actuarial allowance, although later on, in clause 12, it speaks differently. Mr. W. Nash : It is not contradictory. Mr. Ryder : In clause 12 it says that the salary is to be recomputed on the average rate of salary received by the contributor during the ten years immediately preceding his or her retirement. That

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makes no provision for those who, as provided by law, have paid on the higher salary during " cuts in order to conserve their rights to the higher allowance. Later on, in clause 23, it says : In estimating the said period of ten years, no account shall be taken of any interval or intervals during which the contributor has been temporarily out of employment." I believe that the Teachers Superannuation Fund Act, or the regulations made under it, expressly provided for cases where a teacher happened to be out of employment —that he might, or that he should, if he wished to, remain in the fund, continue his payments on the basis of the salary at which he went out at the time, to provide for covering the break. There is another point regarding clause 23, subclause (4), where there is provision that No person shall be entitled by virtue of this section to receive a retiring-allowance of a greater amount than his existing retiring-allowance." And yet elsewhere the £300 limit is abolished ! They do not seem to fit very well together. Mr. Dickie.] How long have you been retired ?—About five or six years. You state on page 1 of your statement that your annuity has been earned and paid for. But apparently you are one of those who had back service on which no contribution was paid when you joined the fund. There are those who consider that you are more or less a load on the fund ?—I was one of the original members, and for a long period of years I served the State on a comparatively low salary. On the formation of the fund that was expressly to be taken into consideration, and on that we claim that with the back deferred pay we have amply paid our share ; and since then we have regularly paid our contributions. You suggest that an extra three years' service would stabilize the fund —is that the idea ? -that " an added three years' service " would have the effect of making the fund sufficiently stable to carry on ?—I have pointed out in my statement that complete figures for investigation have not been before me—and, further, I cannot say that lam capable of dealing with them ; but these figures were put in as an illustration of what might occur with 2,640 contributors. There are 28,106 contributors to the fund, and so it seems possible that there will be a very large saving under that one heading alone, and I urge that that is one thing that ought to be looked into very carefully. If that point were investigated it might show that much more is being asked of superannuitants than is really required. Do you think it advisable that female school-teachers should go on to 60 years of age, and male teachers to 65 years of age ? —Generally there is an objection to the extension of the age for work. Efficiency may decrease in later years, and that always has to be taken into account. On the whole, I should say that it is quite possible that injury may be done to the Service ; and certainly injury will be done to the contributors by that lengthening of the service compulsorily. Later in your statement you say that many of the Government servants would have preferred to have carried on for a further period on their maximum salary, and that under the ten-year average they are going to be adversely affected ? —Yes. The point is this, that hud those who have gone out known that their allowances were going to be calculated on a ten-year average —— I was just wondering how you squared the two. You say it would not be in the interests of the Service for them to go on; at the same time you say some of them would have been willing to go on ?—And many of them were quite capable. When I spoke of the extension of the term, you will notice I modified my statement, but there are many who are well capable of going on. The point is that a teacher, for instance, who joined the Educational Branch of the Civil Service was required by the regulations to go out at 60 years of age with forty years' service who might have been fit and well and able to continue. Under the Teachers' Branch he could have continued ; and therefore, if he expressed a wish to go on, he has really, through no fault of his own, missed the opportunity of having those additional years. . . You say that the present state of the fund is in no way due to present abnormal conditions. But you realize, I suppose, that the investments of the fund are in a very bad position as far as interest-earning is concerned, owing to the present abnormal conditions, that they are £47,000 in arrears ? —Yes. I do not know exactly the figures, but I do realize that recent legislation affecting income from investments has hit some of the State funds very hard. You are referring to the 20 per cent, reduction in interest ? —Yes. Five per cent, of the total amount invested in land is now in arrears, and doubtful of collection, so that the present abnormal conditions, as far as the primary producers are concerned, are bound to have a reflex action on the fund ?—The deficiencies in the funds were created some considerable time before. As a matter of fact, I believe it will be found on investigation that there were deficiencies at times when it was possible to have supplemented the contributions to the fund. In the main, I should say there is no doubt whatever that abnormal conditions have not been the cause, by any means. You mention also the taxation of annuities. Of course you realize that the £300 a year annuity will only just come within the tax-gatherer's net I—Yes.1 —Yes. Do you suggest that it would be a good idea to further tax them, to try and stabilize matters, by reducing the exemptions and so on, as a means of putting the funds right, to assist the Consolidated Fund to meet its commitments ?—I see no special reason for that. As I have mentioned, the figures at my disposal have been very few, and I have had difficulty in dealing with them, but as far as I have looked into the matter it Seems to me that there is no special reason for such a thing. Mr. Ansell.] Do I understand you to say that the back-service liability was liquidated by the comparatively low salary you received ? —What I said was that I, in common with a number of other teachers, served for a long period, before the inauguration of the superannuation scheme, at a low salary, and it was expressly understood at the time when the scheme was founded that the low salaries were to be made up for by the payments from Government subscriptions into the fund.

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What gave you that impression—why did you have that impression ? Was that told you by any departmental officers ? —No. I was one of those early interested in the fund, and it was distinctly understood that the Government would supplement the funds and keep them actuarially sound. I was under the impression—although I am not sure —that it was actually embodied in Acts dealing with the funds, that the Government would make these payments into them and keep them sound. Was this payment on account of low salary a contribution by the Government to compensate for the comparatively low salary that you were receiving ?—lt was to compensate for the deficiency in the fund through admitting a number who had back service and who had not paid contributions at the time; and therefore, naturally, I should say, it would make up for the contributions that they would have paid for their back service. You were a teacher ? —Yes. What salary were you paid, taking an average over the time that you are referring to ? —I cannot tell you exactly the average, but I was teaching for about thirty years before I received £300. I started at £20 a year, as a pupil-teacher. lam referring to the years when, you say, you were getting a comparatively low salary. Taking it over perhaps the last ten years of your service, how did your salary compare then with similar occupations outside the Government Service ?—My salary then was roughly on the same footing. You were not in those years getting a lower salary than would have been paid outside the Service ? —No, I should think not, taking it in general. Of course, there were exceptional cases. Mr. W. Nash.] I cannot find the " Civil Service Superannuation Act, 1905," that you refer to. There is a Public Service Classification and Superannuation Act, 1908 ?• —No doubt it was embodied in subsequent Acts. You mention on page 3 the effect on the fund by increasing the period of service by three additional years, and you give some illustrations. You say that in one case the fund might be increased by approximately £1,750,000, in the other case by £830,000. Have you given any thought to the effect on the funds by retiring three years earlier instead of three years later than provided by the Act ? —I have not considered that question. Assuming your arithmetic to be correct, would it not have an even worse effect on the fund than that which you have cited here ?—To retire three years earlier ? Yes.—lt should. Might that not be one of the main contributory causes to the difficulty that the fund is experiencing to-day, because of the fact that, instead of putting in the full period of years as provided by the Act, officers have retired in many cases by as much as five years prior to the qualifying period ? —There is no question about that, I think ; I think that is throwing a burden on the funds. And if there could be a scheme devised under which the charge on the fund through those early retirements could be removed, you would be in favour of it ? —You are asking me to commit myself to something that I have not considered—l am in the dark as to the actual scheme. There may be points in the scheme that one might not agree with. The statement made by the Government Actuary is that the difficulty to-day is due to the fact that there have been a large number of special retirements. Would you agree that there would be a heavy load on the fund if there were three years' annuities paid for which there were no contributions made ? —I think that is undoubtedly so. If we could devise some scheme, or have some scheme drafted, under which the cost of the special retirements would be met by a special fund, would you be in favour of that ?—I would, but with this proviso : I should say that it should not affect the rights of contributors and annuitants. If the existing payments are continued, and the fund remains in its present position, without being rehabilitated in some way, will it not mean that the contributors will have to find the money to pay for the special retirements ? —-That is if it is left as it is. With the deficiencies that have arisen through past mismanagement, and neglect to pay in sums that ought to have been paid, then I take it ultimately the contributors will have to pay. You will agree that the existing contributors to the fund should be free entirely from any liability that is not theirs ?—Yes, certainly. That would entail a special fund to meet the liabilities that were not properly chargeable against the existing contributors ?—Yes, it seems to me so. It is just a question of Government carrying out the guarantee to maintain the subsidies to the fund. Yes, I think that is right —I would agree with you that there should be a guarantee, and that, as far as can be, it should be kept; but I want to see if we cannot find some way in which the existing contributors to the fund are safeguarded to the extent that they are not made to use their funds to pay pensions that they are not in any way liable for. You would be agreeable to that ?—I should say that, where there have been retirements like that, for the purposes of retrenchment, then the Government should provide the necessary funds to relieve contributors. If a scheme could be worked out whereby there could be a special fund for retirements made other than of those that are fully paid for, you would be quite content for that to be done ? I want you to get it clear—l do not want you to commit yourself or the people you are representing unfairly. The suggestion I have in mind is that there has been a heavy load placed on the fund due to the fact that there have been special retirements not provided for in either the contributions or the subsidies. Taking that into account, would you agree that, if a special fund could be established to which all the special retirements could be transferred, that that should be done, and then the liability of the Government in connection with special retirements would be known ? —Yes, I think that is quite reasonable. Mr. Dickie.] You would be quite agreeable, so long as you did not have to contribute ?—I take it that the other superannuitants as well as ourselves would have to contribute. We would have to do our share.

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By taxation ?—Through the ordinary taxation. I should say. Mr. W. Nash.] You do not think that they ought to use any means for the purpose of getting superannuitants to make special contributions other than those means that are used to get other taxpayers to pay ?—X think not. You are against the limit of £300 ? —Personally I am of opinion that a man should not have that placed on him. But, as I pointed out in my statement, it is a remarkable thing, in forward proposals to strengthen the fund —to propose disabilities upon contributors and superannuitants in order to strengthen the fund —that a clause should be embodied sweeping away the limitation, and thus adding to the burden on the fund. You mention the three years' average. Do you know of any other legislation, other than the existing Superannuation Funds' legislation, that provides for a longer period than three years ? No, Ido not. I had the impression—l did not go into it closely—on reading the accounts of Superannuation Acts that the general period was three years, but I cannot say definitely that that is SO With regard to those contributors who have made special payments on the higher rate of salary than their existing salary, you are of opinion that it would be unfair to penalize them now that they have paid their contributions on the higher rate ? —Yes, decidedly. There are many others besides myself who paid on the higher salary when the cuts came, simply because there was no telling what might happen, and we wished to conserve our rights on the higher salary and get the higher allowance. Supposing we could organize a fund into which all the contributors paid their money, and the Government paid an agreed-upon subsidy, the pension being based on the amount that he or she had paid in. Would you be agreeable to that ? —I think there are serious objections to that. The view has been taken that it is far better to subscribe to the fund somewhat as in this case, backed up by the employer with a suitable subsidy, and then to have an allowance based on salary for the number of years. How would you get over this difficulty—supposing a man has been getting £250 a year lor the last three years of his service to the State, and then suddenly he is lifted to £750, in some cases for the purpose of the retiring-allowance. Do you think in a case like that that the superannuation should be based on £750 because he happened to be getting that sum tor the last three years ?—That is a special case ; and underlying your question is a question of public policy, that is, of promoting a man late in his service. Really, I think the remedy there is for the governing body to see that such promotions do not occur. But assume that it was advisable for the promotion to occur, and that his salary for the last three years was £750, that his previous salary was £250, and that his contributions had been paid on the basis of £250 for a long period. Do you think he ought to retire on the £750 basis ?—lf the man were worth to the State £750, and he had been employed by the State for a number of years on then I should say the State would be fully justified in paying him superannuation on the £750. " The labourer is worthy of his hire." Supposing a man is getting a pension of £2,000 a year, and tlie total sum that he has paid into the fund is £1,820. Do you think that would be equitable I—l am afraid you are citing quite a number of exceptional cases. But if he was intrinsically a £2,000 man, and had been underpaid by the State for all the years previously, his retirement on a superannuation of £2,000 would probably be justified. Your point is this, I take it: that if there are unjustifiable promotions, the persons promoted should not benefit unduly by them. But my point is that proper regulations governing the Public Service would surely provide that such cases as that would be very exceptional indeed. Does not that mean, if he gets more than the fund can stand, that the other contributors will not get as much as they paid for ? —Again, if the Government guarantee is to the effect that a sufficient subsidy shall be paid in and the funds kept in a satisfactory position, then it is clear the other contributors will be getting their due, even though that one contributor is getting more than his due. I thought you agreed that special retirements of that type should be transferred to a special so that the ordinary contributors shall not be affected in any way ? That is so, that is a case worthy of consideration, but I do not wish to commit myself definitely to that point. One other point, in connection with the war increases. We all know that during the war there were special increases of salary and of income—never enough, but still they were increased beyond the average by which they would have been increased had things remained normal, and now we are going back again, since the war. Do you think the retirements on the war-time salaries should be maintained, if they are going to aflect the payments made to existing contributors «—Towards the close of the war there were a lot of cuts in salaries. They were after the war ? —My salary was, I believe, cut in 1921. That is after the war ?—Of course, there is a lag in salary grants. Ido not see any reason why the principles underlying the Superannuation Fund should be varied for that. Ihe Act expressly provided for the three years of service; it was framed with due regard to all these varying conditions—the actuarial position of the funds must have been taken into consideration, and it seems to me unreasonable that, because conditions after the war may have varied, a person should suffer for the whole. that implies really this, that if there were exceptional rises, then a person should not profit by them. In connection with the extension of time—page 7, paragraph sof your summary—you feel you ought to have more time to go adequately into the whole position ?—My point is this, that, as far as a very large number of Civil servants are concerned, they really have no idea of the figures on which these proposals are based, and really no opportunity of going thoroughly into them, to see what would be their bearing on the proposals. If you had another three months, you think that would be better ?—I should say so.

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The Chairman.] In referring to the question of the £300 limit, I presume you have not stressed the point very much because of the fact that you are speaking on behalf of those who have retired, and that the matter is not of any great concern to superannuitants so long as they get what they are entitled to ? —That is the point. Does your retiring-allowance exceed the £300 limit ? —Yes. Would you say the proposal in the Bill is not right, that the amount should be lifted now, or that we should adhere strictly to the £300 limit ? —Those that have gone out entered the Service on certain conditions. Why vary the contract ? On page 4 you say, " Other drastic legislation passed recently has a time-limit, but in the Bill it is proposed to inflict permanent disabilities upon a body of approximately 47,000 servants of the State and superannuitants." I want to point out that the Bill is merely a Bill prepared from the report of the Commission —it is not what you would call a Government Bill, although the Government have brought it down. The Government have not dealt with the Bill. This point was made clear by the Prime Minister in introducing it into the House. Do you suggest, then, if some charge were made, even upon superannuitants, that, as other things are being done for a short term, to meet the extraordinary times, this should be only for a short term ? —lf they have to submit to such ; but I do not see why it should be necessary. I am not suggesting it would be so ; lam asking you, from your statement, do you suggest it should be only for a short term ? —The point is this : Shall these disabilities be permanent or temporary ? I say " temporary," if they have to be imposed. lam simply following up your own statement, lam not saying that such is the case. On page 5 you refer to the retiring-age —that officers should be allowed to carry on. Who was responsible for the 60 years ? Were not the contributors themselves the ones who urged it ?—Those that I refer to, of 60 years of age and forty years' service, are covered by a special Public Service regulation. You said some of them could have gone on ?—Yes. But is it not a fact that it was the contributors themselves who wanted men retired at 60 years of age, because otherwise it did not allow for promotion for the younger members of the Service ? I am not for a moment saying that is wrong, it is quite a reasonable thing, but that is where that came from ? —The point is that had the teachers who left at 60 years of age known, they might have got the benefit of the extra years, if the ten-year average is to be adopted. Of course you realize the position in regard to the funds—Mr. Dickie has referred to the big loss on investments at the present time ?—Quite so. Mr. Hargest.\ You speak on page 2of the condition of the funds. Do you know that the Superannuation Board, in its evidence here, told us that these last two years they have been selling securities to pay superannuation to teachers ? —I did see something in a report to that effect. That must compel one to believe that the funds are not very sound. They are not as sound as you apparently believe, from your statement ? —I have given figures to illustrate the point that they cannot, as a whole, be so absolutely bad as people have been led to believe. I think the Commission's report has been responsible for creating quite a wrong impression. You know that the Teachers' Superannuation Board were compelled to sell securities to pay existing annuities ? —I did not know that —I had not that information from my own knowledge, but I think I saw something about it in a report of proceedings. The contributors to the fund to-day have recently submitted to two cuts in salary. Would not the superannuitants to-day be agreeable to a cut in their annuities to the same extent, for the sake of building up the fund, not for the purpose of assisting the Consolidated Fund ? —I should say not. The superannuitants are on quite a different footing from the contributors. The superannuitants have completed their part of the contract, and they have gone out late in life ; their income now, as far as salary is concerned, is only two-thirds of what it was, so that they have suffered a cut of onethird in that respect; they have suffered cuts in so far as the recent legislation has affected them— the small investments that some of them may have are in quite a poor way. You think it is a fair thing for the present contributors to stagger on under a load that they cannot carry, to keep the present annuitants on a much better basis than they have ever been on because of the reduction in the cost of living ? —I think you have put it a little unfairly. Our contention is not that the contributors should be allowed to continue to stagger on, but that those responsible for the hold-up of the funds should take the necessary steps to see that they are strengthened. You speak of the three-year average, and you rest the whole of the case upon the guarantee that has been given by the State in the past. But supposing the funds cannot be carried, as it is obvious they cannot be carried —that is why we are here to-day —somebody must make some sacrifice ? —lf they cannot be carried, then I presume the State will have to say that it is not able to carry them. But the State is able to carry out its obligations in other directions. I suggest to you that one of the reasons —there are many —for the State's failure to stand up to its payments to the funds is the three-year average for computing pensions, as pointed out by Mr. Nash. It is obvious the funds cannot carry these loads. Would you, in face of all that, ask the State to go on standing up to its guarantee without revising the position ? —Those are exceptional cases. Mr. W. Nash.] You are of opinion that there should not be any interference with those Civil servants who have retired after paying their full amount of contributions to the fund, and who have not had any special conditions in connection with their retirement ? —That is so. The other point is that you are not asking in any way that the existing contributors should be penalized ?—No. Mr. Gostelow.] On page 2of your statement you say, "... the Boards have been able to carry on and accumulate funds steadily increasing. ..." You did not compare the 1931 and the 1932 figures ? —Unfortunately I could not get the figures. That is one of my contentions —that the figures were not available.

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Those figures show conclusively that every one of the funds went down last year ; and figures have been put before this Committee to show that they will probably go down by another £300,000 next year. In the face of that, can you say that the position is "by no means desperate," as you say on page 2 and on page 7 ? —My remarks with regard to the position being " by no means desperate " refer to the figures I have quoted. Supposing you take the increase in the annuities —do you know the amount of annual annuities paid out by the three funds ? It has increased from about £750,000 to £1,100,000 in the last three or four years. What capital sum would you say would be required to pay £1,100,000 a year ? Would you say £11,000,000 —ten years' purchase ? You have annuitants from about 50 years of age onwards ? —I presume you would have to take the ruling rate of interest, and work it on that. Five per cent, would be a twenty years' purchase. Supposing we take a ten years' purchase — you would not regard that as unreasonable ? —Then that would mean £11,000,000. The total of all the funds amounts to £5,500,000, so that they would only pay 10s. in the £1 for the present annuitants ?—That seems to be so, from the figures you show. And what about the other forty thousand contributors ? Can you say the position "is not desperate " for them ? —Again, I would point out that my remarks regarding the " position being by no means desperate " refer to the figures I have quoted. And there is the further point that you have to consider the shortages in the past to build up the funds, and the other undermining causes that have been at work. Your statement is that the position is by no means desperate. I just want you to see that it is desperate ? —That remark refers to my figures, and I think you will admit, taking those figures, that the position is not desperate. Of course one can select figures and make a position brighter than it is ? —I took the figures available, the latest I could get. You have later figures. On page 5 you refer to the recommendation of the Commission that no retirements prior to 1921 are to be affected. Are you opposed to that ?—Yes. It was urged that these reductions should be made with a view to equality of sacrifice, but I say there is no reason why those retired prior to 1921 should be exempted. But they did not participate in the war bonuses ?—They did not participate in the after-war cuts. You definitely object to their being treated separately ? —On the evidence before me I say, Yes, most decidedly. Mr. Dickie.] They would have more back service, I suppose ? —Probably so.

Martin Joseph Lee, Delegate of the Superannuated Public Servants and Teachers, of Palmerston North. (No. 35.) On behalf of superannuitants residing in Palmerston North representing the Public Service, Post and Telegraph, Teachers, and Railway Services, I desire to thank you for affording me an opportunity of placing their views on the proposed amending legislation before you. We are chiefly concerned with such legislation as it will, if enacted, affect us. Briefly, our present position is asjlollows : — 1. We have all contributed to the various funds established under the original Acts. 2. Those of us who have complied with the requirements of such legislation as regards service (forty years) or age are receiving the full annuities provided by same. 3. The original Acts assured to all of us that no amendments would curtail our rights (see clause 26 of Government' Railways Act of 1.902, other Acts, and amendments). Up to the present all amendments enacted have respected such provisions. 4. Prior to the date of coming into operation of the Railways Superannuation Fund Act a circular was issued from the Railway Head Office dated 22nd November, 1902, advising all members of the Service to join the fund ; setting forth the advantages to be derived, and in addition responsible officers were sent throughout the railway system interviewing members in their various places of employment, exhorting them to contribute to the fund. I may say, in passing, that that was a fact and was found necessary owing to a large number of elderly men being afraid of one particular stipulation made in connection with joining the fund — i.e., that their correct age should be stated, and we found at that particular time that quite a number of these elderly men had, in order to join the Railway service in earlier years, given wrong ages and they were afraid they were going to be put out of the Service. That was one factor, but the main factor was, as I have just stated, setting forth the advantages to be derived by becoming contributors to the fund. Relying on the conditions, rights, and privileges which we were advised would be assured to us for all time, many of us forfeited insurance policies —I am one, I was receiving at the time 7s. a day' in order to become contributors to the fund ; this action being rendered necessary owing to the low ruling rates of salaries and wages, particularly wages at that period. By comparison, our position will, if the proposed legislation is enacted, be very materially affected ; our annuities, which have been granted since 1921, will be considerably reduced. Those of us who have qualified for full annuities will suffer a reduction of"20 per cent. Such annuities will be further reduced by the proposal to estimate same on the average salaries or wages received during the last ten years of service. Annuitants retired under the thirty-five-year clause will also suffer a similar reduction—many of these were compulsorily retired when they had every expectation of qualifying for a forty-year-service annuity, and have therefore in addition lost five-sixtieths of their anticipated annuity.

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Annuitants who have been also compulsorily retired with less than thirty-five years' service were retired on annuities based on actuarial reports, which resulted in their losing 7 per cent, on their annuities for each year of service short of forty years, and, in addition, will now probably suffer a further reduction of 20 per cent. They have also lost the opportunity of further advancement and consequent higher salaries ; in this respect it must be borne in mind that a member during the last five years can reach the higher positions in the Service. We now refer to the amending legislation of 1908, which provided for a minimum contribution of 5 per cent, of salaries and wages and limiting annuities to £300 per annum. This provision affected only those members who joined the various funds after that date. This legislation the proposed Act now repeals on the recommendation of the Economy Commission. If the various funds are in such a hopeless financial position as stated by those gentlemen, then they have failed dismally to grasp the importance of such legislation being retained. This amendment, in our humble opinion, will, when operating and in the fullness of time place the various funds on a sound financial footing, and ultimately become self-supporting. The Commission has reported that the repeal of this amendment will have very little effect on the funds, because so few retired officers are in receipt of high annuities. In answer to that we quote figures taken from the Commission's Report, paragraphs Nos. 1467, 1468, and from the Railway Superannuation Board's quarterly statement, in order to show the annual saving that would be effected if this amendment was retained and in operation. The figures given in paragraph No. 1468 of the Commission's report show 659 annuitants in the Public Service receiving from £200 to £350 each ; as we are not able to ascertain the number receiving from £300 to £350 we have not included them. There are 187 annuitants receiving from £350 to £600, totalling £81,844. Thirty are in receipt of £600 and over, totalling £21,931. The average annuities of the former is £437 13s. 4d., a saving on a £300 maximum annuity of £25,743. The average annuities of the latter is £731, a saving on a £300 maximum annuity of £12,930. There are 130 annuitants in the Railways Fund drawing from £364 to £1,976, or a total of £62,088 annually. A £-300 maximum annuity would mean a saving of £23,088, or a total saving to the two funds of £61,761 annually. I have been unable to get the figures separated for those who have received from £300 to £350. If the annuitants drawing from £300 to £350 could be ascertained in the Public Service the amount of annuities over the maximum of £300 would increase the average, which for the above two classes is £477 15s. sd. annually, the Commission's average as per paragraph No. 1467 is £415-8 for those in receipt of over £300. It will readily be seen by these figures that the statement of the Commission in paragraph No. 1467 has been based on wrong computation, and if it could be ascertained how many annuitants of the 659 quoted in No. 1468 are in receipt of from £300 to £350 it would materially swell the total saving which we have compiled. This also applies to the other funds, for which no figures are available. The statement of the Commission that the retention of the foregoing amendment would result in some officers contributing more to the funds than they would receive in benefits, and if this be true then the logical method of dealing with such a position would be for a maximum amount of contributions to be fixed to qualify for a £300 annuity —this should be a simple matter for an actuary. In support of their recommendation not to interfere with annuities granted prior to 1921 the Commission states that those annuitants did not receive post-war increases in salaries anā consequently retired on a relatively lower scale. lam referring now to post-war increases. We give this statement an unqualified contradiction. All salaries and wages were stationary at 1921, the National Expenditure Adjustment Act was passed late in 1921, and in January and July, 1922, two reductions in salaries and wages were in accordance with that legislation effected, and following upon this a reclassification of the schedules of the various departmental classification Acts caused a further reduction in salaries of a minimum of £s—that was my own personal case —or a total of £30 per annum. Later, further reductions, as you are aware, have been made, so that post-war increases have almost disappeared. We consider that the risk of serious anomalies arising as a result of this proposed amendment has been given little or no consideration by the Commission. I give one illustration as example. Take two members in the wages division—l am speaking now of the service to which I belong — of the Railway Department, one from the Locomotive, and one from the Traffic Departments. The Locomotive member receives a higher wage average than the Traffic member. Four years before retiring with full service both members are promoted to the salaried division at an equal salary, and ultimately retire on annuities of similar value. The Traffic member's annuity, owing to his lower average over the last ten years as compared with the Locomotive member, will be reduced below that of the other, although he has been contributing to the fund for four years on the same basis. This position will be created throughout the whole of the services through, as stated previously, advanced remuneration during the last five years of service. In conclusion, we are in entire accord with the views and protests expressed regarding our contractual rights by other delegates ; we have stood by our part of the contract, we retired from the Public Service consoled with the thought that we who can afford to do so would be enabled to live quietly on our annuities after our years of service, only to now receive a rude awakening to what is proposed, which is nothing more or less than a gross breach of faith, a thing we never visualized any Government would countenance. We earnestly appeal to your sense of justice and as representatives of the people of this Dominion, who have been entrusted with the honourable work of legislating for the welfare of all, and, above all, to keep the moral standard of legislation above reproach, to see it when you report back to Parliament on this proposed legislation, that no word of reproach may be levelled at this country for ignoring the provisions of past legislation which has existed for years for the benefit of the State and its employees. There is ample evidence throughout the Commission's

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report that the State's liability to the funds has not been discharged. If the State through its political representatives is prepared to violate its contract, then there is no logical reason why such violation should not be carried further, into the sphere of our national debt, and with the plea that our legislators in the past have spent too freely and possibly unwisely, as it is alleged has been the case with our Superannuation Funds, and introduced legislation whereby the State may escape from its liabilities. Mr. Dickie.] At the end of your statement you say "If the State through its political representatives is prepared to violate its contract, then there is no logical reason why such violation should not be carried further, into the sphere of our national debt." I suppose you realize that the State has already gone into that by taxing free-of-income-tax debentures ?—On quite a different footing to what they are proposing in this case. It is a contract just the same ?—No. Definitely ? —Not in my opinion. I would like you to explain how you arrive at that ?—I take it that when a loan is raised it is raised by authority of Parliament. For a period ? —Exactly. Here we have legislation which has existed since 1902 in the case of the Railway Service, and it is now proposed to curtail our rights for the first time by law. They are both contracts though. You refer to compulsory retirements. I suppose you realize that it was inevitable that these retirements had to be made owing to business falling off. Do you think it would have been a fair thing to have handed back their contributions to them, rather than to give them an actuarial pension ? —The Railways Department have in their regulations a clause which provides the Minister with power to effect retirements in the Service if the necessity arises, and that particular clause states that in the event of any one being recalled back in the Service they must start at the bottom of the ladder. Their previous service in the Department would not count for superannuation ; they would start off as if they had gone in as new members. I say that the placing of these contributors or members of the Service on our Superannuation Fund is a breach of the law, because the law governing our fund does not provide for retirements under the thirty-five years, and then only with the consent of the Minister may the Board do so. You have not answered my question. Do you think they should have had their contributions handed back to them ? —Exactly; that is what I am trying to make clear. Such members should not have been placed on the Superannuation Funds. That is under the thirty-five years ?—Yes. Mr. W. Nash.] In your opening remarks you explain your position and the effect the legislation will have on you, if enacted. You are more concerned about those who have complied with all the conditions than those who have not ? —I am concerned not only with those, but with those who have retired voluntarily or who have been compulsorily retired. You do not think the existing contributors should, in any way, be penalized for the benefit of those who have been specially retired ?—I do not. At the bottom of page 1 you refer to the " Economic Commission." That is a wrong term. It is an Economy Commission, not an Economic Commission ? —Yes, that is wrong there ; it should be an Economy Commission. Could you tell us where to get those figures you refer to on page 2 in reference to the £61,761 annual saving ? —I worked them out myself from the Commission's report. What lam speaking from now is a full report obtained by one of the Railway organizations in regard to the Commission's report on superannuation, and this particularly refers to paragraph 1467 of the Commission's report. I have it here if you would care to see it. I do not want to go into detail about it now, but I want to find out where I can get those figures, because, according to my information, they are not correct. Your suggestion is that if the £300 limit had been applied before 1909 there would be £61,761 less per annum being paid now ?—lf it had been in force from the inception of the Act. The Chairman.] On page 2 you refer to the savings, and say, " There are 130 annuitants in the Railways Fund drawing from £364 to £1,976," and then go on to say a £300 maximum would be a saving of £61,761 annually in both the Railway and Public Service Funds. What would you suggest we should do ? Should we apply the £300 maximum and break a contract ? —No. What do you suggest ?—I suggest that the £300 maximum, the amendment of 1909, should be retained for the purpose of coming into full operation at the end of the term for which the contributors joined under the 1909 Act, when they qualify for retirement with their annuities. Those that are enjoying it should stay as they are ? —Yes, unfortunately we cannot do anything else. I may say in passing that when the fund was first established no one ever visualized any man receiving as much as £2,000 out of the fund, because salaries and wages at that particular time were never expected to reach such a large sum as they did, and, so far as that goes, we cannot blame any one for the present circumstances, but there is the law.

William Marcus Wright, President, Superannuated Public Servants' Association of New Zealand (No. 36.) 1. The Association is represented by its President, Mr. W. M. Wright, representing the Superannuated Pubhc Servants belonging to the Public Service, Railways, and Teachers' Superannuation Funds. A statement will be made by Mr. John Caughley, on behalf of superannuated teachers, by Mr. C. P. Ryan, representing superannuated railway servants, and by Mr. Wright, representing the Association.

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John Caughxey, on behalf of the Association of Superannuated Public Servants of New Zealand. (No. 37.) 1. It will be serviceable, first, to give a brief outline of the main trend of the complete statement and evidence herein to be given, so that as each section is presently developed, the Committee will be enabled to estimate the bearing and significance of the several points in the light of the whole. I may explain that I decided not to give in writing the full development of all this outline, as I propose to comment on the various paragraphs as I proceed. The Chairman: All I can say is that we allow ten minutes to every one after they have delivered their addresses and made their statements in which to amplify their remarks, but if you are going to do what you propose it is going to take up a great deal of time. You have to be reasonable to the Committee. We want to give you every opportunity ; we are trying to do that, but we asked for the information to be put in writing so that we could have it before us, and I may say that comments are not much use. It is the statement we want. Therefore, I hope that you will make your comments as brief as possible. We do not mind if, at the end, you take ten minutes to amplify anything. Mr. Caughley : It was amplifying I wish to do, rather than to make comments. The Chairman : Very well, we will take your statement first and then at the'end you can make any remarks you wish to. 2. The outline is as follows : That, in order to judge fairly what portion should be borne by the State and what portion, if any, by present contributors and annuitants of the Superannuation Funds, out of the estimated unprovided liability of £23,000,000, it is essential first to evaluate and locate the main factors that have resulted in that liability. 3. These main factors chiefly include — (а) The debt or obligation assumed and acknowledged by the State before any annuity had been paid from these funds. (б) The default of the State in meeting its statutory undertaking to meet annually the charges due to that initial debt. (c) The unnecessary and avoidable, but enormous additional, loss, due to the annual accumulative effect of such default. (d) The long-continued neglect by the State to provide measures to stop the above and any other causes of decline in the strength of the funds, in spite of periodical warnings by the Actuary and in the face of repeated undertakings by the State to provide such measures. (e) The fact that if such measures had been provided when the State first promised to do so, the necessary adjustments woidd then have been well within the capacity of the finances of the State, without affecting retrospectively the benefits due to the then members of the funds, and that far less drastic measures then applied would have resulted in saving some millions of pounds to the State and these funds jointly, while the funds would have been to-day in a sound position. (/) Heavy burdens placed upon the funds by the State, through compulsorily retiring large numbers of members on the funds not only as a means of retrenchment, but in large numbers during the prosperous times, and without effecting economies. Such burdens are declared by the Actuary not to be a proper charge on the funds. (g) The voluntary retirement of a relatively small number of members before reaching the retiring age or service, and the deficiency of reduction in annuity often left in such cases. (h) The alleged "material additional benefits" to those annuitants who retired since 1921. 4. That for the same purpose as is referred to in paragraph 2 above, it is essential to know what contribution the State has made to these funds since their inception, apart from meeting its own special liabilities attached to the factors mentioned in paragraph 3, in (a), (b), (c), and (/). The total amount of contributions by members is already known. 5. Information concerning the points mentioned in paragraphs 3 and 4 above is, for the most part, provided in the Report of the National Expenditure Commission, or in the Actuary's Reports. 6. It is seriously essential, in our view, that highly important actuarial information not thus available on any of these points should be obtained in order that the Committee may not take the very serious risk of unknowingly inflicting grave injustice on thousands of members of the funds, by having to report on inadequate data. 7. The essential and only adequate data for a fair decision as just described, would then enable the Committee to assess how much of the present liability is justly attributable to any defect in the actuarial and financial basis of these funds under the statutory provisions on which they were founded, together with any liability since added through additional benefits thereafter granted over and above the additional contributions paid in respect of such benefits, but apart from any of the factors mentioned in paragraph 3 (a) to (/) above. 8. The assessment mentioned in the previous paragraph should justly be made as for the date when, having received serious and solemn warning of the position from the Actuary, the State promised to take in hand the review of all the funds and to place them for the future in a sound position. This would be at least as far back as 1920. 9. This assessment would, we feel convinced, also show the comparatively insignificant adjustments that would have needed to be made regarding the benefits for contributors entering the services after 1920, while the State could readily have met its special liability from its own resources without interfering with the contractual benefits of the previous contributors and annuitants, and the funds would be sound in these days of stress.

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10. Such a review would be no mere futile post mortem, nor a mere allocation of blame. It covers data positively essential to any proper and fair consideration and judgment on the provisions of a Bill which seeks to apportion, on a forty-sixtieths basis, a huge liability resulting, probably, up to 90 per cent, from the defaults, actions, breach of statute, and negligence of the State. 10a. A first reading of paragraph 1451 of the Expenditure Commission report might suggest that the recommendations 1 to 4 in paragraph 1445 to paragraph 1450 represented chiefly the sacrifices to be made by present contributors and annuitants towards meeting the present liability of £23,000,000, while those nnmhp.rp.fi 5 and 6 showed what portion of that liability would be met by the State under the provisions of the Bill. But the position is much worse than if the payment of that liability were to be shared on a fifty-fifty basis. 10b. The recommendation of paragraph 1446 would not in any way reduce the present liability of £23,000,000. It would merely prevent a future unjustified addition to that liability. 10c. Similarly, the recommendation in paragraph i 448 would not reduce the liability, nor is iteven likely to prevent increase in that liability, since the reserves in the funds are earning at least 5 per cent. 10d. Paragraph 1451 states that recommendations 1 to 4 would reduce the deficiency in the three funds by approximately 50 per cent. ; but as recommendations 2 and 4 have just been shown to have no effect in reducing the liability, it follows that recommendations 1 and 3 alone would meet 50 per cent, of it. Both "of these represent sacrifices that would be made by present contributors and annuitants. 10e. Recommendations 5 and 6 are to meet the other 50 per cent, of the liability ; but number 6 includes two more heavy sacrifices that would be made by present contributors and annuitants. Ihe first is an increase by 2 per cent, in the future contributions of those who joined the Railways Fund prior to Ist January, 1908, at ages under 50. The second is the reduction of practically all present annuities entered upon between April, 192.1, and December, 1932. These two together would, to the extent of at least another 10 per cent., go towards paying the present liability. 10f. Therefore this 10 per cent, added to the 50 per cent, referred to in paragraph 10d above would make at least a 60 per cent, proportion of the liability to be paid, if the Bill were passed, by present contributors and annuitants. If the complete figures were supplied by the Actuary, this proportion of three-fifths might be found to be as high as two-thirds. Even on the lower estimate, however, the Bill thus proposes that present contributors and annuitants should sacrifice such part of their guaranteed benefits as would meet at least three-fifths of the liability for a debt incurred, to the largest extent, by the default and negligence of the State. Three-fifths of the liability would amount nearer to £14,000,000 than £13,000,000. 10«. This summarizes the fundamental and unprecedented injustice of the Bill in thus proposing to load on the non-culpable party three-fifths of the obligations of the culpable party. 10h. It surely also shows the grotesque nature of the suggestion that members of the funds should greet such a remarkable method of stabilizing the funds with welcome, because stabilization in itself is something admittedly to be welcomed. lOi, The points brought forward in this connection should, we submit, convince all concerned of the positive necessity for obtaining the categorical information referred to in paragraphs 6, 7, 10, and 74 of this statement. 11. The drastic nature of such infringement of benefits must also be properly evaluated m order fully to comprehend the magnitude and nature of the unprecedented proposal of the State to violate the proviso to section 92 of the Government Railways Act, 1908 —that is the one generally referred to as 26 (2) in the previous Act—probably the most deliberate, self-binding and apparently impregnable statutory pledge of honour and security that has ever been embodied in the laws of this country. That proviso reads, — " Provided that all benefits under this Act shall be conferred upon any person who has actually contributed and shall remain in force, and shall not be prejudicially affected by the amendment or repeal of this Act." 12. It will be submitted in evidence that no plea of expediency should be allowed thus to violate the pre-eminent principles of equity, justice, and honour, and that the State, the supreme national guardian of these principles, should not on such a plea dethrone itself from that exalted status and prestige which constitute the very foundation of a just pride by British people in the integrity of the Crown. 13. As a corollary to paragraph 10 above, it is further necessary to clear away a fallacious atmosphere and to correct a totally wrong angle of approach, that form a serious prejudice to the proper consideration of the proposals of the Bill. 14. One element of these fallacies is that the Government is being presented or regarded as coming to the rescue of these funds, with the reasonable right to expect members of the funds to undergo some financial loss and hardship, to assist in the work of rescue. 15. The actual fact is that the Government is proposing to force members of the funds to come to its rescue by surrendering guaranteed statutory benefits to pay three-fifths of a State debt incurred to a preponderating degree by the default, actions, and negligence of the State itself. 16. Under the proposals of this Bill the State puts itself rather in the position of a man who, after pushing another into the river, finally proposes to rescue the other, on condition that the latter will meet three-fifths the cost of damage to the rescuer's clothing. 17. Most strange of all, it is represented that members of the funds should, and no doubt would, welcome the proposal of the Government to put the funds on a sound basis, and that after the proposed enactment of this Bill, members would enjoy a feeling of security for the future. The fallacy here is the unjustified transference by suggestion and proximity of ideas of the welcome to stabilization of the funds over to a welcome or an acceptance of the means by which it is proposed to effect stability.

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18. It cannot be too strongly represented to the Committee that the proposal by the State now to violate what was probably the most apparently impregnable statutory pledge of security of benefits that could be enacted in any statute can surely not be regarded as a foundation for security in the future. On the contrary, it would undermine all faith in the integrity of the State, and all sense of security for the future. 19. Members of the funds would be compelled in clause 6 (1) of the Bill to read the words, " entitled to receive from the fund an annual retiring-allowance for the rest of his or her life an allowance computed as follows," to be subject to the following reservation : "or until the State deems it expedient again to reduce such allowance." 20. There is a third respect in which this question is being seriously prejudiced. All too lightly, and without taking a position of responsibility fitting to the circumstances, the Government of one day freely admits the deficiencies and neglect of previous Governments that have been seriously detrimental to these funds, and then the Government presents proposals that do not in a proper sense assume the responsibility for such actions. Unless that attitude is corrected, the Bill cannot be judged in its true light. 21. Governments and Administrations may come and go, but the State goes on as an entity and a perpetuity, so that the State to-day must take its clear stand of culpability for the actions of the State in previous years, as much as if the same Government that had introduced Superannuation Funds had been responsible for all State Acts of omission and commission that have imperilled the solvency of the funds, and as if the same Government were still acting for the State. If that had been so, we venture respectfully to submit that the Government as Executive to the State, being in the only attitude and frame of mind appropriate to such a position, would not feel itself justified in compelling contributors who have met to the full all obligations imposed by the Superannuation Acts to bear at great loss and hardship approximately 60 per cent, of the losses so largely caused by the State, which has failed to meet even its initial statutory obligations. This continuity of the State bears also on the continuance of the pledge of security of benefits referred to in paragraph 11 above. 22. Evidence will be given to show that in two main respects the State has committed a breach of trust, and has thereby benefited to a considerable extent, at a loss to the funds. 23. At the outset the State elected and undertook to pay annually into the funds actuarily computed amounts, which included cover for its initial liability for back service. 24. Up to the end of 1929 the shortage in these payments, in respect to the Teachers' Fund alone was £735,251 which, with the consequent accumulated loss of interest, has made an added liability to that fund of £1,023,136. 25. The State therefore holds the sum of about £735,000 which by the provisions of the statute should be in the fund, so that it virtually holds that sum in trust for the fund. 26. Section 38 (2) of the Act provides for the payment of " the retiring and other allowances falling due within the ensuing three years " {i.e., after each actuarial computation) " without affecting or having recourse to the actuarial reserve appertaining to the contributors' contributions." This provision of the Act has not been observed, since, in the words of the Expenditure Commission report, paragraph 1430, " The result is that the liability for annuities arising from service prior to the initiation of the funds is now being met from current contributions of employees." 27. It is recognized that part or all of the sum involved in paragraph 25 is an accountancy duplicate of that referred to in paragraph 26 above, but the difference of effect in re paragraph 26 is that in the latter case funds that were held in the Superannuation Funds in trust for specified statutory purposes were used for purposes for which they were expressly excluded by statute. 28. Now under the provisions of the Bill, the State, while still in possession of the sum of about £735,000 from shortage of payment into the Teachers' Fund, seeks to compel the teachers by surrender of present or future annuities, to pay for three-fifths of this liability, which through the continued delay of the State has, on the computation of the Actuary, accumulated through loss of interest to a liability of £1,023,136. 29. It seems inconceivable that Parliament, taking its proper place in this respect as a trustee, could sanction such an injustice. Evidence will be given to show that the reasons given for such an action by the State should not be accepted, nor even advanced by the State. 30. It will be necessary to elaborate some of the above paragraphs in this forecast, and to quote briefly from the report of the National Expenditure Commission, 1932. Nature and Extent of Losses and Hardships involved in the Provisions of the Bill. 31. In stating before the Committee the general or particular losses or hardships that the Bill would place on members of the funds, I shall refer as a rule to the Teachers' Fund, with which I have been most closely associated. Most of the points to be made would generally apply, however, to any of the Funds. 32. Except when dealing with some aspect specially affecting women teachers, reference will be made only to men teachers, it being understood that the same remarks apply to the case of women with the consequent substitution of the different length of service. 33. It is agreed that we have no right to take exception to the application of the new provisions of the Bill to those who entered the Service after the passing of the Bill. It is the retrospective provisions affecting the guaranteed benefits of those now in the Service or retired on annuity to which objection must be made. 34. The present contributors and annuitants may be referred to in several main groups. 35. The first group includes those who retired before 1921. The Bill exempts all of these from any alteration of benefits, and we cordially endorse this exemption.

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36. The second and largest group includes those who are still in the Service: The proposal to extend the periods of service needed to qualify for any type of annuity would inflict many hardships. (a) Many, though not medically unfit, are imparied in health or vitality, and the postponement of anticipated relief will react doubly on capacity to give good service. (b) It is not fair to the pupils to compel teachers with flagging strength to carry on. (c) Large numbers of women teachers, from the special nature of their work, and owing to their special temperament, would unduly suffer from this compulsory extension of service. (d) Most of those teachers now near the time for retirement under the present Act have been making all their arrangements for the future, including obligations for the future, under the conviction that their date of retirement was fixed. (e) Evidence will also be given to oppose a prevalent view that the period of service for women should be extended, because it is alleged that women contributors are a special burden to the fund. It may here be stated that Table VIII on page 13 of the Actuary's report, E.-Ba, 1932, shows that the present liability to the fund with respect to 3,800 women teachers is about £500,000 less than the liability for about 2,200 men teachers. (/) It should also be known that the average annuity for about 760 retired women teachers is only £132 per annum. (g) Among those who would be compelled to lengthen their period of service, often by five years, is a large number of returned soldiers, many of whom, though not actually medically unfit, have a lessened potentiality for long service, and should not be made to extend their present period of qualification for retirement. 37. It is admitted that those still in the service could, for the most part, during the extended period of a service qualify for a newly stipulated ten years' average or a seven years' average, which would be as avourable as the three years' average at the end of the present shorter service. 38. Many, however, could not so qualify, and would at the end of a longer service receive an annuity smaller than they would have received under the present terms. These would be doubly penalized. 39. The third group consists of those who have retired on annuity since 1921, and it is on this group that the Bill would inflict by far the severest losses. 40. Among these by far the largest number had fully met all the conditions for retirement under the Act. Many of them retired seven, eight, or nine years ago. Many who then retired are dead. Many are, in the natural course of things, nearing their last years. Many have no other resources than a small annuity. Yet the proposal is to make the Bill retrospective, so that their admitted rights under the Act when they retired are, in the language of the Bill, now to " be deemed to be " not rights under the dictum of a Bill not then in existence. 41. The proposal to adopt a ten years' basis instead of a three years' basis for computing annuities would result, in almost every case, in a reduction of annuity, varying from small amounts to £10, £20, £50 per annum and upwards for life. 42. The smaller reductions would as a rule be most severely felt since they would be taken from the smallest annuities. 43. Those retired before 1921 would suffer no loss. Those still in the service, while required to give extended service, could mostly qualify for an annuity as large as they would receive under the present Act, and those who could not thus fully qualify would have the compensation of receiving, during their extended service, a full salary instead of two-thirds of it by way of annuity on earlier retirement. 44. Thus, those who retired between 1921 and 1932 are, in effect, the only members on whom as a class it is proposed to inflict actual financial loss, as apart from hardship. This will be further demonstrated in evidence. 45. The reason given in paragraph 1460 of the Commission's report for this discrimination will be shown to be untenable. It will also be shown that the proposed reduction of existing annuities is in direct contravention of the principle enunciated by the Commission in paragraph 1462 —viz., " This would at least ensure that uniformity of treatment would be achieved, and would result in a greater correlation between contributions and benefits and in a more equitable distribution of the sacrifice involved in a reconstruction scheme." 46. The reason given in paragraph 1460 of that report is, " The majority of those who have retired since 1921 have done so on an inflated annuity, in most cases out of relation on an actuarial basis to the average salary upon which their contributions have been made. This is, of course, due to postwar rises in salaries." 47. Let this reasoning be applied to the Teachers' Fund. The average salary of all adult primary teachers for the years 1918, 1919, and 1920, respectively, was £187, £240, and £278 as given in the report E.-l, 1921, page 17. I would draw your attention to the fact that that is prior to 1921. The average for the three years was £235, and a two-thirds annuity would be £156. Under the Bill this annuity would be exempt from reduction because of " inflation of salaries " after 1921. 48. The report E.-l, 1930, page 19, shows that the average salaries of adult primary teachers for 1925, 1926, 1927, 1928, and 1929 were respectively £280, £280, £279, £280, and £281. I would point out that none of those exceeded by more than £3 the average salary for 1921 in the exempted period. 49. Under the Bill a teacher retiring on average salary in, say, 1922 would have his annuity computed on a ten years' average salary basis back to 1912. Reference to the E.-l reports will show that the range of average salaries for those ten years would give a general average salary for that period of about £200, on which a two-thirds annuity would be £133, or £23 per annum less for life than for the

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average teacher who retired at the end of 1920. The alternative offered in the Bill would not be of advantage to many annuitants. I might state that the alternative there is the offer to count three years prior to 1921 instead of ten years prior to the date of retirement. 50. It is recognized that an average of averages does not always give a true average, that individual salaries frequently do not follow the average trend; but, without going into great detail, we are satisfied that the above gives a general idea of the injustice of discriminating against those who retired after 1921. 51. It is also recognized that the above is a border-line case, but the loss to an individual would be none the less severe even if a general rule fitted other cases. Moreover, it must be stated that in the two years of this border-line period from April, 1921, to December, 1922, 143 members retired on annuity from the teachers' fund, of whom 117 were still alive in 1930. There would probably be at least 300 similar cases in the other two funds, making approximately 417 of these cases. The description of border-line cases would not in the least mitigate the loss to them of, say, £25 per annum for life. 52. It must also be seen that a proportionate, and, in some cases, a greater loss would be inflicted on those farther removed from the border-line, and very few of those who retired between 1921 and 1932 would not be penalized by this discrimination, the reason for which is seen to be so largely untenable. 53. This further illustrates the serious necessity for full data showing how the provisions of the Bill would operate. It would not take long to sort out the cards of the cases which have had to be dealt with above on general average lines. 54. The corollary reason given by the Commission as quoted is that those who retired after 1921 had not adequately paid contributions for their annuities. Now, it is clear that all who retired on full annuity up to 1932 must of necessity include back service prior to the establishment of the fund, for which no contributions were paid to the fund. Those men who retired before 1921 would have to include up to twenty-five years of such back service. But for every year of service after 1921 and up to date of retirement the other penalized annuitants paid another year's contribution on their highest salary. Thus a man who retired in December, 1925, had paid additional contribution for nearly six years on his highest salary as against six years of back service thus excluded from his computation. He has in his case reduced the State's initial liability for annuity on back service by six years out of twenty, or nearly one-third. 55. Far from having added a burden to the fund as compared with an annuitant retired before 1921, he has in that comparison helped the fund. Yet the Bill proposes to discriminate against him. 56. Two illustration are here given, apart from averages. Three officers, A, B, and C, successively occupied the same high position at the same salary. Officer A, after forty years' service, including twenty-six years' back service, retired on the maximum annuity computed on his last three years. His annuity would not be reduced under the Bill. Officer B, appointed in 1921 to A's position at the same salary, retired in December, 1926, with forty years' service, including twenty years back service, or six years less than A. After the first year on that salary, his salary was for three and a quarter years reduced by £112 per annum because a cost-of-living bonus which he had never received was being largely taken away from other officers who had received the bonus. This meant a total reduction to Bof about £364. I may add that that does not seem to be a post-war inflation of salaries. On retirement in January, 1927, he received an annuity based on that salary for three previous years —i.e., the same as A's. Under the Bill his annuity would be reduced by £126 per annum for life, or £1,260 in ten years. Officer C succeeded B in 1927 at the same salary, and is still in the position with six years on that salary. He could, under the Bill, remain another four years receiving full salary instead of a twothirds annuity if he retires now. In four years C could retire on the same annuity as B received on retirement, but C would, of course, not be reduced. 57. Here, then, is the alleged equality of sacrifice. In ten years after the passage of the Bill C, as far as money is concerned, would be £1,668 better off than if he retired now with only present rights preserved. A would not be affected financially. B, who is about the same age as C, would in the next ten years lose £1,260 in addition to the £364 he had taken off with the cut. 58. It is hoped that any views that may be held regarding high salaries and large annuities wdl not be allowed to obscure the self-evident fact that an extremely disproportionate sacrifice would be inflicted on B, whose salary was the same as that of A and C. The case is cited not in the interests of large annuities, but to show the non-equity of the provisions of the Bill to all annuitants who retired after 1921. 59. In any case a further example will now be given that relates to an ordinary salary. After the above case, this one will readily be followed if stated in tabular form : —• Officers D and E : — D. E. Service to December, 1919 .. .. 40 years 35 years. Average salary for 3 years previously .. . ■ £450 £300 Average salary for 6 years previously .. - ■ £380 £250 Date of retirement .. .. .. ■ ■ 31/12/20 31/12/25 E promoted to D's position .. .. ■ • • • 1/1/21 E's commencing salary .. .. .. • • • • £375 E's average salary, 1923-4-5 .. .. .. ■ • £450 Annuity under present Act .. .. • • £300 £300 Annuity under the Bill .. .. ■ ■ • • £300 £259 Loss to E per annum .. .. .. • • • • £41 Loss in 10 vears .. .. • • ■ • • • £410

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Both D and E received the cost-of-living bonus prior to 1921, but it was withdrawn from E in 1921 and 1922. It will be noted that the increase in E's salary after 1921 was not a post-war inflation of salary> but was due to a promotion to a higher grade of salary. 60. In the three Services there would be hundreds of cases fairly similar to that of E, as shown above, especially in the still lower grades of position and salary. 61. Large numbers of those thus adversely affected by this intentional but unjustified discrimination were compulsorily retired not only as a means of retrenchment, as in recent cases, but years ago under a policy that deprived the State of a large number of servants who were at the height of their efficiency and experience. Almost if not every position thus vacated was refilled at the same salary, but men who were able, willing, and anxious to serve for several years longer were compulsorily retired on annuity, so that the State and the funds conjointly paid, for many years after, one and two-thirds the salary for each position, with great loss to the funds. Not even by an extraordinary straining of the principles of equity and justice could these men now be called upon to pay part of the loss thus unnecessarily incurred by the State. 62. Besides those who retired since 1921 after forty years' service there is a smaller number who retired either voluntarily or compulsorily with less than forty years' service on an annuity computed as a rule on less than their actual service because of their premature retirement. 63. Those who thus retired voluntarily were informed of the actuarial reduction that would be required, and if they felt they could manage with that reduced annuity, they retired. Those who found that the annuity thus reduced would not meet their needs remained in the service to qualify for a larger annuity. 64. The Bill proposed that their already actuarily reduced annuity shall be recomputed on much more severe standards than the Act provided at their retirement. To numbers of these annuitants, especially to those whose small annuity provides a bare means of subsistence, this reduction up to a possible 4s. in the £1 means positive disaster. Each amount deducted from a small annuity is of great importance to the individual annuitant. But the £20 thus deducted is a mere drop in the ocean of the £23,000,000 liability caused almost entirely by the default and negligence of the State. Even in the aggregate the total sum thus forcibly taken to meet a State debt would be small in proportion to the sum of human hardship which most of these losses would cause. 65. Table 111 of the Actuary's report E.-Ba, 1932, page 8, shows that in the Teachers' Eund there are only 111 annuities of this type in force. Of these, about seventy-six were in force before 1921, and would be exempt from reduction. This leaves forty-one cases. The average annuity is £168, so that many are below that amount. The whole of their annuity is not a debt on the fund, but only such fraction of it as was not actuarially deducted when they retired as compared with the full actuarial deduction. The total relief to the fund, by their partial payment of the State debt, would therefore be remarkably small, but to John Smith, the annuitant, the blow is just as severe as if there were a thousand other cases. 66. The recommendation of the Commission to reduce these small annuities is in striking contrast to the manner in which reference is made to the effect on the funds by the removal of the £300 limit on annuities for entrants after 1909. Let us compare the remarks on the two types of cases. In paragraph 1403 and 1404 we read, — "1403. In the principal Act of 1907 qualifications for the right to retire were as follows :— " Males at ages not less than 65, or after forty years' service. " Females at ages not less than 55, or after thirty years' service. " But there was a provision giving the Minister in charge of the Department to which the contributor belonged power to extend the provisions of the section to any case in which the age of the male contributor was not less than 60 years or the age of the female contributor was not less than 50 years. " 1404. This was further extended by section 7 of the Public Service Classification and Superannuation Amendment Act, 1909, to any case in which the age of a male contributor is not less than 55 years, if his length of service is not less than thirty years, or to any case in which the length of service of a contributor is not less than thirty-five years. The amendment gave the Minister power to impose upon retiring contributors such terms and conditions as to payment into the fund or otherwise as he deemed fit. In the case of this fund the power to prescribe special terms and conditions in respect of early retirement has, so far as we can ascertain, been rarely, if ever, exercised. The effect is that the fund has had to assume liability for annuities calculated on the actual length of service of contributors having thirty-five or more years of service who have been compulsorily retired, and no adjustment has been made for the increased liability on the fund by reason of these retirements taking place at earlier ages than would normally be the case. It is difficult to understand why the provisions of the Act under which special conditions could have been imposed, and the strain on the fund thereby lessened, have been so consistently ignored. No doubt the easier and more pleasant course has been taken of paying retiring-allowances based on years of service only, without regard to the increased liability on the fund. The adverse position of the fund to-day is largely due to this policy of early retirements." That sentence I wish to draw particular attention to. The Chairman: We have had that in nearly every case.

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Mr. Caughley: Might I make this comment: It is one of the items I would like to see costed by the Government in order to learn actually how much it is costing the funds. It is at present put into a pool along with other items and while some items run into millions, one item appears to cost just as much as the other. In paragraphs 1471-1473 we read,— " 1741. The objections to the limit [that is the £300 limit] may briefly be stated as follow :— " (1) It leads, in some cases at least, to officers paying more in contributions than their annuities are worth. " (2) It helps to defeat one of the main objects of the fund by diminishing the inducement to the best officers to remain in the Service. " (3) It renders it more difficult to retire the higher officers who remain in the Service until the retiring-age, the annuity of £300 being small compared with a salary of, say, £1,000, particularly in the case of a deserving officer of long service. " (4) It will cause a great deal of embarrassment in the future ; at present its effect is more or less dormant because it applies only to officers joining the Service since the 24th December, 1909. " (5) It does not proportionately help the finances of the fund ; witness the following remarks of Mr. George King, F.1.A., of London, a distinguished authority on actuarial matters : 'It is wonderful how little saving was thus made upon the general finances of the fund, because the pensions of the higher-grade officials, although they seemed very large, were almost a negligible quantity in looking at the fund as a great whole.' " 1472. Taking the three funds together, the payments in excess of the £300 limit for annuities are only 2-8 per centum of the total annuities payable, and when this fact is remembered the remarks of Mr. George King quoted above will be appreciated. " 1473. An even more striking example of the relatively little saving to the three funds is contained in a report of the Government Actuary in 1920. He pointed out that had a limit of £300 been in force from the inception of the respective funds the saving would have been only 4-7 per centum in the Public Service Fund, 0-7 per centum in the Teachers' Fund, and 1-8 per centum in the Railways Fund. The disadvantages and anomalies created by the arbitrary limit therefore outweigh the small monetary saving to the funds." Note that in the first case it is stated that " the adverse position of the fund to-day is largely due to this policy of early retirements," while in the second case it is stated " that there is a relatively little saving to the three funds " by the operation of the £300 limit. I would like to urge that we have those properly costed and see how much difference there is between the large burden to the fund and the little one. 67. Here, again, we see the imperative necessity for the actual data on which such generalizations are based. It is positively unsafe to make a concession on the one hand and really dangerous to inflict a loss on the other, unless the actual result and proportional saving or disability are known. This emphasizes my contentions in paragraphs 2, 6, and 7 above, and in paragraph 74 herein to follow. 68. Summarizing the cases of those who retired under the extended provisions without full actuarial deductions, we have to urge — (a) That their number is small, as shown above. (b) That in the Teachers' Fund the number granted since 1924 has increased by only four. (c) That in the three funds many were compelled by the State thus to retire and were thus deprived from qualifying for full annuity. (d) That most of them have already suffered a partial or full actuarial reduction on the standards of the existing Act. (e) That it is most unjust to impose now more exacting standards when the annuitants' bridges are burned behind them. (/) That the individual hardship and distress would in most cases far outweigh the relatively small extent to which these mostly small annuities would be compelled to pay, out of their need, a part of the preventible losses by the State. 69. It seems appropriate here to state that this whole question involves a great deal more than a mere matter of book-keeping; more than merely finding a required amount of money by some means or other ; more than a satisfaction in seeing £10, £20, taken here and there, mounting up into an imposing thousand pounds to reduce losses due largely to faulty administration. It means dealing with human welfare, and with the lives of many who are little able to bear any more strain. If, like Scrooge, the State could have a dream, and look into many of the homes as they would be affected by many of the results of this Bill, it would surely wake up with a similar salutary change of view. 70. Concluding my remarks on the retrospective aspect of the Bill, I must point out that in almost every legislative measure brought forward to inaugurate a change of basis in any system, there has in the past been a protective clause preserving existing rights even when there has been no such deliberately worded and intentionally impregnable security bond, as was in this case included in the original Bill. 71. It is also worthy of note that in his recommendations for the future security of the Teachers' Fund as set out in his last report, E.-Ba, 1932, paragraph 26, the Actuary, while recommending the other proposals now in the Bill, does not recommend a retrospective operation of the alteration in benefits. 72. It is suggested that the Bill be held over till next session of Parliament, and that in the interim the Actuary be requested to provide full and fairly detailed information regarding the proportionate value to the funds of each of the proposals of the Bill, together with a statement covering progressive three-year periods for a considerable time ahead, somewhat on the lines of the outline given in paragraph 74.

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73. It can readily be seen from the reports already made by the Actuary that nearly all of the information thus desired must be already compiled on his working sheets, so that the chief extra work would be the rearrangement of available sectional data in the form requested by the Committee. 74. The information referred to should include, for each fund separately— (a) The amount, out of the total liability, that is now due to the initial obligation of the State to provide for back service, with the interest on deficiencies of past payments relating to back service. (b) The amount of liability due to compulsory retirements. I would like to see those differentiated, putting into one group those who were compulsorily retired in times of prosperity when it did not involve retrenchment, and into the other group those retired from 1930 to 1932, who were retired compulsorily on account of retrenchment. (c) The amount of liability due to voluntary retirements under the extended provisions over and above the actuarial adjustments. (d) The amount of liability due to annuities of those now retired as medically unfit. I am sure that would amount to a very small item for these medically unfit people. In the natural course of events they are not going to live very long. They are people who are suffering from many disabilities. If we had this item costed, it would surely be found that whatever else the Government would do it would say that it was not going to pay any State debt at the cost of people who went out of the service suffering from disability, and who are already under a mental strain. (e) The amount of liability for annuities under the present Act to present members in the services. (/) The liability due to annuities now in force that commenced after March, 1921, and under the separate headings of annuities under full conditions, annuities under extended provisions voluntarily, under extended provisions compulsorily between 1920 and 1930, as well as since 1930 ; and under the provisions for the medically unfit. (g) In a column parallel to that containing the above amounts, the annual payment required during each of the next three of three-yearly periods, to meet each of the above liabilities, also in a similar column the estimated date on which such liability may cease. (h) The estimated amount by which each of the new provisions of the Bill would separately contribute to meet the present total liability. I include that especially, because, as I said earlier in the statement, it appears to me that the Government is asking contributors and annuitants to pay something like £14,000,000 out of the £23,000,000 to make up a State debt, and we want to know exactly how the matter stands. (i) The estimated amount by which the liability would be increased by the removal from 1909 of the £300 limit. (J) A statement showing for the next five of three-yearly periods the estimated reserve funds that would accrue to each of the Superannuation Funds if the present Bill, without the retrospective provisions, were to operate, without extra burdens. (k) Any other information deemed essential by the Committee for making a confident decision on the various provisions of the Bill. 75. At present, and without such information as the above, it is submitted that neither the Committee nor Parliament and not even the Government, is in a position fairly to judge what the proportionate effects would be to the various interests concerned, nor even the extent of the drastic measures of the Bill, designed to remedy in one fell swoop, and chiefly by losses to the present contributors, the whole drift of the past twenty-five years, as compared with much less drastic measures that might be adopted to ensure a more gradual restoration of the funds. 76. It has herein been shown that in some respects far-reaching recommendations on which the Bill has been drafted are partly or wholly indefensible. Many other sections need to be examined in the light which only such information as is outlined in paragraph 74 above could provide. 77. Finally, it is submitted that the Committee should not approve of the revision of benefits to present contributors and annuitants by the retrospective action of a Bill, since such an approval would repudiate the most apparently inviolable statutory charter of security that could possibly have been drawn up for its own restraint by any State. 78. The Expenditure Commission states, " A second failure of the State to meet its obligations would shatter all faith in Government superannuation schemes." Can this proposed first repudiation by the State of a charter just referred to be presented as a surety that a second violation of a statutory pledge will not be made if expediency urges such a course ? 79. Apart altogether from superannuation schemes, if the State, on the ground of expediency, shatters the charter thus given on the honour of the State, it is difficult to see how commercial concerns, parties to contracts, and ordinary citizens can be expected to honour their obligations to each other and to the State, nor can it be seen how the State could, with any propriety or self-respect, inflict the punishment of the law for a breach of law and equity of which the State was in its own sphere guilty. The Chairman : You have ten minutes if there is anything you wish to add to your statement ? — In the luncheon interval I have gone through my notes and have cut out all I possibly could, and 1 think I can now confine my remarks to an explanation of two or three paragraphs. It might take a little more time than ten minutes, but as the matter is going to affect the livelihood of some thousands of people for the next ten years or more, I feel I have to make these points. I know your Committee has given a deal of time to this huge question, but the matter I wish to put before you is necessary for

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the statement of our case. Referring to paragraph 3 (a) in regard to the original debt., I wish to deal with that in particular, and let it be regarded as a sample of a line of inquiry that should be adopted in regard to all the other items that go to make up the total liability of 23 million pounds. You have, no doubt, heard a good deal about " back service." I wish to point out that the annuity for this back service was a debt acknowledged and accepted by the State before any contribution was paid into the fund and before any annuity was paid out of it. The Committee understands that fully ? —Referring to the Teachers' portion, which the Actuary says is £800,000, I wish to point out that there was no previous statutory obligation on the State to pay for back service to teachers. It really arose in this way : I was a member of the teaching profession at the time, and along with Mr. Parkinson and others we met the people concerned. We had fears at one time that the other funds that had statutory claims under old forms of pension might get the credit for the back service and we might not. It was definitely understood at the time that the teachers should come in on the same basis as the other funds, and the reasons given for that decision were, firstly, because of the very fact that the teachers had not received any benefits in the past although they were virtually State servants, and it was right that they should now come into the new superannuation scheme on equal terms with the other branches of the Service, which had, in the past, had benefits and a considerable amount in pensions at little or no cost to themselves. Secondly, on account of the low rate of wages ruling at the time for the teachers. At that time the wages were very inadequate as compared with the rest of the Service. I remember putting a statement before the then Inspector-General, and some of the comparisons were very striking. The head teacher of a Grade 111 school was receiving only as much as a first-class letter-carrier. A number of cases like that were cited, and it was generally admitted that the salaries were very low. In the first five years of my service I started at £20 and in my fifth year I was receiving £55 and was paying £11 out of that for railway fares to attend the school at which I was teaching. The salary for an assistant teacher in Hawke's Bay at that time was, in many cases, £60 or £70 for a man of 22 or 23 years of age. It was therefore regarded that this entrance into the superannuation scheme with credit for back service was some sort of compensation for that long period of inadequate salaries. Further, the National Expenditure Commission's report states that these annuities are to be regarded as a kind of deferred payment of salary. The Teachers' Fund should, according to the Actuary, have had paid into it by the State an annual payment of £50,000 for thirty years to wipe out the £800,000 debt. If this were applied to the other funds it would indicate a need for a payment of £220,000 per annum to meet the initial debt due to back service. The Government has not made any payment for that debt, which it especially acknowledged. In the case of the Teachers' Fund the payments fall short by about an average of £17,000 per annum; therefore the Government has not paid one penny towards any subsequent annuities, not one penny towards the compulsory retirements, not one penny for retirements under the extended provisions, not one penny for any increased benefits, since it has not even met the annual charge which it admitted and accepted as a debt before the Superannuation Fund came into operation. Further, as Mr. Crawford said when he was before you the other day, its contribution has still further been discounted by the fact that the Government's action in reducing the rate of interest and reducing salaries, so that the amount of contributions is proportionately less, has caused a loss, last year or the year before, of £41,000, while the total Government contribution to that fund in that year was £43,000. Thus the net contribution, after deducting the loss, amounted to £2,000. The Chairman.] That is the reduction of interest ?—Partly and partly through reductions in salaries. You cannot blame the Government for that ? —No, but we blame the Government in this sense : that the Government now regards it as an equitable thing to protect the interest by fixing it at 5 per cent. It required a breach of statute to make this default in payment. It was a breach of statute not to pay in the money, and there was another breach of statute in that the contributions of contributors had to be used to pay for annuities in respect of that back service or for part of it. There is a clause in the Act which specifically says that the contributions of contributors must not be used to pay for the annuities due to back service. Mr. W. Nash.] Have you that reference ? —Section 38 (2) of the Act. It is referred to in the Government Actuary's'report on the Teachers' Superannuation Fund for 1915, paragraph 70. I just wish to mention this point—l do not know whether it has been brought before you by any one else — with regard to compulsory retirements which have inflicted such a burden on the fund, Sir Joseph Ward, when moving the second reading of the Railways Superannuation Bill, said, " I hope the scheme there (Australia) will not be raised in judging the proposals in this Bill. The whole of the causes of the breaking-down of that system have been safeguarded against in this scheme, and could not occur in this country. The fault occurred when the great sweep of retrenchment in the Public Service of New South Wales took place . . . There they decided to retire a large number from the Govern ment Service, and how did they retire many of them ? By throwing them on the pension fund of the colony, which is intended to be used only for men who were too old and infirm for the work which under ordinary circumstances they were called upon to perform . . .No country should attempt to use a pension fund in the manner that New South Wales did." And yet that was afterwards done. In paragraph 6 I referred to deliberation on inadequate data. The National Expenditure Commission's report points out that no satisfactory evidence has yet been given as to whether a seven- or ten-year period ought to be adopted as the basis for calculating retirement pensions. There seems to be no report given on that point. That is just as important as a number of other factors that I have already mentioned. I now wish to refer briefly to the question of thefcontractfand'guarantee. Have you had before you the remarks madeJbyjMr. C. P. Skerrett, later Sir Charles Skerrett, Chief Justice of New Zealand, in regard to this matter ?

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The Chairman.] His name has been mentioned, but Ido not know that his actual words were quoted?—A question was submitted to him when there was some fear in 1920 or 1922 about the way in which the funds were beginning to drift, and some of the annuitants were feeling their position insecure. They put the matter to him and asked whether the Government could break that clause 26 (2) under which the conditions were guaranteed. He stated, " Parliament has in the most emphatic way declared that the benefits given by the Act should not thereafter be prejudicially affected by the amendment or repeal of the Act ... If the constitution of the fund were determined by an ordinary trust deed or instrument, and not by statute, it is quite clear that the rights of contributors could not be altered without the express consent of all, except pursuant to some express provision in the instrument. In the case of a statute, Parliament cannot abrogate or preclude itself from exercising its power to repeal or modify an existing statute. I cannot doubt that Parliament would feel itself bound to recognize the rights conferred upon contributors as final and determinate, and would respect its solemn declaration that the benefits conferred by the statutory scheme should not be prejudicially affected by amendment or repeal of the Act." The next sentence is a significant one, "nevertheless, Parliament has power to disregard its pledged word," and I wish to state that that is a most dangerous power for any one to possess: Naradoxically, it should not be placed in the hands of anybody except those who would not use it. It is power to break one's word. If a man could break his pledged word and be subject to penalty or criminal procedure we would not give him a great deal of credit if he does not break his word. But if he has the power to do so and does not use that power then we have the highest standards of integrity. Mr. Skerrett goes on to say, " Parliament can make the retrospective legislation apply to these, but it i& hardly conceivable that it would do so. Indeed, it is difficult to think that Parliament can be induced to alter existing rights in face of its solemnly pledged word." Note that he says that if this was an " ordinary instrument" which might be written on a sheet of foolscap with a Is. stamp attached, it would be a binding agreement which could not be broken. Are we to say, in effect, that a statute has to take a lower level than a piece of paper. It can be broken because it is a statute. I think those words are ominous where Mr Skerrett says, " Parliament has power to break its pledged word. ' Can we rely on it, that, having that power and having given its word, the State will never exercise the power to break its pledged word ? We all know that there are certain obligations which are regarded as debts and bonds of honour, and those are the ones to which the most scrupulous attention is generally given. When I was in the train the other day I was reading an article by Mr. E. Mosley, the Stipendiary Magistrate, headed, " Her Word, Her Bond." It was an article referring to England and her war debts and to her traditions of integrity and honour which every one respects and reverences. Yet in New Zealand, which claims to be a " chip of! the old block, the Government is in danger of saying that not only is our word not our bond, but also that even our bond is not our another statement which was made by Sir James Allen speaking m the Upper House on the 11th September, 1930. He says, "I admit that when the first actuarial report on the Public Service Superannuation Fund was received I happened to be Minister of Finance. A recommendation was made by the Actuary that the subsidy should be increased to £48 000 for each year. That recommendation covered the triennium beginning in 1911. The increased amount was paid in 1913, and for that year there was no shortage in the fund, but I admit now that I did not do what ought to have been done —namely, pay an additional ±,25,000 tor each of the two previous years to cover the period of my predecessor. That should have been done, and similar action should have been taken by Ministers in subsequent years on the report of the Actuary to date the increase back to the beginning of the triennium. . Might I not appeal to honourable members of this Council and even beyond them—to members of the House of Kepresentatives and the people of the country generally—and ask whether this is not a solemn responsibility which cannot be overlooked ? . . . It is our duty to do as the law provides and the Actuaries recommend—make provision to keep the fund sound m the years to come. .. . I was ashamed that New Zealand had played so poor a part in carrying out its obligations under the law to these men and women who are relying on these funds for their after-life. And yet he failed to do it himself ?—He was ashamed that he had not done it, and any one that is ashamed is always anxious to make retribution, not to call upon those who have suffered the injury to make up three-fifths of the State's default, Then he says, "I do not know that I ought to use the word ' disgrace,' but it is not to our credit that, in 1927, when the Actuary reported m connection with the Public Service Fund that £240,000 a year was required to comply with the provisions of the law and keep the fund sound for the triennium the Minister of the day paid m oiJy £86 000 . . ." Then he concludes, "I cannot conclude my remarks to _ the members of the Council this afternoon without making an appeal to the members of the Council and to the members of the House of Representatives to set this account in order. I would direct my appeal even more widely—to the men and women of New Zealand—to let their members know that they will not allow this to go on in the future. The moral responsibility is too great; the danger is too serious. Why should we in defiance of the law, hand on to those who succeed us m after years this huge burden of responsibility .- I make this appeal to the public of New Zealand through the channels by means of which we may be heard. We have our Hansard, but it does not circulate very widely. But Sir I do appeal to the press of New Zealand, if it be impressed with what we say here to-day to let that'feeling be circulated widely throughout this Dominion, so that the men and women of this country may let their representatives know that this great moral obligation of ours is not lightly thought of." Then Sir Francis Bell, who opposed the motion _ . „ The Chairman.] We have had that three times already ?—Yes, but it is very important. He opposed the motion on the ground that Civil servants had a contract with the Government, and there

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was no sense in paying in large amounts to stabilize the funds. He said, " Besides the State guarantee there is a contract with Civil servants in that in consideration of their contribution they should receive a pension." In paragraph 29 I referred to the fact that " it seemed inconceivable that Parliament, talcing its proper place in this respect as a trustee, could sanction such an injustice " as is proposed under this Bill. What is the proper place of the State ? I think you will readily see what part of a Court it would occupy if a Court were dealing with the matter. That is the place in which the State ought to place itself, and I urge, as I said this morning, that the present Government must regard itself as the State, and they must look at this matter just as if they had passed the Superannuation Bill in the first place; just as if they had done all these acts of omission and commission ; and as if they were now called upon to face the position because of the insolvency of trust funds. ' They defaulted in the years when times were good and when they were able to pay, and they have been breaking the law by failing to account for moneys that ought to have been paid into the fund. They used the money for other purposes. They broke the law by the misapplication of trust funds. They caused the contributions of contributors to be used for a purpose which was specifically debarred by the Act, and that is known in law as misapplication of trust funds. Mr. W. Nash.] Misappropriation, is it not ?—I did not like to use the stronger word. They placed heavy charges on the fund which relieved their own Consolidated Fund. There again they broke the law. We all know what would happen to any trustee who charged any of the other expenses of his business to his trust funds, and we are assured by the Actuary that those charges are not properly chargeable to a Superannuation Fund. They neglected to stop the drift when it was pointed out ten or twelve years ago. We all know what the Official Assignee would say in a case like that. The accumulative effect of such negligence always adds to the seriousness of the position of the person concerned. There is, of course, no question of fraud. Many a trustee does not intend fraud when he uses trust funds for other purposes. He says to himself that the money is lying there idle and he might just as well make use of it. He intends all the time to put it back where it came from, but when things go wrong and he cannot pay it back he does not say, " I should have paid the money into the trust funds ; I should not have used those moneys for wrong purposes ; and I should not have charged that fund with amounts that are not properly chargeable to it, but he says to his client " You see the position must be faced, let us share this by your paying 60 per cent, and my paying 40 per cent." Yet that is what we are asked to do. Would a Court listen to such a proposition as that ? And yet that is the position we are asked to face. We are asked to pay up 60 per cent, of the State's debt in this respect. Instead of the State being in that small and secluded space reserved for the person who does that kind of thing, the State actually goes on the Bench and becomes the adjudicator in the matter, and is able, in spite of anything we say, to pronounce final judgment, and say that not itself but some one else shall pay £14,000,000 of the £23,000,000 of the debt, which has been incurred through its default and misapplication of trust funds. I wish now to refer to two or three analogous cases to our own. I will not go into detail, but there was the case of 11.M.5. " New Zealand," which is a case almost analogous to our own. An Act was brought down called the Naval Defence Act, and when the ship was presented to Great Britain it was stipulated that there should be an annual amount of interest and sinking fund provided for so that the cost would be provided for by a given period. I remember distinctly being in the House when Sir Joseph Ward, after his return to Parliament, brought out the fact that during the whole period up to the breaking-up of the National Government that money had been paid in to the sinking fund, but shortly afterwards the money had not been paid in. Further, the money that had already accrued in that fund had been used for other purposes. That is a very similar position to the condition of our funds to-day, but when the time came for payment of the battleship debt the Government did not turn to the people of Great Britain and say, " We are sorry, we have not got the money. We have not paid the money into the sinking fund to meet that obligation and we have used what money that was already there for other purposes. However, the position has to be faced. What about your paying 60 per cent, and we will pay 40 per cent. ? " The other case I wish to refer to is in connection with the National Provident scheme. The Government kept up its subsidies or contributions to the National Provident Fund by which Harbour Boards and other local bodies conduct their superannuation schemes, and yet they are repudiating the liability to the State's servants. In the same way the Government guarantee is behind the Government Life Insurance Department. What would happen if the Government, through stress of circumstances, said to any person —an ordinary citizen —" We are very sorry we cannot meet that obligation. We are going to cut down your benefits by so-much per cent." I consider that these matters are ones that need to be seriously thought of by the Government, because they are not taking their proper place in relation to this matter. They are not taking the proper attitude towards the contributors and annuitants. I would be failing in my duty if I did not quote two or three cases showing how actual hardship will be created if the provisions of the Bill are enacted. One is the case of a man whose superannuation was £228. Through being retired compulsorily two years before he should have retired, and before he would have retired if he had been allowed to stay on, he lost £24 per annum from his annuity. Now he would lose a further £15 per annum under the provisions of this Bill. Another case is that of a man receiving an allowance of £114 15s. If he had been allowed to complete his service—he was compulsorily retired—he would have had an allowance of £182, so he lost over £60 through being compulsorily retired ; and if this Bill goes through he will have to lose a further amount. I wish you to know this man's position. His wife has been in an invalid chair for nine years and his daughter was in hospital for three months in 1931, and he has accounts in that connection totalling £60 still unpaid. He has considerably reduced the mortgage on his property, but cannot keep up the payments any longer, and fears he will lose his property.

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I have here a statement of his income and expenditure which shows that after meeting his commitments he has £76 a year for personal expenses, food, clothing, &c., for himself, an invalid wife, and daughter ; and the Government proposes that that amount shall be readjusted because he was compulsorily retired. That would bring the amount down from £114 15s. to the minimum of £100. Those are actual cases that have to be considered apart from any other question. Finally, with regard to my suggestions, I think the Bill could proceed and ought to proceed as soon as possible with respect to the parts that refer to the contributions by the Government, to making the new conditions for retirement apply to those who enter after the passing of the Bill, and to the rate of interest; but I think all other matters ought to be held over in the meantime, until we have actually costed the items and seen what effect each of the proposals in the Bill will have on the funds. We should have evidence to show how much saving would be effected with respect to each item and how much lesser sacrifice could be arranged, so as to graduate them in instead of bringing them down in one fell swoop. I would further suggest, if I might, that the Committee might well ask Parliament to allow it to sit in recess, and that there should be associated with it a representative of each of the funds—that was proposed by Mr. Forbes in 1930, but the matter was not proceeded with—so that the matter could be gone into by consultation and some proposals might be made, with their assistance. When all the evidence and data required is available, it might be possible to evolve some scheme for handling the position without dealing with retrospective conditions at all. Speaking as a member of the Superannuated Public Servants' Association, I wish to repeat as pointed out in my evidence, that the Bill affects to the most severe extent those who retired from 1921 to 1932. They are hit the hardest financially, and yet they have completed their contract; it is consummated. This is quite different from a current contract. It is consummated and finished; and we hold that our position is one that ought to be regarded as secure on that account. Mr. Savage.] Do you think this Bill has been drafted without proper actuarial knowledge of the ruling facts ?—I do not say there was not the knowledge of facts, but Ido not think it has been drafted with due regard to the facts I have mentioned. I consider that it has not been drafted with due regard to the number of sacrifices that would need to be made in respect particularly of the lower-paid annuitants and those who have been compulsorily retired, as well as those who are medically unfit. I do not think due regard has been given to the hardship and injustice caused to those people, as compared with the saving to the fund. I believe that there has been adequate knowledge, but I also think that due regard has not been given to the possibility of graduating this readjustment instead of trying to do it in one fell swoop. The burden would fall on the present contributors and annuitants. Mr. Bodkin.'] In the suggestions made by you as to what provisions in the Bill should be allowed to go through in the meantime. The Bill provides for a payment of £500,000 annually in excess of the present contributions of the Government. Do you not think that that payment should be included ?—I included that in my suggestion, together with the annual payment by the Government of £1 for £1, the new conditions for new entrants, and the 5 per cent, interest. Mr. Hargest.] On page 12 you speak of the effect of the £300 limit, and you quote the remarks of Mr. George King. You say, " Taking the three funds together, the payments in excess of the £300 limit for annuities are only 2-8 per centum of the total annuities payable, and when this fact is remembered the remarks of Mr. George King quoted above will be appreciated." You know that is not a correct statement ? —I do not know whether it is or not. From your investigations, if I said it was incorrect would you believe me ?—I made it out to be incorrect, but I did not venture to put my opinion against the Actuary. I made out a statement by which it was considerably more. Mr. Ansell.] You make a reference in paragraph 75 to the drastic remedies as proposed as compared with less drastic measures that might be adopted. Have you any ideas about the measures you would a d o pt ?I do not think I can give you that information without the data that has been asked for. If we had all the items costed we could then go into the matter and form an opinion. I feel sure that there can be less drastic measures suggested for creating an adjustment of the fund, but I could not make any definite suggestions unless I had the actual items costed. You recognize the necessity for doing something ? —Certainly. Mr. W. Nash.] On page 13 you state, " The information referred to should include, for each fund separately: (a) The amount, out of the total liability, that is now due to the initial obligation of the State to provide for back service, with the interest on deficiencies of past payments relating to back service. (b) The amount of liability due to compulsory retirements, (c) The amount of liability due to voluntary retirements under the extended provisions, over and above the actuarial adjustments. (d) The amount of liability due to annuities of those now retired as retirements medically unfit' ? Yes. That includes those who are compulsorily retired, and those who retire voluntarily before completing their ordinary service ? —Yes. _ Do you think that some special provision should be made in those cases ? —Yes. those special costs should be chargeable in a different way, and should not be chargeable to the ordinary revenues of the fund. Special provision should be made for getting the money, either from the Consolidated Fund or from some other source, to meet these extraordinary charges. _ You think there should be one fund to which the contributors make their payments, and to which the Government pays a subsidy on account of the payments made by the contributors ; and that there should be another fund for special cases ? —Yes. You also refer to the estimated amount by which the liability would be increased by the removal from 1909 of the £300 limit ? —Yes. Are you opposed to the removal of the £300 limit ?—No, I am not opposed to the removal of the limit. The position is that these annuities are part of a postponed salary fund. Anybody who

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pays contributions on, say, £900 a year, is as much entitled to an annuity of £600 a year, as the may who pays on £450 and draws £300. What you mean is that a man should get the benefit that he pays for ? —Yes. He is then not paying for something that he does not get ? —That is so. He should get out of the fund proportionately to what he pays in ?—'Yes. With no £300 limit ? That is so. An insurance company, for instance, pays an annuity according to the premiums paid in. From your knowledge of the fund would you say that the amount in excess of the £300 should be actuarily computed ? I could not say. I would like to see that set out properly by an actuary or an accountant. Now if the minimum annuity was raised to £150, would that remove some of your objections ?— Do you mean that no one would receive an annuity lower than £150 ? Yes ?—That would be an enormous concession. At present it is £100 ? Yes. The greatest hardship is on those with the minimum annuity. If you could exempt those below £150 instead of below £100 it would relieve some of the most tragical cases I know of. The Chairman.] We understand, Mr. Caughley, that you have had a long experience in the teaching service, and that you are in accord with the proposal of the Commission in regard to the removal of the £300 limit. Is that sq,?—Yes, provided the persons concerned pay in adequate contributions. From your knowledge of the teaching service, do you consider it advisable that teachers should carry on up to the age of 65 ?—I think it should be made optional instead of compulsory. A very large proportion would serve more than forty years, but there are a great many cases that require special treatment because of temperamental and physical and other weaknesses. You think it should be optional ? —Yes. I know cases where it would be really pitiful to ask teachers to go on for the longer term. I would like to explain that that refers particularly to the women. They are teaching chiefly young children, and they have to expend a good deal of vitality and nervous force. They must keep lip their temperamental alertness, or else they cannot do good work, and consequently the strain upon them is very severe. It should be on an optional basis instead of compulsory. Quite a large number would be able to do it, but there are many others who would not. On page 3 you refer to the reserves in the funds earning at least 5 per cent. I suppose at the present time they are not earning anything like that ? —Perhaps I have not worded that very clearly. The guarantee of 5 per cent, from now onwards does not affect the liability of the £23,000,000 accrued to the present. Mr. Gostelow.] ') ou refer to Table VIII of the Actuary's report, and quote certain figures, but the figures you deduce are incorrect. Were you taking all the teachers into consideration ?—I was taking the primary-school teachers. I considered the primary-school teachers and that the liability for the 3,800 women teachers is about £500,000 less than the liability for about 2,200 men teachers. That similarly applies to the whole service. But you do not take the secondary teachers into consideration ?—That is so. Then on page 8, clause 47, you also only deal with the primary teachers ? —Yes. Why is that ? Because in the annual reports we could not get the scales for the secondary teachers in the same way that we could get them for the primary teachers. \ou say that the average for the three years was £235. Is that the average of teachers of 21 years of age and upwards ? —That is the average of the certificated teachers. Of 21 years and upwards ? —Yes, generally. Is that £156 based on the salary at the time ?—Yes. That basis is wrong ? Ihe point I was dealing with was the Commission's contention that those who retired after 1921 should forfeit part of their annuity as against those who retired before 1921. I show there that the average for the three years before 1921 was £235, and that a two-thirds annuity would be £156. The average for the others would be about £280. Then, further on, you also say " Under the Bill a teacher retiring on average salary in, say, 1922, would have his annuity computed on a ten years' average salary basis, back to 1912 " ?—-Yes. Well, if you read the Bill, you will see that no pension is based on a salary less than the average salary of the three years prior to 1921 ?—Well, that offer of three years' concession is practically of no use to them whatever. The Chairman.] Perhaps you might look into that point, Mr. Gostelow. Mr. Millar.] I think you stated that you were in favour of the removal of the £300 limit Yes, under certain conditions. Does that affect your association ? —No, it does not affect any of the members of our association. You also mention the new entrants into the Public Service. That is also a matter that does not affect the existing contributors ?—That is so, but I think it ought to be proceeded with. The Government should do something now to stop the drift. You do not consider that the compulsory working for the full period is desirable ?—No. I think it should be optional. And you think it desirable to subsidize the payments ? —Yes, £1 for £1 on the contributions. \ou formally ask the Committee that the Actuary should be asked to place all those details you ask for, in front of this Committee ? —Yes. And that the superannuitants and contributors should have an opportunity of questioning the Government Actuary on the report he brings down ?—Yes, their representatives should have that opportunity. You consider that should be done before you can get at the actual position ?—Yes. (The Committee then adjourned.)

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Wednesday, 7th December, 1932. Charles Philip Ryan, Representative of the Superannuitants of the Railway Service. (No. 38.) 1. In presenting the case for superannuitants of the Railway Service, I should like to say at the outset that I do so in no recriminating or censorious spirit. The crisis in which the country finds itself is too serious, and the recommendations of the National Expenditure Commission, of which the Bill is the concrete expression, are too drastic and far-reaching to be discussed in any but a calm and deliberative manner. I will confine myself to a statement of the essential facts, and my arguments will, I hope, be fair and reasonable deductions from these. I shall avoid traversing ground already covered, except where necessary to the statement of my case. 2. The Railways Superannuation Fund Act presents features not to be found in the later schemes. It was the first of the kind undertaken by the State, and in reviewing the provisions of the Act, which was passed in 1902, it is essential that the intentions of Parliament and the Government, as expressed by the Minister in charge of the Bill, should be mentioned. It is for this reason that I have quoted with some fullness his statements on certain phases of the Bill. 3. The Bill was introduced not very long after the failure of the New South Wales Superannuation Fund, and the Minister (Sir Joseph Ward) evidently felt that some public assurance was necessary that no such fate would overtake the scheme he proposed. When moving the second reading of the Bill he referred to the insolvency of the New South Wales Superannuation Fund, and said, — " I hope the scheme there will not be raised ... in judging the proposals of this Bill. The whole of the causes of the breaking-down of that system have been safeguarded against in this scheme, and could not occur in this country. The fault occurred when the great sweep of retrenchment in the Public Service of New South Wales took place. . . There they decided to retire a large number from the Government Service, and how did they retire many of them ? By throwing them on the pension fund of the colony, which is intended to be used only for men who were too old and infirm for the work which under ordinary circumstances they were called upon to perform. . . No country should attempt to use a pension fund in the manner that New South Wales did."—Hansard, CXX, p. 97. 4. To make assurance doubly sure this declaration is made in section 26 of the original Act, and was repeated in all re-enactments : — " 26. The rights and benefits provided for by this. Part of this Act shall be subject to all such modifications as may be provided by any Act hereafter passed in amendment or repeal of this Act; provided" that all benefits under this Act shall be conferred upon any person who has actually contributed, and shall remain in force, and shall not be prejudicially affected by the amendment or repeal of this Act . . I shall return to this section later. 5. Now, when the Bill was passed, the management, by direction of the Government, issued a circular (a copy is attached) to the employees inviting them to become contributors, and enumerating the advantages which the Act provided. Clause 8 of that circular reads, — " 8. [The Act] combines all the advantages of insurance, savings-bank, and pension fund, and provides all the machinery for automatic collection of contributions, thus relieving contributors of the anxieties and loss of time incidental to the payment of premiums or savings-bank deposits, while absolutely insuring that a contributor saves a certain amount of money each four-weekly period and makes at the same time provision for old age, wife, and family." The employees agreed almost unanimously to become contributors. Out of the whole staff of over seven thousand —I think that is wrong—only about sixty omitted to come in. 6. A good deal of capital is being made of the fact that the fund—l am speaking of the Railways Fund only —was not actuarially sound at its inception in 1902. That is quite true, but it was never contended that it was. The Minister, when he introduced it, said quite frankly that it was not on an actuarial basis. He acknowledged that it was not perfect, but claimed that it was an honest attempt to deal with a complex problem which would be to the benefit of the staff and the State. He said, — " If you are going to ask for a superannuation scheme to be established in this colony or in any country upon what may be termed, from an actuarial point of view, a sound basis, you would never get a scheme at all. If you take the position of the great friendly societies, such as the M.U.O.F. for instance, which has an accumulation of about £10,000,000 ; if judged from an actuarial standpoint that society is not regarded as being in what is termed a sound position. Then take the London North-Western Railway Co., and submit their position to an actuary and ask whether upon an actuarial basis their scheme is a sound one. He will tell you immediately it is not. . . Yet after forty-seven years it has over one million pounds sterling of accumulated funds, which, invested, largely meets the annual outgoings in every direction. . . It is not so much upon the amount of accumulated capital they have to draw upon that such schemes should be judged ; it is what is at the back of them." —Hansard, CXX, p. 94. 7. The foundation of all, or nearly all, superannuation funds is an equal contribution by the employer and the employee upon a fixed relationship to the wages. The only important exception

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I know of is the English Civil Service scheme, of which the State bears the whole costs. Originally our Railways Act was based on this principle of a dual contribution, but eventually the State's share took the form of a State guarantee. 8. In 1926, in view of the growth of the actuarial liability, sanction of an annual subsidy equal to that which had been recommended in the last previous investigation of the Railways Fund as being required to place the fund on an actuarial basis was given. The position of the fund thence-forward, until the effect of the policy of retiring employees, irrespective of age, on reaching forty years of service, was not unfavourable. The income from all sources was more than enough to meet the outgo, and credit balances, though not large, were accumulating. This new retirement policy was adopted in 1924. I do not know what the additional load on the fund amounted to in money, but that it must be considerable may be surmised from the table which appears in the report of the Government Actuary in D.-sa, 1932. The percentage of retirements of employees under the age of 60 to the total retirements were : 1903-1912, less than J per cent. ; 1912-1919", less than 8 per cent. ; 1919-1927, in excess of 35 per cent. 9. It may or may not be questioned with some validity whether the scheme, when originally propounded, contemplated compulsory retirement in the case even of employees who had qualified for retirement by completion of the stipulated period of service, or by attaining the requisite age. But it can without doubt be questioned whether it was contemplated that a load would be placed on the fund of such a magnitude as resulted from the policy of retrenchment that has recently been undertaken. That this policy has had a very beneficial effect on the budgetary position of the State cannot be questioned. Likewise is it beyond possibility of doubt that the retrenchment of employees, to whom pensions became payable from the Superannuation Fund, relieved the funds of the State of a tremendous load to which they would have been subject if the retrenchment had affected employees who had no such source of income after their loss of service in the Government employ. Up to the time when this policy of retrenchment threw this load on to the Railways Superannuation Fund, the fund had not only been able to meet all immediate outgoings, but even had a surplus which went to increase the funds which were being accumulated against future liabilities. I submit strongly that it is wholly unfair to penalize the present superannuitants because a load has been placed on the fund which was never contemplated, and which, but for the fund, would have placed a very substantial liability on other Government financial resources ; a liability, moreover, which, as the Government Actuary has said, is properly a charge against the Consolidated Fund. If the State contributes to the sustenance of those retrenched men by a payment adequate to maintain the stability of the fund to meet the additional load, at least the Government will be having the benefit of the thrift of those men over the period of their service. This would not have been the case if men had been retrenched who would have had no claim on the Superannuation Fund. 10. I am not raising the question as to the propriety or otherwise of the policy of retrenching employees who were entitled to an allowance from the fund ; although on this -point the views of the Minister are clearly expressed, as already quoted ; what I am submitting is that the effect of this action as a factor bringing about the present condition of the Superannuation Fund should be recognized, and likewise the increased financial advantage which accrued to the State from that line of action at the expense of the fund. 11. I might even go further, and say that in common fairness the State cannot on the one hand charge the Superannuation Funds with costs foreign to their purpose, and so impoverish them, and on the other use that impoverishment as a justification for doing a grave injustice to superannuitants. 12. I now come to the Expenditure Commission's report, and in reviewing that part of it which refers to the State Superannuation Funds, consideration must be given to all the circumstances in which it was drawn up. The Commission was appointed during the worst depression ever experienced. Their main consideration was the immediate budgetary position. They had to find a solution of the budgetary difficulties under high pressure. Of the members, whose abilities and high qualities need not be questioned, the majority were business men whose training and qualifications had been obtained in commercial life. The Commission's order of reference was so wide as to embrace every phase of State activity and every aspect of State administration. They were confronted with problems of a complexity and magnitude which had no parallel in the commercial world, and they were limited as to time. Where in their businesses they had been accustomed to think in thousands they were now called upon to think in millions. In their task they had, of course, to meet aspects of public administration quite outside the scope of their training and experience, and where their commercial equipment failed them they had necessarily to see those problems in the light of such information as they could get from those immediately dealing with the facts. 13. Taking all these considerations into account, we say that it would have been little short of a miracle if the Commission had in every case and in all circumstances succeeded in maintaining a correct sense of proportion and in perceiving every fact in its true perspective, and I must say that a doubt as to this arises after examination of their recommendations regarding the Superannuation Funds. The various funds have many points of difference. They were commenced at different times ; their contributions and benefits vary ; the support undertaken by the State to the respective funds is not uniform ; the present financial position of each is different; and the immediate and contingent liability of the individual funds are widely apart. There are further differences in the provisions of the respective Acts governing the conditions of retirement and in the classes of employees to which these conditions apply. It is only natural that in dealing with such a problem the Commission would place great reliance upon the Government Actuary. But the Actuary's views in a rigid application

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to practical problems may be subject to qualification. At the very inception of the Railways lund the Minister himself gave this question grave consideration. Let me quote what he said : " The idea that occurs to one is as to whether or not we are undertaking a scheme that may be termed actuarially sound. Well, of course, any proposal to have a system such as this established upon what is known as an actuarial basis is an impossibility, and I think that must be apparent to any one, who, even cursorily, examines into that aspect of the subject. No actuarial calculation can be made upon an unknown quantity, such as the number of contributors who must, during the years to come, be continuously added to the Railway service, and in my judgment no actuarial calculation could possibly be made unless it was on the basis of a huge capital in the first instance —on a huge principal to be set aside, which, with the security of the State behind it, would be a surplusage, and unnecessary. In other words, an actuarial calculation could not apply —or, rather, could not be applied to a system such as this for the very good reasons that, first of all, no actuary could speak with any authority on the number of men who would be annually retired and put upon the fund; and, secondly, that no actuary could speak with any authority on the number of men who will come into the fund as the years go on."—Appendix to Journals of Legislative Council, p. 6. That the views of the Minister are well founded will be obvious upon consideration of some facts relative to insurance with which we are all well acquainted. When a man takes out a policy on his life, his premiums, Ī take it, are computed upon an actuarial basis. When his policy has been in force for a year or two he is told that it has earned a bonus. These bonuses gradually mount up until eventually his policy advances in value by 50 or even 100 per cent, and his widow may finally be paid twice the assured sum ; and it is not to be supposed that the companies unduly strain their finances to do this, as witness their palatial offices in our large cities. There is a very close analogy between the principles of the engineer and the actuary. If an engineer is asked to build a bridge to carry a load of 5 tons, he multiplies the load by, say, five, which he calls the "factor of safety," and he calculates his materials and stresses on that basis. The actuary also must deal with possibilities and probabilities, and to some extent with the unknown. He must, if not eliminate the element of risk, at least reduce it to a low factor ; he, in short, aims at the ideal. No ordinary business could be carried on upon an actuarial basis ; no bank could be considered sound ; and no scheme of contributory pensions would pass the test. It would appear as if some of these considerations were missed by the Commission, and also that their sense of proportion was somewhat disturbed. They evidently accepted the Actuaries' figures implicitly. Coming from the staggering liability of £23,000,000 to the remedy they propose, the mind cannot resist a sense of anti-climax. If the liability is correct, the remedy seems inadequate. It is true that it is stated to be a potential liability that is to say, that its incidence stretches away into future years. None the less, to more than the Commission in the form in which it is presented, the liability is a most disturbing reality. It seems clear that the calculation upon which the sum was arrived at was based upon the assumption of a continuance of the policy of compulsory and early retirements, and also that the funds would continue to bear the cost of continued retrenchment. It is hardly necessary to demonstrate that in all the circumstances this was an extreme view, but in any case, the position, I submit, should have been made clear. There is no information as to the effect on the liability figures given, of the removal or modification of one or more of those factors. The whole situation so far as the actuarial calculations upon which the proposals are based is obscure, and requires further examination. 14. The fact is that actuarial unsoundness is not necessarily insolvency. The apt and timely illustration given by the Secretary of the Amalgamated Society of Railway Servants shows the extravagant position that would be reached if the Actuary's advice should be acted upon literally. 15. Some, if not all, of these aspects were before the Minister when the original Bill constituting the Government Railways Superannuation Fund was drafted. It was not by any means an ill-considered hastily-drawn-up measure. The Minister stated that he had been pondering oyer it for three years. He had consulted every authority within reach, and he had caused extensive investigations to be made into similar schemes abroad. I cannot do better than quote what he said to the Committee of the Legislative Council. "No actuarial investigation is of the least use. I had a long conversation with the Actuary of one of the great life offices of Australasia, and I know the methods they adopt. They want, first of all, to have the equivalent of what one would term ' capital,' and the earnings of capital and compound interest for a series of years, and they want to make assessments and so on before they will give you an actuarial report, which is of no value at all. Neither you nor I can tell of what use an actuarial calculation is except to mislead one." 16. I have now to deal with the claims of the Railway superannuitants. It should be emphasized that the whole scheme emanated from the Government in the first place. A draft of the proposals was certainly submitted to the various societies representing the staff, but the Bill was purely a Government measure. When it was finalized and passed into law the employees were asked to become contributors. A circular to which a copy of the Bill was attached was sent to every employee, setting out the advantages he would derive. This circular is a very important feature of the contract. As an inducement for the employees to become contributors the benefits were put in the clearest light. The employees were told that they would, in a large measure, be relieved of the necessity of making other provision for themselves and their dependants. The significance of that lies in this : A number of employees had already insured their lives and they found themselves in a position in which they could not pay both their"insurance premiums and the contributions to the fund. Upon the faith then of the promises made in the circular and the Bill, many of them surrendered their policies. Others who were contemplating taking out policies abandoned the idea. 17. There is a material difference in status between the contributors on the one hand and the superannuitants on the other. The superannuitants have completed their part of the contract with the State. Their benefits were determined by the Act as it stood at the time they retired, and thereafter

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no alternative is open to them. If you will refer to the Expenditure Commission's report, paragraph 1459, it will be seen that this distinction has not been fully appreciated. The Commission say in effect: Having dealt with future retirements, we must in fairness deal similarly with those who have retired. But if there is no similarity in status there can be no fairness in similarity of treatment. The full force of section 26 of the original Act must here be considered : — " 26. The rights and benefits provided for by this Part of this Act shall be subject to all such modifications as may be provided by any Act hereafter passed in amendment or repeal of this Act: Provided that all benefits under this Act shall be conferred upon any person who has actually contributed, and shall remain in force, and shall not be prejudicially affected by the amendment or repeal of this Act. . 18. The section embodies a solemn declaration by Parliament that the right to the benefits under the Act were finally fixed and determined, and that they should not be prejudicially affected by a subsequent amendment or repeal of the Act. This declaration has since been carefully observed by the Legislature. For example, when the rate of contribution to the fund was increased by the Public Service Superannuation Fund Act, 1907, the increased rate of contribution was made payable only by the persons who after the passing of the Act became contributors to the Government Railways Superannuation Fund. The provision contained in section 11 of the Public Expenditure Adjustment Act, 1921, can also be referred to in support of the statement that the Legislature has hitherto scrupulously observed the solemn declaration contained in section 26 of the Act, 1902, and section 92 of the Act of 1908. 19. If the constitution of the fund were determined by an ordinary trust deed or instrument and not by statute, it is quite clear that the rights and obligations of contributors to the fund and superannuitants could not be altered without the express consent of all the members of the fund. 20. The Commission have acknowledged that the whole question of superannuitants is bristling with difficulties. They deal with those difficulties by devising a rule, general in its application, on a basis similar to that applied to contributors. But a common formula of reduction applying to such widely varying conditions as have been mentioned, is, we submit, impracticable. It would be tedious to go into detail. It is sufficient to say that if once the provisions of the respective Acts governing the assessment of individual allowances be departed from, a position will be reached in which anything approaching an equitable adjustment will be found impossible. We say emphatically the number of anomalies, inequities, and injustices which would arise would be fatal to any satisfactory solution of the problem. Even a percentage reduction was rejected by the Commission as being unfair. The Commission realize that their proposals will cause a " measure of hardship." Actually many superannuitants will suffer in varying degrees, and some will not suffer at all; and I submit with all respect that a proposal having in its essence the elements of injustice is not one which should be adopted by the State. 21. The Commission acknowledges that they recommend interfering with a contractual right. Well, there are contracts and contracts, but if you can show me anything in the whole course of the legislation of this country more explicitly, more emphatically, more solemnly binding than that section, I shall have nothing more to say. I know that Parliament has great powers, but great power carries with it equally great responsibility, and I refuse to believe that in the exercise of those powers Parliament will consider itself above and beyond the application of those principles of justice which it was created to uphold, and which in fact govern the administration of the State law-courts. 22. A very interesting fact that is relevant to the present discussion is that the superannuitants who will be affected by this Bill are not the only superannuitants in whom the Government is interested from the expenditure point of view. Many superannuation funds of local authorities are established within the National Provident Fund, and by reason of that fact are subsidized by the State, which, however, in those cases is not the employer. The reasons for this encouragement of individual thrift on the part of the State as a provision against destitute old age need not be elaborated here, as they are well known, and this expenditure on the part of the State has, up to the present, been considered to be fully justified by the advantages accruing to the State as such. So far as the Government Railways Superannuation Fund is concerned, however, it is pertinent to note that the State, except in its capacity as employer, has made no contribution to the fund nor will it require to do so even if the State pays into the fund the rate of subsidy recommended by the Government Actuary as being necessary to establish the fund on a sound actuarial basis. This is clearly brought out by paragraph 28 of the report by the Government Actuary, showing the results of his investigation into the position of the Government Railways Superannuation Fund as at 31st March, 1927 (parliamentary paper, 1932, D.-5a.) For convenience of reference I quote this paragraph as follows : — " 28. In recommending that the amount of the automatic subsidy be fixed at 10 per cent, of the pay roll I have endeavoured not only to place the fund on a firmer footing, but also to keep the cost to the State as low as is reasonably possible. The valuation bases have been fixed after very careful consideration, but it is impossible that they will exactly coincide with the actual future experience of the fund, since many of the factors involved are affected by social and economic conditions which can only be estimated approximately. " In order to counteract any possible adverse fluctuations, it is essential that every endeavour should continue to be made to invest the funds at the most remunerative rate consistent with safety." This brings out clearly two points : — (1) That an equal division of contribution as between the employer and the employee is the recognized basis of superannuation funds in the industrial sphere ; (2) That the amount recommended by the Actuary to be paid by the State as a subsidy sufficient to put the fund on a sound actuarial basis represents, after all factors are taken into consideration, approximately an equal division of contribution as between the employer and the employee.

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23. Even if the State pays the increased contribution, which on recognized principles it would pay as the employer, it would still be getting the advantages which accrue to the State ae such from the provision of the Superannuation Fund, which advantages are well recognized, and in New Zealand are held to justify the State making a contribution as such to the other Superannuation Funds I have mentioned. The inequity of singling out the Government superannuitants for differential treatment such as is proposed in the Bill becomes on these facts strikingly apparent. 24. This completes the statement of my case for the Railway superannuitants. I have not touched upon the instances of special hardship arising from the retrenchment policy, or others falling on superannuitants whose allowances are small. These cases are common to all the funds, and have either been, or will be, dealt with in other statements. 25. In conclusion, I would emphasize that the superannuitants cannot be given their lives back. They have done everything on their part that required to be done, and they have done that in firm reliance on the provisions of the Act, including the State guarantee. The present position of the fund has not been brought about by any act or default on their part. There is, I submit, an obligation towards them from which in the language of the Commission's report the State cannot honourably escape. The language of the statute which gives them an assurance of the intention of the State to bind itself to maintain its obligation towards them is of the strongest and most unequivocal character, and is, as I have already indicated, practically unique as regards statutory provision of this kind. It pledges the word of the State, and I do submit that the State's word should be its bond. Any departure from that principle as regards the superannuitants will not only be unjustifiable in itself, but is fraught with possibilities for harm that would make any possible monetary saving, either present or future, that may result from the present proposals, fade into insignificance and constitute one of the worst investments the State could possibly make. 26. The question may be asked if superannuitants claim exemption from the disabilities that every one is suffering from in this crisis. My reply is, that they are not exempt as it is. It is perhaps not generally known that when a Government employee steps from the active to the retired list, he immediately comes under the operation of the highest form, of taxation —the super-tax. His diminished income suffers an increased impost of 33 J per cent., which is applied right down to the taxable limit. 27. The Railway Superannuation Fund, though not actuarially sound, is still financial, and given very moderate additional help from the State it has every prospect of remaining financial and after a few years have passed will again begin to build up its reserves. There is therefore no need so far as the Railway Fund is concerned for any fresh legislation or interference with the contractual rights of contributors or superannuitants. 28. From the national point of view the introduction of the Bill and the publication of fantastic actuarial figures has already caused a loss of State credit and prestige, and a disturbance of public faith in State institutes that cannot be sufficiently deplored. 29. After surveying the position our unbiased judgment is that the proposed Bill as affecting the Railways Superannuation Fund is unnecessary, and, if passed, would cause undue hardship, and we pray that it be not proceeded with. New Zealand Government Railways. Head Office, Wellington, November, 1902. Government Railways Superannuation Fund. The Government Railways Superannuation Fund Bill, which established a Superannuation Fund for the benefit of the members of the staff of the New Zealand Government Railways, having been passed during the last session of Parliament, a copy of the Act is attached hereto for your information. The Act will come into operation on the Ist January next, and all persons who are members of the Department on that date are given six months from the Ist January, 1903, within which to decide whether they will join the fund or not. The six months will expire on the 30th June, 1903, and it is most essential that all persons in the employ of the Department who desire to participate in the benefits accuring under the Act should notify me, through superior officer, of their decision not later than the 30th June, 1903. It cannot be too well understood by members that those who do not join the fund on or before the 30th June will not afterwards be permitted to do so, and cannot thereafter under any circumstances become participators in its benefits. The following are the principal benefits that will be secured to persons who become contributors to the fund : — (1) Provision against want in old age. (2) Provision against compulsory retirement in consequence of disablement by injury or sickness. (3) Provision for the widow and children where contributor dies from any cause before becoming entitled to a retiring-allowance. (4) Provision for payment to widow and children or legal representatives (in cases where a contributor had died after becoming entitled to a retiring-allowance) of the difference between the amount the deceased member has contributed to the fund by way of premium and that drawn from the fund as retiring-allowance. (5) Secures to contributor in the event of his leaving the service from any cause before becoming entitled to retiring-allowance a refund of the whole amount he has paid into the fund. (6) Secures to contributor on his voluntarily leaving the service or on his being dispensed with for cause other than misconduct, any compensation to which he may be entitled under the Government Railways Act, 1887. (7) Secures payment to legal representatives, or to widow or children, of such compensation as a contributor may be entitled to under the Government Railways Act, 1887. (8) Combines all the advantages of insurance, savings-bank, and pension fund, and provides all the machinery for automatic collection of contributions, thus relieving contributors of the anxieties and loss of time incidental to the payment of premiums or savings-bank deposits, while absolutely insuring that a contributor saves a certain amount of money each four-weekly period, and makes at the same time provision for old age, wife, and family.

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New Zealand Government Railways. Head Office, Wellington, 21st November, 1002. R. 1902/3375. No. 17994. Circular Memorandum : District Officers. (Traffic, Loco., and Maintenance.) Chief Engineer. Chief Mechanical Engineer. Chief Traffic Manager. Stores Manager. Railway Accountant. Government Railways Superannuation Fund. . Copies of circular No. 02/54 with the Government Railways Superannuation Fund Act, 1902, attached are being sent you under separate cover. When to hand, please supply each member of the permanent staff under your control with a copy and obtain receipt on the form provided, forwarding receipts to this office when all are in. In any cases where receipts cannot readily be obtained owing to absence of members from duty through sickness or other cause, the receipts which have* been obtained should be sent forward accompanied by a memo, giving names of members whose receipts are missing, with reasons for same. Each person appointed to the permanent staff up to and including 31st December, ] 902, must also be supplied with a copy of the circular and Act, receipt for which is to be sent here. The 4th January, 1903, being the commencement of a period, it is suggested that members desirous of joining the fund, on its inception should ask to have their contributions deducted from that date. T. Ronayne, General Manager. Mr. Hargest.] On page 11 you refer to a circular sent out to the employees in the Railway service setting out the advantages they would derive by becoming contributors to the Superannuation Fund, and stating that they would be relieved of the necessity of making other provision for themselves and their dependants. Have you been quite satisfied with the treatment you have received up to date ? —■ Yes, quite. What are your views in regard to the 3 per cent, contributions to the Railways Fund ? Those people have got away with a 2 per cent, advantage over the rest of the people in the Public Service. Do you think that is reasonable or are you going to rest your case on the letter of the contract ?—I would like to explain here that when we had the original Bill before us there were many different schemes put up and if you set your mind back to 1902 you will find that the rate of interest ruling in the Old Country at that time was about per cent. That percentage rate of interest, as far as Sir Joseph Ward was concerned, had an influence on the fixing of that rate of contribution. Yes, but that is a capital payment, not interest at all. It was building up a fund, not paying interest on it ? —Supposing the value of the pound had remained stable from 1902 up to the present time, it is more than probable that a 3-per-cent. contribution would have been ample for all purposes of this fund. Then on page 15 you say, " An equal division of contribution as between the employer and the employee is the recognized basis of Superannuation Funds in the industrial sphere." Do you thinV the 3-per-cent. contribution, plus an equal contribution from the State, would give the superannuitants the superannuation they are getting to-day To-day, Ido not, but I would like to point out that the change in monetary conditions has involved a change in superannuation conditions. The French Railways have a Superannuation Fund which is one of the best in the world, and their employees contribute 5J per cent, and the Railway companies—private companies—contribute 15 per cent. That is very much more than we are asking from the Government of this country. You do not think that the 3-per-cent. basis has been sufficient to maintain the fund ?—I think it would have been quite equitable, as I explained before, had the monetary position remained stable, but no one ever put their minds forward and anticipated that we would have the £1 round about 12s. as we have it to-day. That is outside the question, because if the rate of interest has gone up the investment part of the fund has had the advantage of it. The money you have put into the fund has been earning more ? —That is so. Then there is the question that the men in the Public Service to-day have had to submit to two cuts in their salaries during the last two years of about per cent., and I would say that of all the people who have been employed by the State the present annuitant has gone away scot free. Also the rest of the country has suffered by having fixed incomes reduced and so on, and the present superannuitant has not been asked to make any sacrifice. If anything his income has been almost doubled —it has been increased by 20 per cent, anyway —owing to the cost of living having fallen. Do you think it would be reasonable, in view of the state of the fund and the position the country is in to-day, to ask the present superannuitants to submit to an ordinary cut similar to the last 5 per cent., 10 per cent., and 12f per cent. ? —I will answer that question by applying it personally. You know your own job best. lam not exactly an old man and I can work. I had to submit to a cut first of all of over one-third of my salary. After submitting to that Igo out not on the maximum pension, but on a small pension. My case is not peculiar, lam telling it because I know it. Now you come along and say the superannuitant has not submitted to any cuts along with the rest of the community. I submit that the majority of us have had more cuts than the majority of the people. We have lost that which mose men deem most essential —i.e., work, and we are anxious to work. Mr. Bodkin.] If the cut was only applied to those in excess of £300, do you think there would be any hardship imposed ? —When you come to that question you again trench on the question of the contract. I admit that ?—We stand firmly by the contract and whether it is a question of equity. We know as practical men that there is a stage where no one is foolish enough to argue that a man with an income of a couple of thousand pounds could not submit to a cut. We know that that man could very well afford to have the amount reduced, as compared with the man who has only £150. As practical men we do not argue about that, but what we do say is that these men with very large

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pensions entered into a binding agreement with the Government, and in all equity they are entitled to have that contract carried out. But in extenuation of that, money has a greater purchasing-power to-day than it had a year ago. Even if the cut is applied they would probably have the same purchasing-power ? —The economists in the Old Country do not agree with that view. Their view is that the purchasing-power of money will very rapidly decrease. If the Government's contribution is paid and the present burdens are left on the fund, will the fund be able to square the yards ? —I took out some figures regarding that, at the request of my committee, on the probable position of the fund in succeeding years. I cannot say these figures are accurate, because they are an estimate, but they are based on a very conservative basis. The Chairman.] You are referring to the Railways Fund only ? —Yes. In the D.-5 for the last year we had official figures up to 31st March, 1932. The retiring - allowances paid to members was £346,527, and to widows and children £27,147, a total of approximately £374,000. In the same return the total allowances granted up to 31st March, 1932, amounted to £431,129. Now, those allowances, I might explain, are projected forward. If a man went out prior to 31st March his pension is calculated and included in those figures though not actually paid, so I have added to the £431,129 an additional £4,000, because there has not been many retirements since the date of the issue of the D.-5 referred to. I have taken the figures for the retiring-allowances for 1932-33 as £435,000 and refunds of contributions to superanmiitants £50,000. Those are the men who are contingent contributors to the fund and who have been retired by the retrenchment policy. They relieved the fund of quite substantial benefits that would accrue in the future. I put down the sundry expenses as £10,000. Sundry expenses would include a reserve of £6,000 for bad and doubtful debts. That gives you a total of £495,000 on the expenditure side which is very far in excess of the figure of any previous year. As against last year it is an increase of over £85,000. On the income side I have reduced the contributions from £141,686 which we received in 1931-32 to £130,000 for the current year under review, 1932-33. Assuming that we get the subsidy from the Working Railways Account —£170,000 —and £12,000 for the widows and children, and that we get interest to the extent of £70,000 —last year we got £84,000 —therefore that is a reduction of £14,000 in the year's interest —the loss for that year, estimated on a conservative basis, would only be £113,000. We have securities in the fund, as stated in evidence before you, which can amply meet that loss for that- year. The next year, without worrying you with figures, the loss will be estimated at £68,000, the succeeding year £63,000 ; then a decreasing factor of £43,000, £28,000, and £13,000 until in 1939, without any additional assistance from the Government or additional payments into the fund, it will right itself. Without any additional payments beyond the £170,000 ? —Beyond the ordinary subsidy. I think, unless something very unforeseen happens, in this country, that fund should right itself at the latest in 1939, and show a profit. I understand these figures are being supplied to us so that we will have a copy of them ? Mr. Bodkin.] For the next year an additional payment of £113,000 would, in your opinion, square the yards. It would carry the present debt without additional burdens ? —I am assuming without any additional burdens, but I would like to say that a lot of the money we have accumulated is invested in freehold securities. It is very undesirable in the interests of the primary producer at the present time to disturb any of those securities, and as a business proposition I think a small additional contribution would be good business on the part of the State. I have no fear in regard to our fund. It would certainly be bad business to call on your reserves to meet outgoings ? —The reserves at the present time are £1,454,000 and the accrued losses over all those years would amount to approximately £326,000, which would still leave £1.128,000 in hand, and by that time we will surely know where we are. Mr. Ansell.] On page 6 you say " although on this point the views of the Ministers are clearly expressed, as already quoted." Where is that quoted ? —That is referring to the statement made by Sir Joseph Ward on page 2 of my statement that our fund would never be used for retrenchment purposes. He was entirely wrong there, because it has been used for that purpose. You make an important case of the heavy load that has been thrown on the fund by the retrenchment of employees. Evidence has been given to show that the Minister in charge of the Department is probably largely responsible for that. The Minister, I understand, would send a message to the Superannuation Board that a certain employee was to be retired and that he was to get a certain pension. Is that the position %—Are you referring to the retrenchment or to ordinary retirements ? I am referring to enforced retirements ?—What really happened was that about 1922 a policy was introduced, who by I cannot say, whereby as soon as a man had had forty years service he was automatically retired. A lot of those men had joined the Service very young and they were probably at the top of their form when they were retired with forty years' service. I know one man who is conducting a very big business and he was only 52 when he went out. It was bad business to enforce that policy and retire those men as far as the Superannuation Fund was concerned. If you look at the D.-5, page 3, you will see that before the policy came into effect the average retirements were about nine thousand per annum. When the retirement with forty years' service came in, they immediately jumped from nine thousand to twenty thousand. That is from 1919 to 1920. I am not advocating any policy matter in connection with this ; 1 am simply stating the facts. Has it ever occurred to you that it might be of advantage to the fund to have a Board that is free from political control ? —I have great faith in our political institutions, and I have spent my life in the Government Service and I still am strongly against Boards or Committees or any of those things being set up to administer public affairs. I still think the public man is the man to do the job.

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On page 17 in your resume you say in regard to the proposed Bill that it proposes a complete and permanent recasting of the contract which the depression in itself does not warrant. Are we to understand from that that you recognize the difficulties of the present and are suggesting in a quiet way that some rearrangement of a temporary nature might be made to tide over the difficult period ? — That was the reason why I quoted those figures. A business man in times of stress calls up his reserves. Politically we generally have other expediencies. From a business point of view, if you are running a company and are on the directorate and you were losing £1,000,000 this year and could see that by losing further sums of money you would turn the corner in a reasonable time, you would call up your reserves. I cannot see any reason why the Government should not adopt the same method. The Railways Fund and the legislation you have already on the statute-book gives us a fund that is stable —not actuarially stable—and Ī think you had evidence from the Wellington Harbour Board which has a fund that is practically on all fours with our fund, that they have more money than they know what to do with. The Chairman.] They are not on all fours with your fund. They got the pound-for-pound subsidy and the payment for back service ? —Yes, but our Bill is the same, we were supposed to get those things. But you did not get them. Mr. Ansell.] My point is that you have recognized that in the meantime something must be done, but when we return to more prosperous times do you think the benefits should be returned to the superannuitants ?—Well, no. If you decide to do anything, which we hope you will not, then, of course, we say it should only be for a period to tide us over, but we think the fund is sufficient in itself to carry on with its own weight. Would you say that in view of the evidence that has been given by the Actuary ? —With due deference to the Actuary, I think he has been dealing with lots of factors which did not exist at the time. Take one factor. Ido not think when he made his calculation he had any idea that numbers of people would be handed their contributions back. You have there a balance-sheet which shows that we have given back £70,000. If you run that out in your mind, you will find, in projecting that forward, that the fund has been relieved of a considerable liability in regard to future pensions. Mr. W. Nash.] What is your profession ? —I am a qualified accountant, Wellington University Degree, but at the present time am unemployed. How long did you serve with the Railway Department I—Just1 —Just on forty years in all capacities. I had a very varied experience, from Clerk, Stationmaster, Accountant, and finally in charge of the Publicity Branch of the Railway service. Have you any experience of the Superannuation Fund of the Railway service ? —Yes, as Control Ledger Clerk the figures relating to the fund would come before me. I did not actually compile them myself, but they came under my review. You have submitted some figures in reply to a question asked by Mr. Bodkin. Can you give us full details of those figures 1 The Chairman.] I understand the Amalgamated Society of Railway Servants is going to supply them. Mr. W. Nash.] If Mr. Ryan or someone else will let us have those figures, that will be all right ? — We will supply you with those figures. When we have examined those figures and got the Actuary's report on them, will yoir come back here, if we want you, to sustain your own figures or reply to the Actuary's comments on them ?— I should be very pleased to do so. You mention the fact that the Wellington Harbour Board pays a subsidy of £1 for £1 into its Superannuation Fund. The subsidy is 65 per cent., not £1 for £1. Assuming the funds are now in a chaotic condition and in a bad condition, do you think that it is advisable for the superannuitants and the members of the Railway service to rely exclusively on the guarantee ?—I do. I cannot, in my own mind, think of anything better than the State guarantee. If that goes, then our whole civilization goes. You mentioned the value of the £1 to-day and said it was worth 12s. If some one has been getting £2,000 and the £1 will buy so much more to-day, do you think it is fair for the State to continue to pay that £2,000 ?—lt is really worth less. The purchasing-power of the £1 is less. Presuming that a man's pension started in 1925 when the price-level was 180 and the price-level is now 120, obviously that £2,000 is worth very much more to-day than it was in 1925 ?—I do not take that view. It is a matter for argument. Most of the authorities in the world consider that the purchasing-power of money will decrease. lam taking the position to-day. Ido not know the actual figures, but presuming that in 1925 the price-level was 180 and to-day it is 120, is it equitable to continue to pay a pension based on 180, when it will buy half as much again ?—I think it is. I would put the other side to you. Supposing the reverse happened and it has happened. We granted many pensions on the old gold basis and those pensions were very much lower than pensions granted in later years. With the exception of the widows' and children's allowances and a temporary cost-of-living bonus those superannuitants had to stagger along, notwithstanding the fluctuations in prices. No relief was granted on the one side, and I cannot see why any reduction should be made on the other side on that basis. I myself think that if you have any system of pension that is subject to review you are on very dangerous ground. The members of the Railway service have all had their salaries cut on the basis of the cost of living ; they have not used that basis, but that has been associated with it. Do you think those salaries should all be cut and those that are getting pension incomes from the same fund should remain on the same basis ? —I do so, because, supposing the reverse had taken place and prices had gone up, we, as superannuitants, could not have come along to you and said we were paying Bd. for a loaf to-day whereas we only paid 7d, in the past, and ask you to make up the difference.

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Would you not have come along ?—We might have come, but we would not have got anything. You know more about the Railways Fund than any one except Mr. Gostelow.—l would not say that. lam very modestly putting my figures before you, and lam not questioning Mr. Gostelow's figures at all. I have the greatest respect for the Actuary, but I think lie is an idealist. I have in front of me eight cases of men in the Railway service who are now superannuitants, and I want to see that their service prior to becoming contributors to the fund should be paid for by the State. If they were not paying into the fund and were promised an annuity, then they should get the payment for that, but I have these figures here and want you to tell me whether you think the fund can continue to pay out these sums, taking into account the amount of contributions paid in. I have here the case of a man who has paid in £812 155.; he has an annual pension of £719 15s. He has already received £7,167 17s. Is it possible for the fund to be stable taking that operation into account ?—lf you went to an Actuary and asked that question he would tell you that what should have been done in regard to pensions over £300 was that if the contributor was paying in 5 per cent, he should have paid in approximately 1 per cent, for every additional £100 of salary. That would mean that a man drawing £3,000 would have paid 30 per cent, of his salary. Presuming that he was paying on the basis for £1,250 for ten years and in previous years on a lower amount and then for three years he got £3,000, and his retiring-allowance is £2,000 a year, could you work out a fund that would stand charges of that type ?—No. The obvious reply to that is that those salaries should not have been paid. If the salaries should not have been paid, is it fair to continue to pay an annuity based on a salary that should not have been paid ?—There you bring in the question of the contract, and I cannot, under any stretch of imagination, imagine any one breaking a contract whether it is good or bad. They should keep to the contract whether it is good or bad. You keep to the agreement even if it is to your own hurt ?—Yes, that has always been done by British people. We had evidence here yesterday to the effect that England's word is her bond. Is that what you mean ?—Yes. Supposing you have not anything to redeem your bond, what would you do ?—I know what I would do. I would probably do the same as you would do, but I am representing the superannuitants, and I cannot answer that question. Would you be in favour personally or as a representative of the superannuitants of a special fund being set up for the purpose of taking over all the special and compulsory retirements and all those people who have been responsible for the heavy charges on the Fund for back service ?—I do not think you could do any better than follow the precedent of the South African Railways in that connection. They were up against the same difficulty as we are up against to-day in regard to their fund and they paid from the Working Railways Account into their Superannuation Fund an amount of money equivalent to the additional load due to early retirements. If that was done in our case, our fund would be in an excellent position. If we could establish a fund for all special retirements, compulsory retirements, and back-service men, transferring their contributions to that fund and leaving the contributions of the other contributors to stand on their own for the benefit of the contributors, do you think that would be a good thing ? —Now you are setting up elaborate machinery. You can do it without separating the various people from the fund. That is a thing to guard against. The fund should, in my opinion, take the contributions in respect of those contributors and absorb them into the whole, just the same as the South African people did. You do not think the contributors' money should be used for any other purpose than the benefit of the actual contributors ?—I do not think that at all. That is the Actuary's idea. Ido not subscribe to it at all. All these funds are, as I see them, carried on with the aid of the contributors' money. They are not funds of a day or two days. We consider they are fund for all time, and the contributors' money must be used to pay the pensioner for the time being and in turn as those contributors become pensioners the other man pay their pensions, and so on. Are you not of opinion that the contributors' money should be kept for the contributors benefit ? —No, not as such. If the payment of moneys out of the Superannuation Fund during the past ten years has meant jeopardizing the amount paid in by the contributor, do you think that ought to continue ?—Yes, with the State guarantee kept in mind. That is why we have never objected in this fund to our contributors' money being used to pay the pensions. You do not feel alarmed about the state of the fund. You have in mind all the time that the State is behind you ?—Yes. The Chairman.] During the course of evidence we have heard a lot of statements about the number of men who abandoned their life policies. Is there any record of that ?—None, whatever. You have no idea how many ?—No. Mr. Gostelow.] On page 9 you state that no ordinary business could be carried on upon an actuarial basis. I suppose you know that any business house that lends on table mortgages has them on an actuarial basis ?—They are, and they are not. They are actuarial to the extent that you are getting back interest and principal, but I do not know that there is any grave actuarial calculation involved in it. Any ordinary Sixth Standard school-boy could run around a table mortgage. That is so. You then go on to|say no bankffcould be considered sound.||What]j dofyou mean by that ?—I am at some loss to interpret that myself. It is your own statement ?—lt is, and it is not. There were a good many heads concerned in this statement, but, briefly speaking, the idea there is that it does not really come within the actuarial

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sphere at all. The idea they are trying to put over there is that if the depositors of any bank wanted to draw all their money out the bank could not pay it. What about the insurance companies ? —ln exactly the same position, as you know it. They are on an actuarial basis ?—lf you closed down the Government Life Insurance Department to-morrow and called up all your policies where would you be ? It would last for the next forty years. If you stopped taking any new business you could still carry on for forty years and pay all the claims ?— Exactly. The difference with ours is that while you are not taking any new business you are still continuing the payment on your policies. But you are still able to carry out the contracts, which the Superannuation Fund could not do ? —It could carry on for forty years. With the present funds ?—Yes, supposing our contributions continue. Take your Reserve Fund. You have about £1,450,000, and on your own figures that will be reduced this year by £113,000. You have funds of £1,450,000 and you are paying out £400,000 a year in pensions ? —Yes. What amount of capital sum would be required to pay out £400,000 a year ? —We are not talking about that. We are talking about the hypothetical closing-down of the scheme ? —I am not. You are talking about that. You led on to that. I told you that as far as these funds are concerned they are all contingent and continue indefinitely. With £400,000 a year being paid you would want at least £4,000,000 ? —We are not questioning your figures from an Actuary's point of view, but from a practical point of view. In regard to the statement of Sir Joesph Ward. Do you know if that represents his considered opinion ? Did he stick to that opinion or was it just a temporary phase when he said, " Neither you nor I can tell of what use an actuarial calculation is except to mislead one " ? —Sir Joseph Ward knew finance if he understood nothing else. I appreciate the view of the Actuary, and Ido not want to discredit him. I think he is an exceedingly useful individual, but in connection with these funds, if we had had an actuarial report at the time we would never have got the funds at all. Now, when we are in the trough of the wave, you come along and say the funds should be put on an actuarial basis. I do not think it is going to help us or the country very much. I think it is rather important. You have quoted Sir Joseph Ward on page 3 as saying, " If you are going to ask for a superannuation scheme to be established in this colony or in any country upon what may be termed, from an actuarial point of view, a sound basis, you would never get a scheme at all." Can you reconcile that with Sir Joseph Ward s action in establishing the National Provident Fund in which he laid it down that the scheme was to be on a definite actuarial basis. That is a scheme that is almost on all fours with our Superannuation scheme, but which has been valued possibly half-a-dozen times and has always disclosed a surplus ? —I agree with you that if we had been able at the inception of these funds to establish them on the same basis as the National Provident Fund it would have been much better for this country. I am concerned only with Sir Joseph Ward's statement ? —What you are endeavouring to do is to come along when the fund has lived for thirty years, and say it cannot live any longer, you are going to take a piece out of those who have contributed* for thirty years so that the men in the future can benefit. lam dealing only with the statements by Sir Joseph. Ward. I want to say that Sir Joseph's words, as quoted by you, do not coincide with his subsequent actions. I have quoted the National Provident Fund. Then there is the Wellington Harbour Board. Sir Joseph Ward was instrumental in bringing down the legislation which enable local bodies and others to start their superannuation schemes, and he laid it down that each scheme was to be submitted to an Actuary appointed by the GovernorGeneral, and all those funds—every one of them that has been formed—have been sound right from the start, so Sir Joseph's statement that you could not get a fund on a sound basis was subsequently materially changed ? —That may be so, but it does not affect our funds. We cannot go back in regard to our funds, and those other funds have had the benefit of our experience. That is so, but I wanted to correct the statement that you are putting forward that funds established on an actuarial basis, as a theoretical basis, will not stand the practical test, and you have quoted Sir Joseph Ward in that connection ?—You mentioned the Wellington Harbour Board. They have built up reserves of £209,000, and now they are coming along and saying they want to increase their benefits. Their profit has been made from excess interest. That might not rule m the future ?—lt does not matter how it is made, the point I am making in connection with our fund is that instead of getting the subsidy we are getting the State guarantee. That is so ?—Now at the eleventh hour you say, " The State guarantee is not enough, you must have the fund on an actuarial basis." There is no question of taking away the State guarantee ? Oh, yes, there is. Part 01 the .Bill absolutely repudiates the State guarantee. It is not my Bill ?—I know, but I am using it as a figure of speech. I would like to apply Sir Joseph Ward's statement that the funds could not be actuarially sound, to friendly societies. I suppose you know that he was responsible for bringing in the Friendly Societies Act here, and he probably went further than any Friendly Societies Act in the British dominions ? —Yes. _ # .... ■ , And made it imperative that every friendly society, before registration, had to get an actuarial certificate I—That is so, but he was going on the experience of friendly societies abroad. Friendly societies all over the world are not on an actuarial basis, and yet they carry on. I suppose the friendly societies in Great Britain have given equal if not better benefits to their contributors than we have in New Zealand. It is a strange thing that.

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It is also a strange thing that hundreds of friendly societies in America have had to close down on account of unsound principles ? —I do not know about the Americans. I confine myself to the British Empire. On page 5 you mentioned the load placed on the funds due to the policy of retrenchment that has recently been undertaken. Who is responsible for that load ? —For it being placed on the funds ? Yes. You have placed the responsibility on the Government of the day ? —Yes. Is it not a fact that your Superannuation Board threw that load on the fund ? —No ; they have no say in the matter at all. Who can extend the provisions of the Act ? —The Minister. No.—Yes, the Minister. That is incorrect. If you look up the Act you will find that the Superannuation Board may, with the consent of the Minister, extend the provisions of the Act to allow men to retire after thirty-five years, and I put it to you that the Superannuation Board must take its share of the responsibility in allowing those men to draw pensions ? —What would you suggest could be done. Possibly if the Superannuation Board had taken up the attitude that it would not grant the pensions those men would never have been retrenched. Mr. W. Nash : Were they not ordered by the management to retire ? Mr. Gostelow : Yes, but the only people who can grant pensions are the Superannuation Board. Mr. W. Nash : They were ordered to retire though. Mr. Gostelow : Yes. Witness : I appreciate that point, but then you have the extraordinary anomaly that the General Manager is the Chairman of the Board. I am not speaking about personalities ; I am just saying the Superannuation Board ? —That comes into it though. The Superannuation Board cannot altogether escape responsibility in the matter. It is its liability ? —I am not defending the Board. I just put that to you to lead up to my next question. The Board, having neglected its duty in throwing these men on to the fund —men with thirty-five years' service—is it reasonable in any scheme of reconstruction that the pensions of those men should not be reviewed ? —You cannot argue on those lines ; they are not fair at all. The superannuitant is entirely separate from the Board. The Board is only the machinery. The superannuitants made a contract with the Government and they stand by that contract. What was that contract ? There is nothing in the contract which would allow them to go out after thirty-five years' service ? —Yes, the men may retire with the consent of the Minister. No, they may retire with the consent of the Superannuation Board ? —I will have to refresh my memory regarding that point. The Chairman: Ido not think that point need be stressed any further. Mr. Millar.] Following Mr. Gostelow's question, is it not a fact that the constitution of the Railways Superannuation Board is such thg,t they have to practically carry out what the Minister dictates ?—I would not like to criticize the Board, because I think you should have them here. I am speaking for the superannuitants. I know what the Board does, and how it does it. Ido not think I should cither defend or decry it. You would not regard it as entirely responsible though. In regard to the question of the 3 per cent, contributions by certain members in the Railway service. There are roughly about fifteen thousand railway contributors at the present moment ? —Yes. Roughly, how many at the present time are paying on the basis of 3 per cent.? —Very few. Most of them are on a dead-level salary now ?—Yes, the thirty-five-year men eliminated quite a lot. We have only the men from twenty-five years to thirty-five years' service left —a ten-year group. The increase of 2 per cent, would roughly mean an increase in the income of the fund to the extent of not more than £7,000 ? —I think rather less. It was really not a factor in the financial scheme of things ? —lt is a factor in this way, that had we paid 5 per cent, from the first we would have been much better off financially to-day. But at the moment with only 1,700 left and with only a short time to go, it is not a material factor ? —No. This should be qualified as no figure is available. You mention the compulsory retirements, but you do not mention the permissive retiring-points —thirty-five years' service or 55 years of age with thirty years' service. They have placed a tremendous load on the fund have they not ?—Yes, they are the people who have broken the fund. It has been mentioned that that accounts for £250,000 in all funds. How much in the Railways Fund ?—lt is here in the D.-5. Those compulsory retirements threw an annual liability on the fund of at least £160,000. Nearly 33| per cent, of the total pensions payable ? —Yes. Surely you do not regard it as reasonable that that should continue I—Well,1 —Well, it is not, but you see we are living in queer times and while the obvious thing to do is to make the Working Railways Account assume the responsibility, it may be a question of finance and, being a question of finance, if the State is not able to do that, then the funds should be allowed to carry on as they are until better times come. Do you not consider that those permissive retiring-points should in the future disappear ?— Yes, for many reasons ; not only from the superannuation point of view, but also having regard to the safety of the Railway service itself. That would be a considerable relief in the future if that were done ? —Yes. The Railway service is down to bedrock, and I do not think any more men can be sacked, therefore we have a period of at least seven years when there should be no material additional pensions granted. 17*

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That is because you have wiped out the people eligible to retire ?—We have wiped out all the men it has been possible to retire, all those medically unfit and all those unfortunate people who were under any official ban whatever have been retired. That is the secret of how you show an excess of income over outgoing in 1939 ; you would not have the men to retire ? —That is so.

William Marcus Weight, President, Superannuated Public Servants' Association of New Zealand (recalled). (No. 39.) 2. I am expressing the considered opinion of the associated body of superannuated public servants in New Zealand. Our case in opposition to the Bill is based on — (a) That it proposes to break the contract made under the original Acts between the State and each individual contributor to the funds. (b) The neglect of the political Administration of the Dominion to meet the financial obligations of the State in the past. (c) That the present economic depression is not the cause of the actuarial deficiency. (d) That the present position of the funds is due entirely to neglect by the State to meet its financial obligations and by the misuse of the funds for retrenchment purposes. 3. The contract made between the State and each contributor is in its nature similar to a contract entered into between private persons and between Corporations. 4. We claim as a right the benefits already granted to us and for which we have contributed in full the amounts we were compelled to contribute under our contract. 5. That we entered into this contract relying on the statute law that — (a) All existing rights (compensation, &c.) would be preserved. (b) That all continuous service prior to the establishment of the funds would be allowed to count in the computation of our benefits. This provision is common to the great majority of both State and private Superannuation Funds. (c) That having qualified for these benefits we would receive them. (d) That having joined the funds to make provision for old age we did not consider it to be necessary to make any other provision. Indeed, the great majority of us could not afford any other form of thrift. 6. The Civil Service Insurance Act, 1893, granted a combined whole life and annuity policy for a reasonable premium, also there was a fund called the Public Trust Fund. An officer could elect to pay into this fund 5 per cent, of his salary to accumulate at compound interest, the total to be paid to him on retirement. 7. The inducement of back service was more attractive than the forms of thrift then in existence, and nearly all of the officers who had paid into the Public Trust Fund withdrew their savings whilst those who had taken out insurance policies either accepted the surrender value of their premiums or a paid-up policy and, I may say, much to the relief of the Government Insurance Department. 8. The contributions to the Superannuation Funds were based on the recommendation of the Actuary, 5 per cent, to 10 per cent, of salary in the Public Service and Teachers' Funds, as great, if not greater, than those charged by funds of a similar nature —the contributions to the Railways Funds, commenced at 3 per cent, under the original Act. The contributors had no right to bargain, as the terms of the contract were dictated by the State. 9. Having joined his respective fund the contributor is bound to make the stipulated payments so long as he or she remains in the Public Service. If he or she resigns before qualifying for an allowance the total contributions are refunded, without interest, which remains in the fund, and is a relief to the liability of the State. 10. Having accepted the contributors' money the State has no moral right to use it for any purpose other than paying the benefits promised under the original Acts. The State is in the same position, technically, as a trustee who is amenable to the law if he commits a breach of his trust. The State, not being amenable to the law, is under even a greater obligation to be faithful to its trust. 11. You are aware that the amount of a contributor's annual allowance is computed on his length of service and average salary. The underlying principles here are (1) to offer an incentive to public servants to attain, by merit, high positions in the service, and (2) as a fitting reward for exceptional ability and zeal. That paragraph, I submit, answers the question as to the £300 limit of pension. 12. The contributor who has fulfilled all of the conditions imposed by the law and who has been receiving the benefits he has purchased, has completed his contract in every sense. On his retirement he loses at least one-third of his income, and if that income is taxable he is charged the rate as for unearned income. Extract from Taxation Act, Commonwealth of Australia : — " Classes of Income. —Definitions, section i : ' Income from personal exertion ' or ' income derived by any person from personal exertion ' means income consisting of earnings, salary, wages, commission, fees, bonuses, pensions, superannuation allowances, retiring-allowances and gratuities not paid in a lump sum, allowances received in the capacity of employee, and the proceeds of any business carried on by the taxpayer, either alone or as a partner with any other person, and any income from property where the income forms part of any emoluments of any office or employment of profit held by the individual and any profit specified in paragraph (6) of the definition of ' income ' but does not include interest unless the taxpayer's principal business consists of the lending of money, and does not include loans and dividends."

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13. The present political Administration having at last realized the effect of neglect of the funds by previous political Administrations, sought a way out of the difficulty by referring the question to the Public Expenditure Adjustment Commission, a body of men appointed and paid by the Government to report on and recommend reductions in the cost of administering the Public Services. 14. The Commission has reported that the indebtedness to the funds should be paid, partly by the State and partly by contributors and superannuitants. No immediate economy is effected, whilst additional expenditure 011 account of subsidies to the funds is recommended. Here I may say that the Government has from time to time appointed other Committees and Commissions to go into the questions of superannuation, but those Committees and Commissions have never functioned. They were never intended to function. They were simply something for the Government to hide behind when the question of superannuation was raised in the House. 15. As the obligations of the State to maintain the funds have not been observed in the past, and as the State has used some part of the money belonging to the contributors to the funds to pay existing allowances, we feel justified in holding and expressing the opinion that any further promises or statutory guarantees are also liable to be disregarded. I was Secretary of the Public Service Superannuation Board for about sixteen years before I retired, and never an occasion was missed to urge upon the Government the necessity for paying the subsidies to the funds. Every time I came in contact with my Minister —and the times were very frequent, as there were frequent changes —I always urged the need for keeping the subsidies paid up, or there would be trouble in the future. 16. Therefore we maintain that the only satisfactory guarantee that the State can give is to discharge its present indebtedness to the funds for unpaid subsidies, plus interest compounded immediately. As we are aware that the amount involved cannot be paid in cash, we suggest that inscribed stock be issued for the necessary amount and allocated to the funds in proportion to the sum owing to each. This would secure to the funds an assured income and is the only method by which the present political Administration can guarantee future payments 011 this account. The total amount of unpaid subsidies with compound interest is, we believe, about £3,500,000. Mention has been made of the failure of the first New South Wales Superannuation Fund and the late Sir Joseph Ward's reference to that fund. So far as our information goes, that fund was in a weak position financially when the Government of that State, in order to economize, retired 011 superannuation a large number of contributors, and, so great was this added burden that the fund was bankrupted. The Government then closed the fund, but it continued to pay, in full, the retiring-allowances already granted. Those contributors who had not qualified for retiring-allowances were given the option of withdrawing their total contributions or of commuting their contributions into an annuity to be entered on when they retired from the Service. When the existing fund was established those contributors who commuted had their rights preserved, and when they retire their commuted annuities are added to the benefits they acquire from the existing fund. I may say that this position arose during the financial depression of 1893, when the same depression affected ourselves. The circumstances were practically the same as they are to-day. Actuarially Reduced Allowances. 17. At present there are two classes of superannuitants who were retired under the extended provisions of the Superannuation Act —viz., (a) those who are receiving the full amount of allowance computed on their length of service and average salary, and (b) those who are receiving discounted allowances. 18. This has created an anomaly, and has caused hardship and suffering in many cases. 19. The annuitants who are affected by the actuarial deduction are, in most oases, low-salaried persons aged between 50 and 55 years of age. 20. The consequence is that they are not receiving sufficient income to keep themselves and their dependants in reasonable comfort, and are unable to find employment. 21. Many of these retired officers are experienced men and women in their prime and whose services were of value to the State. It is probable that their positions are now occupied by officers of less experience and value. 22. We believe that in many cases the discount is not reasonable, and we ask the Committee to obtain from the Secretaries of the three Superannuation Boards a list of those annuitants affected showing the amount of the allowance computed on the normal basis and the amount of the discounted allowance in each case. 23. Also we ask the Committee to ascertain from the Actuary the method of computing the discounted allowances, especially as to whether the actuarial Government subsidy is taken into account. I mean by that, that he is to assume that the Government subsidies were paid as they fell due. 24. We claim that if the funds had been kept actuarially solvent there would not have been any need to reduce this class of allowance, and that those annuitants who are now suffering hardship, and in some cases actual want, are the victims of the failure of the State to maintain the solvency of the funds. A great many of these men who have been forced out of the service had undertaken heavy responsibilities—heavy in proportion to their means —in the shape of house purchase, life insurance, &c., and are now faced with the necessity of having to surrender their equities. The State Advances Department is largely concerned in this matter, and private mortgagees are compelled by their own necessities to realize their securities.

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25. Also it must be pointed out that the discount deducted from these allowances, although an immediate relief to the Superannuation Funds, is in effect a reduction of the State's liability—i.e., the future subsidies payable to the funds will be relieved to the extent of the amount of the actuarial discount. A question I have been asked frequently, which seems difficult to answer, is this—as to whether the allowances already actuarially discounted are to be subject under the Bill to a further discount. The Actuary will be in a position to answer that. 26. It would be interesting and instructive to ascertain what system of selection has been adopted by Departments in making these retirements, whether or no the economic position of the officer has been taken into account, also whether younger officers, not qualified for superannuation, have been retained at the expense of those who have been retired. We believe that in the long-run these retirements will be uneconomical. Meaning by that that the State is losing the services of men of experience, and replacing them with men of less experience. 27. It must be remembered that most of the premature retirements have been compulsory. In our opinion, it was originally intended that the conditions which the Minister may impose were to apply only to those persons who elected to retire before acquiring the full qualification, and not to those who have been retired for retrenchment purposes. When the funds were established the latter possibility was not contemplated. The difference between the actuarial allowance and the normal allowance should be provided by the State. I know that what I say is correct. I know the history of these funds because I was associated with most of them at the beginning. The idea of imposing conditions was to prevent a man from retiring for his own purposes. The first case I have in mind is where a postal officer of thirty-eight years' service wished to retire for his own purposes. The Board agreed to grant him a retiring-allowance payable at the expiry of his fortieth year of service, he to contribute to the fund in the meantime, and the Department to give him leave of absence without pay. That was the intention of that provision—and not to be applied to compulsory retirements. 28. The Bill before the House proposes to reduce the retiring-allowances of those persons who have been retired on the ground of medical unfitness. This proposal is a cruel one, because in most cases the annuitant is unable to supplement his or her income by obtaining employment. Moreover, in some cases the cost of medical treatment absorbs an appreciable part of income. Admitting that a high death-rate is in favour of the funds we hope that the Government will not intentionally act as executioner. 29. A short time ago the Dominion newspaper, in a sub-leader, commenting on the Commission's report, stated that " The report does not profess to be a human document," and we think that the truth of that comment is obvious. The report deals with the interests and happiness of a large number of human beings in a ruthless fashion, and throws on the Government the onus of giving effect to its recommendations. 30. In contrast to the negligence of the State of the Superannuation Funds we draw attention to — (а) The National Provident Fund. This fund was established on a contributory basis, the amount of contribution, together with the Government subsidy, being adjusted to purchase in full the benefits provided under the Act. The fund has been maintained in a sound financial condition ever since its foundation, and has now, we understand, a substantial surplus. The amount of the Government subsidy, which is paid automatically under the Act, was £49,900 last year. (б) Section 82 of the Land and Income Tax Act, 1923, reads, — " In calculating the taxable income of any employer the Commissioner may allow a deduction of any amount set aside or paid by the employer as or to a fund to provide individual personal benefits, pensions, or retiring-allowances to the employees of that employer : " Provided that a deduction shall not be allowed under this section unless the Commissioner is satisfied that the fund has been established or the payment made in such a manner that the rights of the employees to receive the benefits, pensions, or retiring-allowances have been fully secured." There is a striking contrast there between the treatment of these particular cases and the treatment of the Superannuation Funds by the Government. 31. Before concluding our case I would ask the Committee to submit to the Actuary the questions set out in the last page. There has been so much misunderstanding of the financial position of the funds, that a definite answer to those questions may throw a stronger light on the subject. 32. I reiterate the statements made so ably and fully by previous speakers, and ask this Committee to give full weight to those statements in its recommendations to Parliament. 33. In conclusion, I repeat that the superannuated public servants who retired under the original Acts have complied in full with the terms of the contract they entered into with the State under those Acts, whilst those who came under the amending Act have been made the victims of expediency. 34. Apart from the economic aspect, there are questions of right and justice to be considered. We ask ourselves and no doubt each of the members of this Committee will ask himself, whether the proposal to take away from an annuitant any part of his benefit is right or whether it is wrong. In the answer to that question lies the crux of our case. We accuse the Government of an attempt to take away from us that which we have legally acquired. In no other country under the British Flag has such an act been contemplated, and it would ill become this State, which prides itself on its credit in the eyes of the world, to propose to break faith with its retired servants in order to repay the funds part of the money which the State, as trustee, has used for a purpose other than was originally intended.

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We are convinced that we have presented forcible and sound argument in favour of our contentions, and we leave the issue to the judgment of the members of the Committee in the belief that their moral sense will guide them aright in coming to their conclusions. We ask the Committee to submit the following questions to the Actuary in the hope that his replies will assist in making clear some of the questions which have been raised from time to time : The Actuary,— Have you not in your reports from time to time, stated the financial position of the Superannuation Funds and drawn attention to the failure of the Government to provide the amounts of subsidies needed to place the funds in a sound actuarial position ? Can you tell the Committee what is the total amount of unpaid subsidies plus interest compounded at 5 per cent. ? If this amount were provided would the funds be in a sound actuarial position now ? If this were done, what amount of annual subsidy— (a) Computed on an actuarial basis; (b) An equated amount, — would be needed to maintain the funds in a sound actuarial position ? With reference to the alleged deficiency of £23,000,000, — (а) Does this include the actual amount now owing to the funds ? (б) Is it based on the existing conditions of retirement ? (c) What would be the amount of the deficiency if the original conditions of retirement has been adhered to ? If the original conditions of retirement were reverted to, what amount of annual subsidy computed as a proportion of the contributions would be needed ? If the present indebtedness is paid and a pound-for-pound subsidy provided, would it be necessary to reduce benefits ? From your knowledge of other Superannuation Funds would a pound-for-pound subsidy be reasonable ? There is one other matter that I would like to submit to you because it has a bearing on this case, although the position has not arisen yet. This is a quotation from the London Times for 10th September : — " Pensioned officials of the Ottoman Bank who had recently arranged to bring an action against the bank in the Mixed Court at Alexandria, on account of the proposed reduction in their pensions, have now withdrawn the case, as the Turkish Government has decided to abolish the tax which led to the proposed cut." I hope we will not find the Turks are more honest than we are. Mr. Gostelow.] Subclause (d) of paragraph 2 of your statement reads, " That the present position of the funds is due entirely to neglect by the State to meet its financial obligations, and by the misuse of the funds for retrenchment purposes." You make no reference there to the enormous liability thrown on the funds by taking the post-war cost-of-living bonuses into account in computing pensions ?—That was a Government action, it was not done by the contributors. Were any representations made, to your knowledge as Secretary of the Superannuation Board, to the Government as to the effect of that procedure ?—Not that I am aware of. It was not the Board's duty. Take a man going up £100, paying contributions for three years, say, £5 a year —£15 altogether. Surely you would not consider, as a Board, that £15 would pay for a pension of £66-odd for life ?— The English Government pay annuities on the basis of the war-increased salaries. Did they not treat them as bonuses, quite apart ? —'They paid the allowances including the bonus. But those allowances would be reduced as the cost-of-living fell ?—Probably so. The pensions now enjoyed by pensioners include really the cost-of-living bonus ? —The English Government paid annuities based on the salary plus bonus. When the bonus was reduced, those who were retired afterwards of course had a lower average, but their salaries were not reduced. Would it not have been a wise policy on the Board's part to point out the enormous liability that the Government would incur ? —The Board is representative of the contributors as well as of the Government. So long as it benefited the contributors, you would not mind what liability it threw on the Government ? —Certainly not. You mention in the section that I quoted the " misuse of the funds for retrenchment purposes." What do you think should have been done in regard to the thirty-five-year retirements ? —They should not have been retired. But supposing there is no work for a man ?—You know the circumstances of the case as well as I do. You know that the Departments had to reduce their vote, and the easiest way of doing it was to retrench men who were qualified under the Act for a retiring-allowance. They did not retrench the men who were not qualified for retiring-allowances so largely as they did the others. It was the departmental policy. The question is the enormous load thrown on the fund, which you admit. I am putting the question to you, what should have been done —what was the best course to follow with the thirty-five-year men ? Should they not have been granted a reduced pension ? —Certainly not. Those who are compulsorily retired should have got their full pension, and the State should have found the difference if the fund suffered. Would you contend that a man compulsorily retired because there is no work for him should get exactly the same pension as a man retired medically unfit ? —Exactly the same. Although the medically unfit man has fewer years in which to live than the other man ?—That is not the question at all —that is not a fair way of putting it. The contract is between the man and

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the State it is an individual contract; just the same as National Provident Fund contracts are individual contracts. If the State makes a bad bargain with Jones, it might make a good bargain with Smith. But sound finance surely demands that if a man loses his position, unfortunate though it may be, that liability should not be thrown 011 the Superannuation Fund ? You admit that that is one of the main causes of the present trouble with the funds ?—Of course it is. That it was departmental or the Government policy which caused it. But apart from that, sound finance would demand that those men should receive smaller pensions, in equity to others ? —ls there any sound finance to-day ? Getting away from that question of retrenchments, as Secretary to the Board you can take your mind back to the time before the depression. Have you any idea what proportion of men were retired before completing forty years' service or before attaining the age of 65 years ? —I cannot say definitely. From memory I think the figure is one in every three ; one in every three of the annuitants who a-re now alive did not complete their forty years' service, or did not attain the age of 65 years ? —Of course, you must remember that it was the policy of the Postal Department to retire their men when they attained thirty-five years' service. But did your Board not make any protest to the Government as to the effect on the fund ?—No. The Board considered if a man were forced out of a department through no fault of his own that he was entitled to his full pension. You state in paragraph 33 that the superannuated public servants have complied in full with the terms of their contract ?—Yes. That was not in their contract, to go out after thirty-five years' service ? —Oh yes, it was. The Government itself varied the contract. The original contract was forty years' service, 65 years of age, or permissive at 60, but the Government varied the contract voluntarily. As far as the fund was concerned, the contributor had fulfilled his part of the contract when" he reached thirty-five years' service. But in spite of the load that you knew was being thrown on the fund, your Board made no representations to the Government ?—No, not so far as I am aware. Mr. F. W. Millar.] In regard to the thirty-five-year retirements, was not the effect of the 1909 Amendment that the Government had these officers in the hollow of their hands, that they had the power to retire them ? That being so, the Government also had the power to impose conditions, possibly by way of a slightly reduced pension. The Government determined that it was not desirable to take that particular course; they were allowed to go on the full thirty-five sixtieths ?—That is a question, of course, for the Boards to consider, whether it was policy, or just, to make any recommendation in that regard ; but ultimately the Minister decided, and if the Minister gave his approval unconditionally, that was sufficient for the Board. We can assume, then, that the Minister himself agreed with the Board that it was not desirable to impose special conditions in cases of retrenchment ?—The process was this : the Board had nothing to do with the case until application was made by the Department for a retiring-allowance. The Department went to the Minister and got his approval, and the Public Service Commissioner's a.pproval, before the matter came to the Board. The Board had no power but to carry out the decision ?—That is all. Exactly. Mention has been made to the Committee in regard to the alleged parlous state of the funds, that the Boards have even had to realize some of their securities to pay their existing pensions. Could you put that in its right perspective ? —The moneys of the various funds have always been kept closely invested, so as to earn the greatest amount of interest possible. The Government subsidies for some years past have been paid to the funds in the form of inscribed stock or debentures, so that there was never any cash balance in the funds in case of undue claims. When these increased pensions became due, or when the load became heavy so that the outgoings exceeded the income, it was necessary to realize on some of these Government securities which had been handed to the funds in payment of subsidies. In regard to back service, from your experience of Superannuation Funds is it not the usual practice, on the creation of Superannuation Funds, for States to bear the liability for back service ?— Undoubtedly. It is a feature of most Superannuation Funds ?—Yes. That is the main inducement to enter. We have seen stated in the report of the National Expenditure Commission that the present and prospective liabilities of the fund are £23,000,000 ? —Yes. At the inception of the funds the State had, I suggest, an enormous liability for back service which they took over, which they guaranteed ?—At the beginning of the Public Service Superannuation Fund it was estimated that there would be five thousarnd contributors, each of whom had back service to his credit. The estimated liability on account of those was, I believe, calculated by the Actuary, but I have not got the figures. The principle of that fund was this : that it was not to be established on what is generally understood to be an actuarial basis—that is to say, capital was not available at the outset, but when one of those contributors retired, the difference between the annuity that was purchaseable by his contributions and the total annuity was to be provided by the Government in the shape of a subsidy. And that is the principle, I think, that the Actuary has worked on. Mr. Gostelow: That is correct. Mr. Millar.] Payment of the liability by instalments ?—As it arose. They did not anticipate payment of a capital sum, but as the liability arose it was supposed to be met by the Government subsidy.

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Thinking in terms of £23,000,000 as representing the present deficiency, should not that figure be balanced somewhat by the capital liability at the outset, running probably into many millions ? — Of course, if the liability at the outset had been met then, the position would have been quite different now. At the present time the Government owes the funds £3,500,000, which they should pay now to put the funds on a sound basis. The other £20,000,000 spread over forty years is practically what the Government proposes to pay into the fund as a pound-for-pound subsidy —it is practically the same thing. But the pound-for-pound subsidy will not pay the £3,500,000 ; therefore the Government say, " No, we do not pay the £3,500,000 —we are going to make you pay it, but we are paying the £20,000,000 spread over forty years." In other words, the State is proposing for the moment to default on its instalments of its past debt ?—That is so. In your statement you ask the Committee to submit to the Government Actuary certain questions, and one of the questions reads, " If the present indebtedness is paid and a pound-for-pound subsidy provided, would it be necessary to reduce benefits ! " I take it by " benefits " you mean the original conditions of retirement only, not the permissive points created in the 1909 Act ? —No ; I mean the benefits under the original contract. Then would it not be better for the question to read this way, " If the present indebtedness is paid, and a pound-for-pound subsidy provided, would it be necessary to reduce benefits, assuming that the original conditions of retirement were reverted to 1 " Would it not be desirable also to ascertain from the Actuary what was the capital liability assumed by the State for back service at the time the respective funds were established ? That again would give the true perspective ? —I do not know that that matters very much, except in the Railway Department. It matters possibly from the point of view of the general public, when considering the whole superannuation aspect ? —Yes, from that aspect; but it does not really affect the financial position. Mr. McCombs.\ Thousands of the State servants had to contribute from wages that have been increased by the cost-of-living bonus, and many of them will not gain any benefit as the result of that increased contribution made during the war period ? —Oh yes ; when the Act was amended in 1921, at the time of the first cut, it was provided that contributors could elect to continue to contribute on the higher salary. Precisely. Supposing a number of those contributing were getting £150 a year, and eventually they attained £250. The fact that they contributed on £150 when they might have contributed on £125 a year is not going to benefit them ? —No, they lose the benefit ultimately. The fund gains by that ? —Oh, yes. Would not that to some extent offset the benefits that were given to the few who retired ? — Probably so. It is difficult to estimate ; it would offset it to some extent —put it that way. It is bound to some extent to offset it. You have not made any investigation as to what the effect would be ?—No ; most of them, I think, elected to contribute on the higher salary, because they were probably near their maximum. Those who expected promotion would very likely not so elect. You have no figures to show to what extent the fund would benefit —to what extent it would offset what has to be paid out ?—No. It is a matter for the individual; if he thought he was going to get promotion, then he would not contribute on the higher salary, whereas the man who was near his maximum would so elect. Seeing that you have been Secretary to the Board, could you have figures prepared in connection with that matter ? —That is a matter for the present Secretary ; I have retired now. I have not the information.

John Gunn Polson, representing the Teachers of all Branches of the Service in Christchurch. (No. 40.) May I preface my remarks by saying that, knowing the Committee have been sitting a long time and have already had a great deal of evidence placed before them, I have deliberately made my statement brief, and tried to give our point of view without an undue abundance of words. The proposed reorganization of the Government Superannuation Funds as outlined in the Government Superannuation Fund Bill, 1932, was considered by a meeting of Christchurch teachers on the 14th November. It was decided to place before you certain points of view which it is hoped will carry weight. The general feeling of the meeting was opposition to the Bill in its present form. It was recognized, however, that the state of the three funds demanded attention on account of the unsatisfactory drift towards instability, and because in the Teachers' Fund at least certain anomalies have tended towards defeating one of the main purposes of a subsidized fund —namely, a contented service. The proposed Bill makes no attempt to remove existing anomalies, and it was felt very strongly that any new legislation regarding superannuation should be based on a wider vision than is evidenced by the present Bill, which is apparently an attempt to meet present financial difficulties only. Moreover, even from this narrow point of view, the Bill suggests a sharing of the burden by the Government and by the contributors in a very unfair way. When the Teachers' Superannuation Fund was inaugurated certain conditions were laid down for contributors and these have been amended from time to time. All these conditions .have been faithfully carried out. At the same time, the Government undertook certain obligations for non-contributory back service in addition to subsidies for full contributing members. These obligations successive

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Governments have failed to carry out in full, although the Government Actuary has fearlessly pointed out the default in his triennial reports. That is to say, the drift towards instability of the funds has been due almost entirely to the failure of successive Governments to carry out their share of the contract. The result is a widespread dissatisfaction and assuredly a distrust of promises made for the future. The present Bill suggests a pound-for-pound subsidy by the Government on future contributions. In the light of the past history of the fund such a proposal does not inspire confidence. The burdens proposed to be placed on present contributors and on annuitants seem unnecessarily heavy in many instances, as will be pointed out later on. There is little evidence of an intention on the part of the State to honour its liability —a liability which the report of the National Expenditure Commission characterizes as one from which the State " cannot honourably escape." It must be remembered that in the case of most branches of the Education service membership is compulsory. Even in the case of University professors, who would prefer in many cases to avoid membership, there is no escape. They must contribute to the fund on the terms laid down. Again, it is accepted as a clear principle in any subsidized scheme that the subsidies paid on behalf of contributors is in effect deferred salary —that is to say, if public servants had to make their own arrangements for old age through insurance companies the State would have found it necessary to pay higher salaries in the past. In lieu of higher salaries the subsidized Superannuation Funds were established. Had the State in the years before the present serious depression carried out its share of the contract, the funds would not now be in their present unsatisfactory state. Yet annuitants who carried out their share fully and completely find themselves threatened with a recalculation of benefits on a much lower scale, and present contributors are threatened with a recalculation on a new basis giving in most cases a lower scale of benefits. Had it been announced years ago that the State was endeavouring to carry out its obligations when times were good, but was unable to do so because the schemes were actuarially unsound from the outset, 110 doubt all branches of the service would have co-operated gladly in placing the funds on a sound basis. The State, however, did not in general attempt to do more than meet current needs, with the result that potential liabilities have accumulated to a degree that cannot be met at once. In the last two years outgoings have outstripped income. Nevertheless, the situation is not so hopeless as to require the contributors to bear the heavy share of reconstruction outlined in the Bill. In the first place, the estimated shortage of £23,000,000 —that is on the three funds, of course —is based on future and not on present needs, and continued reference to this amount has been totally misleading. Up to date in the Teachers' Fund the contributors have carried approximately three-quarters of the burden, and at present the investments are decreasing —securities having been sold to meet outgoings during the last two years. If this regressive movement can be stopped, however, there is no reason to suppose that over a moderately long period there should not be complete recovery with very little adjustment other than an honest attempt by the State to overtake its past neglect. Take the proposed pound-for-pound subsidy. lam not an Actuary, and lam not going to say that these figures are anything more than a layman's statement. If this can be relied on as continuous and certain, it would appear that this would stop the drift. Taking the figures for the year ending 31st January, 1931, as a basis, the following appears to bo the position £ (1) Retiring and other allowances .. .. .. .. .. 254,927 (2) Contributions.. .. .. .. .. .. .. 115,961 £1 for £1, as proposed .. .. .. .. .. .. 115,961 Interest on investments .. .. .. .. .. 72,682 £304,604 This leaves a margin of £49,677 to meet refunds and other charges which amounted in 1931 to £35,000 (approximately). In other words, not only would the drift be stayed, but a surplus for investment would remain. Should this surplus prove to be less than appears from the above figures owing to decrease in interest and contributions, then other means should be found by which the State could overtake its past default —for example, by the means already suggested, the issue of inscribed stock. To sum up it was felt, therefore, that the Bill in its present form was not acceptable for the following reasons : — (1) It is unfair in its incidence in view of the accumulated liabilities of the State. (2) It makes no provision for eliminating present anomalies (referred to later). (3) It would fail to secure a contented Service. (4) It places unnecessary penalties on contributors and annuitants. (5) It does not provide for overtaking past liabilities so far as the State is concerned. Nevertheless, there was a concensus of opinion that if new legislation which aimed at placing Public Superannuation Funds on a permanent sound footing were brought forward, present contributors would be willing to accept some of the proposals. A sound fund implies — (1) That the Service should attract men and women of the best type. (2) That it should secure for the State continuity of service without which efficiency would be impaired.

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(.3) That it should secure contentment in the Service by securing similar benefits to all concerned. . . . , At present many teachers are suffering from a feeling of injustice. Ims the present Bill makes no attempt to remove. Efficiency will suffer so long as dissatisfaction remains. . (4) That inefficiency should be reduced to a minimum by securing that retirements can be made before age or infirmity reduces ability. This is necessary in any Public Service, but is particularly so in the Teaching service where fall in efficiency of teachers reacts at once 011 the training of the youth of the nation the nation s greatest asset. Moreover, particularly with regard to women, the Service is admittedly an exacting one, and 'extension of the age for service requires very careful consideration from the standpoint of the training of the child. Comments on the above principles : — (a) If we consider (1) and (2) first—namely, attracting and keeping the best men and womenit is common knowledge that many of the best teachers have entered and remained m the Service because of the anticipated benefits of superannuation. If there had been any inkling that the Government might fail to honour its contract it seems equally certain that they would have been lost to the Service. The proposed Bill, if passed, which increases the contributors' burden will tend to prevent the entrance of the most desirable people. (b) The third principle—namely, a contented service—is not catered for, since many teachers are unable to count their back service. Many probationers and pupil-teachers who failed to join through ignorance or wrong advice should be given the option of joining by paying back contributions with interest. Though this injustice has been brought to the notice of Parliament on many occasions, and is again before the House by way of a petition, no provision is made in the Bill for remedying it. Yet this seems an opportune time to take the necessary steps. Were such a provision included it would remove the discontent of a section of teachers. Moreover, membership of the fund in the future should be made compulsory from the time of admission to the Service whether as probationers, or training college students, or through any other mode of entry. A similar provision is desirable in the case of women, especially war widows who on the death of their husbands have been compelled to earn a living by re-entermg the Service. Members of some branches of the Service have the right to join at any time, and on doing so can count back service. Yet a large body are denied a similar right although actually many could have joined had they been properly advised. (c) The fourth principle of a sound scheme is the certainty of being able to pension ofi teachers whose efficiency is impaired. The proposal in the Bill is to extend the retiring-age of both males and females. In view of the acknowledged strain of teaching, particularly in the case of women teachers, this proposal tends to defeat one of the main purposes of a subsidized scheme. In any case the clause thrusts differential treatment on those contributors who started at an early age, since under the proposed provisions many will be compelled to teach and contribute for well over forty years (forty-five in some cases) and yet can claim only forty-sixtieths of the average salary—no more than those who contribute for the bare forty years. ; If however, the clause in the Bill was' amended to permit retirement after forty years service or at 60' years of age for men, and after thirty-five years' service or at 55 years of age for women, no objection would be raised, provided that certain anomalies were removed, namely (1) Counting back service (already mentioned). (2) Payment of interest on contributions to those leaving the Service. (3) Removal of the £300 limit (mooted in the Bill). Similarly, the provision to calculate the pension on a longer period than the last three years would also be agreed to, but it was suggested that the last seven years would be more equitable. Other points in the Bill: — (f) No provision is made for cases of special.hardship. For instance, recalculating the pensions on the basis of the last seven or even ten years would leave the pensions of some annuitants as at present or with very small reductions. Others would suffer severely. (2) The proposal to give an actuarially calculated pension to men with forty service, and women with thirty-five years' service, who wish to retire before 60 years or 55 years of age is differential treatment that seems unjust. I stress that very particularly. Under a subsidized scheme the fund contains not only the contributions of the contributor but an added amount, usually £1 for £1, supplied by the State The contributions by the officer and the State subsidy have been earning interest all the time and it seems reasonable that he should be able to withdraw his contributions with interest; not perhaps the total amount—a certain amount should possibly be deducted for administrative costs. Conclusion.—ln conclusion, the feeling of the teachers of Christchurcli may be summed up as follows : — (1) General opposition to the Bill on the grounds given above. (2) Recognition of the need for taking measures to place the funds on a new basis. (3) A strong feeling that this should be done and could be done without the burdens suggested for contributors and annuitants being so heavy.

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(4) A willingness to accept some of the proposals made in the Bill, provided — (a) That amendments are made furnishing clear evidence of the State's intention to honour its liability, thus restoring confidence in the fund ; (b) That outstanding anomalies are removed. Mr. W. Nash.] You have a real objection to the extension of the service of teachers, on account of inefficiency, after 55 years for women and after 60 for men —you are of opinion that their value from a teaching point of view tends to decline ?—I should say so. In many cases, of course, teachers at that age are perfectly efficient, but as a general rule, more particularly with the women, I should say their efficiency was considerably reduced. And lam taking into full consideration the fact that they are teachers, and not merely people carrying out routine work, say, in a business office or something of that kind. The handling of young children needs persons whose temperament is still sweet, shall I say, and whose abilities are in no way impaired. We cannot afford that the children of this country shall have anything in the way of inefficient teaching, and I do feel honestly that a general extension of the age is likely to impair the teaching. If the subsidy were paid to date, and the State accepted its liability in connection with back service, and it was then proved that the funds required readjustment to enable them to meet the liabilities, owing to existing circumstances, would your association be in favour of it being done ? —That is the general feeling. We feel that the State, of course, should meet its past liabilities. And on that point I would like to say that we have perhaps been very trusting. Teachers are notoriously supposed to be unbusinesslike, but we do have fairly high principles, and we have trusted that when the Government introduced new legislation of any kind it was done after making full inquiry into exactly what it involved ; and where new amendments were made to the Bill, for example, giving pensions on the basis of the last three years of service, we accepted that as being something that the fund could bear. If it will not bear it, I do not see why we, having compulsorily contributed all these years, should be compelled to suffer in the way the Bill is asking us to suffer. Do you feel the Government has used some of the money contributed by the teachers to pay pensions that the Government were liable for ?—Yes, I think I could say that. It is not a personal opinion—l think that has been stated practically by the Actuary in his reports, that whereas the teachers have contributed three-quarters of the fund, the Government has only contributed about one-quarter, and yet the initial liability of the State for non-contributory back service was estimated at something like a capital value of £800,000. And again we say that that was undertaken by the Government at that time, we understood, in the full knowledge that it was something they could do. It appears, either that they could not do it, or that they simply would not do it when times were good. The Actuary has pointed out in each of his triennial reports for a number of years this default on the part of the Government. My point is that what might have been paid in previously has gone on accumulating at compound interest, and has now reached such figures as to make one realize that it cannot now be done. The Chairman.] You say, " The present Bill suggests a pound-for-pound subsidy by the Government on future contributions. In the light of past history of the fund such a proposal does not inspire confidence." Just exactly what do you mean by that statement ? —Quite frankly, there is a general feeling of distrust growing amongst the teachers. As I say, we have been a trusting people. We felt we had a right to expect, when a contract was entered into, that the Government of the day had taken full steps to see that they could meet that liability —and apparently they have defaulted. You have no confidence ? —I will say that, times being bad, how are they going to pay the pound-for-pound subsidy if they could not pay the other ? You do not say, " times being bad " ; you make the straightout statement. You also suggest that many probationers and pupil-teachers who failed to join, through ignorance, or wrong advice, should be given the option of joining. Is it not a fact that a lasge number of those have retired from the Service now ? —I could not say —I have not got the figures ; but I know a very great number are still left in the Service. But a good many of them have retired. How are you going to deal with those ? —Not having the figures to go on, I could not say how you would deal with them.

Oscar Ambrose Banner, on behalf of the Men Teachers' Guild, Auckland. (No. 41.) This evidence is being offered on behalf of the Men Teachers' Guild, with headquarters in Auckland. There is not a branch of the Men Teachers' Guild in Wellington, but there are branches in various parts of New Zealand. The headquarters of the branch in Auckland asked a representative of the Wellington Headmasters' Association to tender this evidence on their behalf. There are several aspects of the proposals as set out in the Government Superannuation Funds Bill that we desire to comment on, and in connection with which we beg to submit evidence in support of our views. 1. In common with other Teachers' organizations, we claim that it is the Government's duty to meet the obligations entered into under the original Act and its amendments to date. Teachers have had no option concerning their part of the fulfilment of the contract entered into, and in every respect have complied with, the demands of the Act in the past. The present unsatisfactory state of the fund is due almost entirely to the neglect of successive Governments to subscribe the amounts indicated as necessary by the Government Actuary in his successive triennial reports.

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We desire to emphasize the fact that the present position of the Teachers' Fund has nothing to do with the prevailing depression, admitting that temporarily the income of the fund has been affected by the lowering of the rates of interest and the reduced contributions of teachers, due to reduction of salaries. It is merely a coincidence that incomings are not sufficient to meet outgoings at this particular time. The tendency has been in this direction for many years, and the present position was inevitable in view of the limited contributions of the State. The following figures speak for themselves :— f Total allowances paid to date to annuitants .. .. 2,310,000 (approximately). Total of this amount paid to annuitants for back service— i.e., non-contributory service (an accepted Government liability) .. .. .. .. .. 1,287,000 (approximately). Total Government subsidy during period . . 973,000 (approximately). This quite simply means that present contributors' funds have been used to meet past Government liabilities, and that no subsidy has been paid to augment the funds for their benefit in the future. This is an extremely serious position for present contributors, and one, we feel, it is unfair they should be placed in. For this reason we consider it inequitable that teachers should be called upon to share the financial burdens proposed. 2. We consider that sufficient consideration has not been given to the proposals of the Bill. Though it has been based upon proposals made by both the National Expenditure Commission and the Government Actuary in his report for the period ending 31st January, 1930, we consider there is a degree of uncertainty as to whether the present proposals would finalize the stability of the fund. Referring to this aspect of the matter, the National Expenditure Commission says, " An actuarial calculation will be necessary to determine which of these periods—i.e., seven or ten years —will give the results aimed at, and as this will take some considerable time we are unable to state a definite period over which the average salary should be calculated." The Government Actuary in his report, referred to above, says : " Alter the basis of calculation of ' final salary ' to the average salary of the last seven or ten years, instead of three as at present." Quite clearly the real needs of the fund are not at all certain in the minds of either of these authorities, and the whole case should be carefully and scientifically investigated. Both the Commission and the Actuary express doubt as to what is necessary, an indication that the Bill may have its foundation on very insecure ground. For this reason we consider that the preparation of the Bill has been far too hasty and that its proposals should be deferred for further consideration. Another phase of this situation is of deep concern to male teachers. It has already been shown that the proposals in the Bill throw a large share of the financial burden on teachers as a whole. By removing this responsibility to the shoulders of the teachers the Government will place an undue burden upon the male portion of the profession. To quote from the National Expenditure Commission's report: " This fund—i.e., the Teachers' —differs from the others in that there is a larger proportion of women contributors. These contributors become eligible for retirement at an earlier age than do the men, and in addition they have a greater expectation of life than do male contributors. This throws a relatively greater burden on the Teachers' Fund." And, again, the Government Actuary in his report for the period ending 31st January, .1927, says, " There is conclusive evidence that tha early ages at which female teachers retire are responsible for a considerable portion of the fund's deficiency, and if the rate of contributions which they are paying were increased throughout by 2 per cent, of salary it would no more than place them on a parity with the male teachers." No serious exception could be taken to this great advantage gained by the women teachers when it was understood that the Government was willing to undertake in what was conceived the interests of the Service the financial obligations it entailed ; but when it is proposed to shift part of this obligation on to the teachers, it is manifestly unjust that the male portion should be burdened with a share of the amount necessary to give the female portion such a distinct advantage. Despite the plain statements of both the National Expenditure Commission and the Government Actuary, little attention appears to have been given to them in drafting the Bill, and we claim that this is another weighty reason why much more consideration should be given to details before any enactment is contemplated. 3. Under the provisions of the Finance Act, 1926, returned-soldier teachers were given the right to elect to pay for back service not previously included for determining the age at which they might retire. This was a definite concession granted to returned men in view of the likelihood of their feeling the strain of war service towards the end of their teaching careers. Many paid considerable sums into the fund to enable them to enjoy the privilege of earlier retirement. The Bill by proposing that nobody should retire before the age of 60 years withdraws the privilege previously granted, and, in addition, penalizes the individual, who in many cases paid a sum of over £50, by rendering ineffective this extra payment to the extent that no benefit will accrue from it. In common justice the present provisions should be allowed to stand or a refund plus compound interest should be made. The Chairman.] You are acting for the Auckland teachers ?—That is so. How do you feel in the matter —do you feel you would care to answer any questions ? Does this statement meet with your entire approval ? —Practically. I would not mind answering any questions. We have had before us the question of the 2 per cent, which it is suggested should be added to the women's contribution ? —lt is a question of investigation on that point, as to whether that would assist the position, to enable them to get out at the earlier age.

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Dr. Michael Herbert Watt, Director-General of Health, on behalf of Nurses employed in the Service of the Government. (No. 42.) 1. The purpose of these representations is to ask that provision should be made in the new Superannuation Bill which will enable nurses employed in the Service of the Government to retire or to be retired at the age of 55 years with compulsory retirement at 60. 2. According to the provisions of the Bill, any female contributor may be retired— On full pension— (i) At the age of 60 years regardless of service : see clause 6 (1a) (b). (ii) At the age of 55 years, provided she has had thirty-five years' service : see clause 6 (1a) (b). (iii) At any time on medical grounds. On actuarial pension— (iv) At any time after twenty-five years' service, or after she reaches 50 : see clause 7 (3) (a). (v) At any time after thirty-five years' service, provided she reached 50 : see clause 7 (3) (c). 3. The Department agrees that the provision to retire a female contributor at the age of 60 years regardless of her service is reasonable. That is as regards the extreme age to which she can serve. The proposal to take power to effect retirement at the age of 55 years, provided the nurse lias had thirty-five years' service is, however, inapplicable. As a general rule, nurses do not enter the employment of the Government until some years after qualifying. A nurse cannot obtain registration earlier than the age of 22 years, and it is therefore impossible for her to complete thirty-five years' service by the time she has reached 55 years of age. There are, in fact, relatively few who could complete even thirty years' service at the age of 55. 4. In support of its view that a nurse should be eligible for retirement on pension at full rates at any time after reaching 55 years of age, the Department would submit the following :— (1) It has to be recognized that the work attached to many of the positions in the nursing service renders retirement before reaching the age of 60 advisable. The work of district nurses, for instance, entails irregular hours and arduous travelling and necessitates not only professional efficiency, but physical vigour and endurance. Again, the work in maternity hospitals and tuberculosis sanatoria is of a very trying nature. (2) (a) Under the Hospital Board superannuation scheme nurses are eligible for retirement either on their own volition or at the instigation of the Hospital Board at 55 years of age. Retirement is compulsory at 60. (b) The same retirement age operates under the hospital employees' superannuation scheme used in connection with the English voluntary hospitals. " The Lancet Commission on Nursing " page 79, paragraph 143, as follows : — " Provision for Old Age. —An increasing number, but still only some 400 of the 1,000 voluntary hospitals in the country, are now participating in the Federated Superannuation Scheme for Nurses and Hospital Officers (Contributory) introduced in 1928. In July, 1931, more than half the voluntary hospital beds in Great Britain belonged to participating institutions, showing that the larger institutions have been more prompt in recognizing the advantages of this scheme than the smaller ones. Special arrangements have been made to enable nurses who join a participating District Nurses' Association, or who undertake private work, to continue their insurance under this scheme. The contribution from the nurse is 5 per cent, of her salary, and from the employer is 10 per cent., and the nurse receives her pension, or a capital sum for investment, at the age of 55. The main provisions of this scheme are set out in Appendix X." " Appendix X. Summary of the Federated Superannuation Scheme for Nurses and Hospital Officers (Contributory).—ln this scheme (see para. 143) full details of which can be obtained from the Secretary, , the total contribution is 15 per cent, of salary and emoluments, the participating institution paying 10 per cent, and the nurse 5 per cent. " Emoluments are reckoned thus : Probationers and nurses, £50 per annum ; ward sisters, £60 ; home sisters and sister tutors, £80 ; assistant matron, £80 ; matron, £150. " Contributions made by and in respect of probationers admitted to membership are held in deposit during training, and are used to take out initial policies on completion of training. " Each individual member has a right to select the class of benefit (endowment insurance policy, or deferred annuity policy), and net rates are quoted by thirty-six insurance companies, and by the Royal National Pensions Fund for Nurses for the purpose of this scheme. Policies of nurses mature at the age of 55. All policies effected are written in the name of the Central Council of the scheme—which is a corporate body —as grantee and trustee for the nurse and the participating institutions that contribute in respect of her. " An important provision covers the facilities for migrating within hospital or nursing service at Home or abroad. If the nurse joins the salaried staff of another participating institution, the policy is forwarded to that institution for future maintenance. In all other cases the Secretary to the Central Council negotiates the future maintenance of the policy until the member again joins the salaried staff of a participating institution. If the member is unable to pay the full premium on the policy while not in the service of a participating institution, the policy is either adjusted to a lower premium, this premium being not less than

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the 5 per cent, contribution previously paid by the member ; or if she is unable to make even this contribution, the policy is converted into a paid-up assurance. When the member re-enters the service of a participating institution, either the policy is adjusted to the original rate of premium (unless it has been converted into a paid-up assurance) or a fresh policy is effected. In the event of the nurse migrating to practice her profession as a private nurse, the premium on her existing policy is adjusted to a uniform rate of £22 per annum, subject to certain provisions. The policies of nurses are not surrendered unless they definitely abandon the nursing profession. If a nurse abandons the profession within five years of the date of her admission to the scheme as a trained nurse, she receives the benefit of her own contributions only. If she abandons the profession after five years from the date of her admission to the scheme as a trained nurse, she receives the benefit of the total contribution. (The ' benefit of contributions ' means the surrender value of the policy. Whether this sum is more or less than the contributions depends on the type of policy originally chosen.) " This scheme, which was only started on Ist January, 1928, has attracted considerable support, so that on Ist July, 1931, the number of participating institutions was 462, including 402 hospitals, representing 58 per cent, of the total voluntary hospital beds in Great Britain. " The application of the quotations now in force for this scheme provides a pension, on the average, of two-thirds of the final salary and emoluments, but the age of the individual on joining the scheme, the nature of the cases and career, and the dates on which promotions occur, govern the figures of the actual pension. " Example : A nurse may join a hospital at 19 years of age, but may not enter the scheme until she is 20. If her salary in her second year is £25, in her third year £30, in her fourth year £60, as a staff nurse £65, as a sister £75, increasing by increments of £5 a year to £100, her benefits would be as follows :— £ " After ten years (insured) service her policy would be worth .. .. 260 " After twenty years (insured) service her policy would be worth .. .. 610 "At the age of 55 (insured) service her policy would be worth .. .. 1,480 V or £105 per annum." (c) Under the superannuation scheme for mental nurses in England the retirement age is 55 years : see the same volume, page 157, paragraph 330. Page 1, subclause 2 (c) : Quotation from " The Lancet Commission on Nursing," page 157, paragraph 330 : — " The provision for superannuation for mental nurses is good. " Under the Asylum Officers Superannuation Act, 1909, nurses employed in all the public mental hospitals —which form the large majority of the mental hospitals in the country —are pensionable at the age of 55, provided they have been in the service for twenty years, or after ten years' service if permanently incapacitated for service. The annual amount of the pension is one-fiftieth of salary and emoluments for each year of service ; in certain circumstances a number of years, not exceeding ten, may be added to the actual service when the superannuation allowance is being computed, provided that this allowance does not in any case exceed two-thirds of the salary and emoluments. For pension purposes service is aggregated and reckoned whether or not the service has been continuous and whether it has been rendered at one or more mental hospitals, provided that written sanction for removal to another hospital is obtained from the Visiting Committee. The scale of contributions from the employee varies between 2 per cent, and 3 per cent, according to length of service." (d) Under the Queen's Institute of District Nursing nurses are eligible to retire at 55, see " Who's Who in the Nursing World," page 69 which reads as follows :— "... A Long Service Fund has recently been started from which annuities will be given to Queen's nurses on retirement after having reached the age of 55 and served for twenty-one years. There is also a fund from which help can be given in time of illness." (e) The number of nurses affected so far as the Department of Health is concerned is not great. If the proposal to transfer the tuberculosis sanatoria to Hospital Board control is carried out there would probably be about one hundred nurses only in the Health Department who would be affected. There are, however, the nurses employed by the Mental Hospitals Department to be considered as well as those employed by the Child Welfare Branch of the Education Department. 5. I am aware that under the Local Bodies' superannuation scheme in England nurses are not eligible for retirement until they have reached 60 years of age, and then only if they have completed forty years of service. Retirement under that scheme is not compulsory until 65 years of age is reached. In my opinion this to too late an age for New Zealand conditions. " Lancet Commission on Nursing," paragraph 144-, page 79, and Appendix Xl:— " Many nurses working in municipal hospitals are eligible for superannuation under the Poor-law Officers' Superannuation Act, 1896, the Local Government and other Officers' Superannuation Act, 1922 (or a modification thereof), or a local Act. An employee occupying a post designated ' established ' under a local authority which have adopted the 1922 Act may transfer his services to another authority which have adopted this Act without loss of pension rights ; but the schemes constituted under special local Acts are available only for

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employees who continue to work under the same local authority. The total contribution under the 1922 Act and most local Acts which affect hospital nurses (other than mental nurses) is 10 per cent, of the nurse's total salary and emoluments, of which the hospital pays 5 per cent, and the nurse 5 per cent., in the form of a deduction from her salary. The earliest age at which the nurse can receive her full benefits is 60. Further details of municipal schemes are set out in Appendix XI. The adoption of any such scheme is optional on local authorities, and a considerable number of nurses employed in municipal hospitals come under no pension scheme whatever." " Appendix XI. Summary of Superannuation Schemes in Municipal Hospitals.—At the present time local authorities are under no compulsion to make provision for the old age of their employees by any form of superannuation scheme. Many local authorities have, however, adopted the Local Government and other Officers' Superannuation Act, 1922 (see para. 144) or have in operation a superannuation scheme under a local Act. " The total contributions in the 1922 Act, and in most local Acts which affect nurses in hospitals, amount to 10 per cent, of the nurse's salary and emoluments, the local authority paying 5 per cent, and 5 per cent, being deducted from her salary. Superannuation allowances under the 1922 Act are calculated at the rate of one-sixtieth of the average salary and emoluments during the last five years of service in respect of every year of service. " An employee becomes entitled to a pension so calculated on reaching the age of 60 if she has completed forty years' service, or on reaching the age of 65. " After ten years' service, if incapable of discharging her duties with efficiency by reason of ill-health or infirmity, or having reached the age of 65, she receives a superannuation allowance of ten-sixtieths of the average amount of her salary during the last five years of her service, or more, according to her years of service. '' Example: There is no uniformity in the assessment of emoluments by local authorities under the 1922 Act; so that the pension of, say, a ward sister who had been paid a salary of £100 during her last five years of service might vary within fairly wide limits. If her emoluments were assessed at £60, her pension would be £106 after forty years of service, or £93 should she retire owing to ill health or infirmity at the age of 55 after thirty-five years of service. " In certain circumstances, such as loss of employment by reason of reduction of staff, or ill - health, or compulsory retirement on marriage before the employee is entitled to superannuation allowance, she receives her own contributions to the fund back with compound interest (3 per cent.). If she voluntarily resigns, or is dismissed for incapacity, she receives her contributions back without interest. " In no case is the contribution made by the local authority to the Superannuation Fund in respect of an employee returnable to the employee. " There are still many local authorities which have adopted neither the 1922 Act nor any other superannuation scheme, and nurses who have joined the staffs of municipal hospitals under such authorities since 1930 are unprovided-for in this respect. " The position of nurses formerly employed in the poor-law hospitals, which were transferred to the local authorities in April, 1930, depends on their own choice. Under the Poor-law Officers' Superannuation Act, 1896, contributions towards superannuation were deducted from the pay of all officers, including, of course, nurses. But the normal departure from the hospital of nurses whose contract of service expired after their three years' training was not interpreted as ' voluntary resignation,' and they were therefore allowed the return of their own contributions. A more important differentiation between nurses and other poor-law officers was made by the Poor-law Officers' Superannuation Amendment Act, 1897. This Act gave nurses working in poor-law hospitals the option of contracting out of the 1896 Act, and many of them exercised this option. Those who remained under it were safeguarded in 1930. They retained their superannuation rights with the option of remaining under the 1896 Act, or of coming under a modification of the 1922 Act, if this Act had been adopted by the local authority under whose jurisdiction they came (except to those poor-law officers on the verge of retirement, it was more advantageous to come under the 1922 Act). Nurses transferred to local authorities which had a private Act in operation could make a corresponding choice. " Employees of local authorities which have adopted the 1922 Act are interchangeable as far as pension rights are concerned. This interchangeability does not, however, apply to local authorities with private Acts. For example, a sister in the North Middlesex Hospital (Middlesex County Council) could not apply for a post in one of the London County Council's hospitals without loss of pension rights unless she had elected to remain under the Act of 1896. " In the report of the departmental committee on the superannuation of local-government employees which reported in 1928 on the working of the 1922 Act, it is recommended that it should be made obligatory on all local authorities, separately or in combination, to establish a scheme of superannuation for their officers ; also that, to promote mobility, arrangements should be made by an extension of the transfer values for an employee of an authority operating a local Act scheme to carry her pension rights on transfer to an authority with a scheme under the Act of 1922, and vice versa. It is also recommended that female nurses should have the benefit of a provision for retirement at the age of 55, and that retirement should be compulsory at 60 ; also that nurses, formerly in the Poor-law Service, who contracted out of the 1896 Act should be obliged to enter a scheme under the Act of 1922."

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6. One other matter requires to be mentioned. There have been cases of nurses who have been retired when they have reached 50 or 55 years of age on account of unsatisfactory health. The retirement has been effected, however, on the age basis and not on the grounds of health, although the latter was the real reason for the early retirement. It would appear to be unfair to do anything now to affect the retiring pensions of such officers. 7. Attached will be found copy of a memorandum from the Director, Division of Dental Hygiene, dealing with the retirement of dental nurses. It would appear that these officers, by reason of the nature of their work, are in a special category. Department of Health, Division of Dental Hygiene, Wellington, 21st November, 1932. Memorandum for — The Chief Clerk, Department of Health, Wellington. Your memorandum of the 18th instant re Superannuation Bill, — In its application to the Department's dental nurses the suggestion that retirement should be optional at the age of 55 irrespective of length of service has much to commend it. i would like to go further, however. No dental nurses have yet attained the age of 55, but I feel sure that no woman over that age could carry out the duties of a school dental nurse efficiently. The nature of the work is such that it would, in my opinion, be in the interests of the Department if retirement were made compulsory at the age of 55 and optional at 50, with, say, a minimum of thirty years' service. The effect on the Superannuation Fund would be negligible, as I think it is safe to assume that the number who would retire on superannuation would be very small. The average age on appointment is much lower than it was when the Service was first established, and our experience is that most dental nurses eventually resign to be married. Among the more senior of the dental nurses there are at the present time several who are over 40 years of age. These were about 30 when they were appointed, and they will probably retire on superannuation in due course. However the number in this category is limited. My suggestions in regard to dental nurses are : — (а) Compulsory retirement at the age of 55. (б) Optional retirement at the age of 50, provided the officer has had thirty years' service. (c) As provided in the Bill, retirement by the Department on an actuarial basis after twenty-five years' service. J. Ll. Saunders, Director, Division of Dental Hygiene. Mr. McCombs.] The last communication is from Mr. Saunders. Was that after consultation with all the people affected ? —I could not tell you. They are his views.' The Chairman.] The Department probably asked for his views ?—That is so. Mr. W. Nash.] Would the strain on a nurse be any greater than the strain on a teacher ? —I could not say. I think it probably would be. I know this, that there is only one matron of a public hospital at the present time in New Zealand who is over 55 years of age, and she is 56 ; she has broken down in health now, and has had practically nothing but sick-leave since her fifty-fifth year. The Chairman.] Those of us who have been associated with hospital work for a long while find that nurses are continually breaking down in health, are they not ?—That is so. And having to apply for sick-leave. Do you think that the nervous condition is such that it would be impossible for them to carry on ?—I think it would. I may say that in the case of the English hospitals that I spoke of, under local authorities, where the retiring age is 60 years, the hospital authorities at Home regard that age as being too long. And those hospitals have rather a bad name as regards their staff. My own feeling very definitely is that 60 years is too great an age to which to retain a nurse. Mr. W. Nash.] Would that mean that they go on to the fund late, and their years of service, owing to the nature of the work, are limited ? —Yes. And therefore they ought to retire earlier ? Would that not be better adjusted by increasing their pay, increasing their contributions to the Superannuation Fund, so that the fund could meet its liability in connection with the earlier retirement, assuming, of course, that there is to be a subsidy by the State ?—Your suggestion is to increase a nurse's contributions ? To increase their pay, increase their contribution ; that would increase the subsidy, and then the fund would be sufficient to enable them to retire at the earlier year ? —Yes, 1 see no objection to that course. Mr. Gosteloiv.] There is another alternative. Dr. Watt will probably recognize that it is inadvisable, in a Superannuation Fund, to have discrimination as regards benefits ? —That is so. Would it not be better for the nurse to receive her actuarial pension from the fund, and for the Department to provide on its estimates the difference between the actuarial pension and the normal pension ?—Yes, that would be quite satisfactory from an administration point of view. Mr. F. W. Millar.] You yourself fully agree with Mr. Saunders's recommendations ?—I am not quite sure as regards the retiring age of 50—it has not been proved. But it has been proved in regard to general nurses —I can speak with authority on that point. It is an axiom, as possibly you know, that one of the main factors in the superannuation scheme is the efficiency of the Public Service ? —Yes. Do you consider that the efficiency of the nursing staff of your Department would be better protected by the continuance of the existing provisions for the retirement of females, which are, after age 55 or after thirty years' service ? —Yes.

Sidney John Harrison, General Secretary, New Zealand Returned Soldiers' Association, Inc. (No. 43.) To commence with, the superannuitants, upon whose behalf this Association desires to tender evidence, are men and women who rendered service in His Majesty's Forces during the Great War. The actual number of these people is not known, but the evidence being tendered is the result of consideration of the representations of the four main affiliated branches of this Association.

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Before outlining the evidence on behalf of the ex-service people who are likely to be affected by the proposed legislation if carried into effect in its present form, may it be said that the New Zealand Returned Soldiers' Association is definitely of the opinion that there should be no alteration in the various statutes governing the payment of superannuation at the present time. Subject to this definite opinion, the following evidence is tendered for consideration in connection with age-limitation and service-limitation. It is understood that the proposed legislation contains — (1) Provision for contributors to the Superannuation Funds to — (a) In clause 6 : Retire as of right —Males, 65 years, or 60 years and forty years' service ; females, 60 years, or 55 years and thirty-five years' service. (b) In clause 7 : Retire earlier than stipulated in (a) hereof, provided that — (i) The actuarial retiring-allowance be computed so not to exceed the average rate of salary actually received by the contributor during the ten years (according to clause 8) immediately preceding his retirement. (ii) The annual retiring-allowance shall be computed as follows : For every year of service one-sixtieth part of annual salary and for every fraction of a year of service a proportionate part of the the one-sixtieth, but in no case shall the retiring-allowance exceeds two-thirds of such salary. (iii) Or refund of contributions with compound interest. (c) Clause 7, subclause (3) : Be compulsorily retired, otherwise than for misconduct, or voluntarily retire earlier than as in («) hereof, the basis being — (i) Compulsorily retired (males or females) otherwise than for misconduct : Not less than twenty-five years' service or age not less than 50. (ii) Voluntarily retired (subclause (4) of clause 7): Males, forty years' service, 55 years of age ; females, thirty-five years' service, 50 years of age. (2) In clause 8 : Provision to ensure that all retiring-allowances, other than where the retirement is in accordance with (a) above (i.e., male, age 65 years or is 60 years old and completed forty years service; female, age 60 years of is 55 years old and completed thirty-five years' service) are to be computed so as not to exceed the average rate of salary actually received by the contributor during the ten years immediately preceding the retirement. In so far as the " ex-service " contributors are concerned the request is for amendment of the proposed rules regarding age-limitation and service-limitation —i.e., to allow those who rendered service in the war to retire as under : — 1. As of Right. Proposed in Bill. —Males, age 65 years, or 60 years of age and forty years' service ; females, age 60 years, or 55 years of age and thirty-five years' service. Suggested for those with war service.—Males, age 60 years, or 55 years of age and thirty-five years' service ; females, age 55 years, or 50 years of age and thirty years' service. 2. Compulsorily retired other than for Misconduct. Proposed in Bill. —Males or females : Not less than twenty-five years' service or not less than 50 years of age. Suggested for those with war service.—Males or females : Not less than twenty years' service or not less than 45 years of age. There is no request for any concession in the computation of retiring-allowances, it being realized that to ask for a similar reduction would mean a handicap on the funds. This means that an ex-soldier retiring " as of right " and receiving the privilege outlined herein would have his retiring-allowance computed actuarily. The point upon which this evidence is based is one that medical opinion in all parts of the world recognizes in principle, but not as to the actual period. In effect, the principle is that war service with its strain, rigour, hardships, and worry has brought to the participants the prospects of adduction in the expectation of life. The actual average period of this reduction has been stated as high as ten years and as low as five years. It is obvious that it would be well-nigh impossible to frame any method of estimating this handicap owing to factors such as physical fitness (prior to and after service), nature of any wounds or sickness, and nature of the occupations and modes of living prior to and after service ; and therefore this Association feels that it is reasonable to ask for recognition of the period of five years in respect of those superannuitants who rendered war service. It may be mentioned that in 1930 the following statement was made in the report of the Ex-soldiers Rehabilitation Commission, page 5 : — " The opinion was strongly expressed by practically all the medical witnesses that we have now reached a period when latent results of war service are becoming apparent in varying degrees of impaired health amongst ex-service men. Many of these men who were discharged as fit on their repatriation, and who until recently have had no particular ground for complaint in the matter of their health, are now developing and suffering from rheumatism, sciatica, lumbago, neurasthenia, respiratory diseases (asthma, bronchitis, and tuberculosis), colour-blindness, bad eyesight, deafness, heart trouble, and the after-effects of knocks and bruises."

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This phase—i.e., the development of ailments at a later date which are almost impossible to attribute to war service to the satisfaction of the War Pensions Boards —has now been dealt with in Canada by the War Veterans' Allowance Act, 1930, which, briefly, provides for —• " Allowances to be paid to any veteran (duly qualified) who has attained the age of sixty years or is permanently unemployable by reason of physical or mental disability." Mr. Hargest.] In brief, your claim is that the rigours of war service have reduced the age of usefulness of ex-service people, of both sexes ? —That is so. If the proposals in the Bill for retirement as of right and compulsory retirement are to be proceeded with, then we suggest that there should be provision made for those with war service to retire five years earlier. Mr. Ansell.] In all cases ? —That is so, without any handicap upon the fund. We have had evidence before the Committee to show that certain actions by the Government in various directions have been a very heavy drain upon the funds. In order to obviate any drain upon the fund in regard to this service, what do you suggest —that the money should come from Consolidated revenue ? You do not suggest that it should be a further drain on the fund ? —No. If it is in an officer s own interests to retire at 60 years of age, we ask that he should get credit for that service and bear the handicap himself. We do not wish it to be a handicap on the Department in which he is serving, or on the fund. But we want a man to have the right to retire, bearing the handicap himself that would be no charge on the funds. In reply to some suggestion made formerly, I think the Actuary made a suggestion that in some cases war service would be the means of prolonging life, because of the training that the men had been through. What have you to say to that suggestion ? —I can only reiterate the statement made there on the evidence of our Commission ; and also the action of the Canadian Government, in passing a Bill in 1930 to make provision for a special pension for ex-service men. It is hardly likely that they would do that if there was not some effect upon the expectation of life of ex-service men. But medical men do not seem to agree on the expectation of life, or as to how war service has affected the men. Mr. W. Nash.] With regard to your statement that there should be no alteration in the various statutes governing the payment of superannuation at the present time : assume that the funds are in a bad way, that they will get from bad to worse, and that it is necessary for a statute to provide a remedy. You would not be averse to the remedy ? —No, but we would prefer to see the arrangements regarding superannuation continued as they are : Provided, of course, that the others are fixed up. In your statement in regard to those retired after thirty-five years' service, you say you want no special privilege for the soldier ; if he retires after thirty-five years' service you would feel if he got an actuarial pension that he would be satisfied ?—Do you mean if he continues the full length of service ? Assume that he retired at 55 years of age with forty years' service. Then he would get an actuarial pension, according to your way of looking at it ? —That is so. Or if he retires at 60 years of age with thirty-five years' service. But he has that right under the Bill—he can get an actuarial pension anyhow. That is no advantage to the returned soldier ? No, except this ; he has, I understand, at the present time to fulfil 65 years of age, or 60 years of age with forty years' service. But that is to enable him to get his full pension. If he is 60 years of age, with thirty-five years' service, he can retire any time after thirty-five years' service on an actuarial basis I—That is so. But we say the 65 years of age, or 60 years of age with forty years' service, should be 60 years of age, or 55 years of age with thirty-five years' service. If there can be an actuarial pension, you are not making the slightest bit of provision for the soldier s war service ? —We are not worrying about that so much. If he finds he cannot carry on, we do not want him pinned down to serving the full length of time. The Bill proposes that the consent of the Minister shall not take effect now, and that a man may either go out as of right at 65 years of age, or at 60 years of age with forty years' service. The provision in the Bill is that a person could retire after thirty-five years' service on an actuarial pension. Mr. Gostelow.] That is only if he is compulsorily retired ? —That is the point. Mr. W. Nash.] You want them to be voluntary retirements, and still to have the actuarial pension ? But that is no benefit to the returned soldier ? —lf a man feels in himself that he could not fulfil his full range of years according to the Bill, then we say he should be able to retire at five years less, and take the handicap on his own shoulders. I think Mr. Harrison is the best witness from the Government's point of view that has been here, because he is asking for less, almost, than they are willing to give. If there is any disadvantage in having gone to the war and become liable to the trials and sickness that returned soldiers are liable to, then there should surely be some compensation for that in their declining years : This is asking for nothing ! If that is the returned soldiers' considered opinion, it is an extraordinary one ? —We have looked at it that it might be possible for a man to serve to 65 years of age —then let him go to it. If he finds he is not able to do it, then let him go out at 60 years of age, but taking the actuarial computation for that period. If he goes out at 60 years of age it means he loses any payment that might come to him owing to the fact that he has served at the war, and his nerves have been wrecked, and he has had to retire earlier ?—lf he is 60 years of age, in any case it would not matter whether civilian or soldier, he would still have to go out on the same basis. We do not ask for any privilege over and above that. 18*

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You are not asking for anything for the returned soldier that is not being asked for for the ordinary civilian ? —No. I want to make that quite clear. We say if you leave things as they are, we are quite satisfied ; but if there is to be an alteration making it obligatory to serve to 65 years of age or 60 years of age and forty years' service, then give the alternative to the soldier to retire five years earlier. We do not ask for anything over and above that. But any member of the Public Service ? —Quite right. At 60 years of age, with thirty-five years' service, could get the permission of the Minister to retire on an actuarial basis ? —But the Bill proposes to do away with the consent of the Minister. He can retire on an actuarial basis, because there is no charge on the fund at that point ? —Well, if that is so, the soldier does not want anything more. The Chairman.'] I would like to say, and you can convey it to your association, that practically every witness who has made a statement before this Committee has spoken on behalf of the returned soldiers and the nurses ; and that has been appreciated very much. Statement ends. [In camera.] Mr. Hargest: Ido not think Mr. Harrison has quite grasped the essentials of what he is asking. The Chairman : I think Mr. Harrison means to ask for a five-years option. Mr. W. Nash : And that is reasonable. Mr. Gostelow : What he wants is the option to go out. At present an officer cannot get an actuarial pension unless he is compulsorily retired —he cannot do it of his own volition. Mr. W. Nash : If a returned soldier is suffering from any disability he ought not to be compulsorily retired ; he ought to have the right to voluntarily retire at thirty-five years' service, and not on an actuarial basis. I would say the Government ought to pay that amount into the fund to square it. Mr. Gostelow : He could go out medically unfit. Mr. W. Nash : You have to prove a lot there. If there is anything in the case that the soldier's health will be ill-affected some years before the ordinary civilian's health, provision ought to be made to let him retire on a thirty-five-sixtieth pension, the fund being reimbursed with the difference. The Chairman : I read it this way : Mr. Harrison in his statement has "As of right—males, and females," then he says, " Suggested for those with war service " —that is, where he came in with his right to get the benefit of five years, and that is what he means. Mr. F. W. Millar : That is what he means : he wants a five-years privilege. Mr. W. Nash : I think Mr. Perry was to have made the statement.

Thomas Leonabd James, Vice - President New Zealand Technical - School Teachers' Association, Registered. (No. 44.) In speaking on behalf of the Executive of the New Zealand Technical-school Teachers' Association, Regd., I should be failing in my duty if I did not express strong dissatisfaction at the state into which the Teachers' Superannuation Fund has been allowed to drift. This has been caused partly by the very generous treatment of those who were in the Service when the superannuation scheme was inaugurated, partly by the increased benefits which have been granted from time to time and partly by the failure of successive Governments adequately to subsidize the fund. We regard the Superannuation Regulations as a contract, but as one which, like every other contract, may be altered in the same way as it was made, by agreement between the parties, and we as an association are not unwilling to consider alterations so far as they are not due to.the default of successive Governments in the payments of subsidy, but have been brought about by the payment of annuities in excess of what the fund, even if reasonably subsidized, could have borne. We expect to receive from the fund contributions plus interest, plus reasonable subsidy, plus interest. What is a reasonable subsidy is a matter upon which opinions may differ ; but it surely cannot be on a lower basis than that adopted " in large superannuation schemes of other Governments and of commercial institutions," i.e., £1 for £1. Yet in the past the subsidy has equalled approximately 10s. in the £1 on contributions. The Government now proposes to adopt the pound-for-pound basis ; but it is regarding this subsidy as sufficient to provide for the present as well as to make up for the past. It is surely not unreasonable to ask that the New Zealand Government should pay for the present and future a subsidy equivalent- to that paid by other Governments, and, at the same time, take some steps to liquidate at least some of its past liability. We respectfully submit that it should do this. Turning now to the proposed amendments to the scheme itself, we should like to express our approval of the removal of the £300 bar. This has been an anomaly for many years, and we are glad to see the proposal for its abolition. But there are some amendments that we should like to have made in the Bill, and in the superannuation scheme generally, and would submit the following proposals : — (1) That the subsidy be made statutory and not subject to annual appropriation. I mean by that a permanent appropriation. If this betrays a lack of confidence in the Government, can it be wondered at ?

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(2) That present contributors, especially women teachers, be allowed to contribute at a higher rate actuarially calculated in order to secure the present benefits. This would entail no extra drain on the fund, and would enable those who have been looking forward to retirement at a certain age to obtain their desire at no extra cost to the Government. (3) That the payment of contributions on married allowance, on remuneration for eveningschool teaching, and on other casual and varible receipts which have no direct relation to ordinary salary be optional, and that the retiring-allowance be calculated accordingly. Even if the average salary for the last ten years be used as the basis for the calculation of the retiring-allowance, a contributor may be placed at a considerable disadvantage if this irregular income is not earned during these last ten years ; while, on the other hand, he may benefit unduly if it is earned during these ten years only. (4) That a contributor, upon retirement, be allowed to allocate part of his allowance (actuarially calculated) to his wife. One of the drawbacks of the regulations is smallness of the widow's pension. Generally speaking a man is mtfre concerned about his dependants than about himself, and the allocation by a married man upon retirement of part of his allowance to his wife would provide more suitably and more adequately than the present widow's pension for the widow of a deceased superannuitant. (5) In the case of a contributor dying, the widow have the option of receiving her late husband's contributions with compound interest, or the widow's allowance. This proposal is also due to the smallness of the widow's allowance as now provided. (6) That in the case of soldiers who, after discharge from H.M. Forces, have become contributors to the fund for a second time, the rate of contribution be that paid during the first period of membership, and not that fixed by the Act in accordance with the age at the time of rejoining. (7) That, as it is proposed to abolish the £300 limit, contributors be given another opportunity to elect to pay on the rate of salary being received on 31st March, 1931. No contributor subject to the £300 limit would elect to pay on more than £450 ; but he may so elect if the limit be removed. (8) Clause 27 of the Bill be amended so as to provide for appeal from the Board to the Court. There are one or two remarks that I would like to add that are not in the statement. In connection with the rate of subsidy, it is quite apparent, I think, that in the past a pound-for-pound subsidy would not have been sufficient to put the fund on an absolutely actuarial basis. We ask for a pound-for-pound subsidy for the future, and for something to make up for the past. But lam not submitting that an actuarial basis is necessary with a Government superannuation scheme. In connection with the £300 bar, it may be that in the House the provision regarding the £300 bar will be removed from the Bill. If that be so, it seems reasonable that a £450 maximum should be that on which payment should be required, and I would submit that as an alternative that would be just as fair. In connection with the right to pay at a higher rate to secure present benefits, that applies in the Teaching service, especially to women. They do not last as long as men without such changes occurring as to make their work so much less efficient than it has been, but it is worth while, from the point of view of the Service, to allow them to retire sooner. After all, the only reason for a Superannuation Fund is that it should be one of the real rewards of service, and it should aim at securing efficient service ; and we ask that our women teachers, and our men teachers too, as a matter of fact, should not be asked to teach longer than they can be efficient. I might point out that in New South Wales and Victoria there is provision made for paying at a higher rate to secure superannuation at different ages, 60 years and 65 years. Those who choose, when they join the Service, to retire to 65 years pay one rate, and those who choose to retire at 60 pay another rate. With regard to (3) of the statement, there are quite a number of casual receipts that teachers get which it is unfair, we consider, should enter into the retiring-allowance, except as options. The " married allowance " and " remuneration for evening-school work in technical schools " are two that I will take. I know of a case where a man, just recently retired, had been working several nights a week overtime nearly all his life, but owing to a rearrangement of the school, in his old age he has taught fewer classes and during the last and effective years from the retirement point of view has dropped considerably in salary. In addition to that, he suffered the loss of his wife. As I say, these calamities occurred just when it was most important from his point of view that they should be continued ; he dropped in salary, and dropped consequently in allowances. We ask that they be not taken into account, that salary alone should be the factor taken into account, unless the teacher be given the option of choosing. There are cases where, at evening schools, a teacher can during the last ten years of his service increase his superannuation allowance very considerably. Suppose, for example, he earns £60 a year for the last ten years under the Government proposals —£600 ; 5 per cent, on £600 would be £30. For paying £30 into the fund, with the accumulation of interest, he will increase his retiring-allowance by £40 a year. That does not seem fair. That is from the other point of view—to the teacher's advantage, but there is the other side of the story, where a teacher might lose in the last ten years and suffer accordingly. In connection with (4), regarding the allocation of an allowance to widows, I have in mind that a teacher might retire at £300 a year. He allocates, on retirement, one-half of that £300 to his wife. His wife may be younger, and consequently have a greater expectation of life. Her £150 of it would be reduced in some proportion —-it might be reduced to £140 because she is to receive it longer. If she happens to be older, then, too, it will be increased a little, but they will receive in effect £150 a year

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each from the date of his retirement. When one dies, then the allowance to that one ceases ; so that if the wife predeceased her husband, he would be left with his £150, and if the husband predeceased the wife, she would be left with her £150, and not as she is at present. No. (5) is to provide for a more adequate return where, during the period of service, the contributor dies. He might die just before he retired, and yet the wife gets no benefit from interest on the contributions that the husband has paid in. In connection with (6), soldiers who returned from the front and who withdrew from the Superannuation Fund when they went away, as many of them did, were allowed to come back on to the fund, but the rate was fixed at the rate at which they came back ; if they were over 30 years of age (but not over 35) it would be 6 per cent. We ask that they be allowed to contribute at the old rate now and for the back years at the old rate, if necessary at compound interest. Mr. Dickie.] Your suggestion about the husband and wife going fifty-fifty is quite a good scheme, but it would throw a further burden on the fund ? —No. I mentioned the case of the £300 man. At the present time, if the husband dies the widow gets £18 a year ?—We have an average expectation of life. We can conceive that husband and wife might both die within two or three years. The Chairman.] Supposing a man were single ? —He would not allocate it. Mr. Dickie.] You do not think it would throw a greater burden on the fund ? It is halving the risk, and surely it would throw a greater burden on the fund ? —I referred that to others, just to verify it. If the allowance is made on a basis which takes into account the average expectation of life, what is lost by one will be gained by another. Take a case where a man lives for twenty years after retiring. If no allocation has been made, he will draw his pension for twenty years, and the fund will be out of pocket. But if he had allocated half to his wife, she may have died after ten years, and the fund would be paying £300 for ten years and £150 for the remaining ten years. On the average expectation of life there would be no loss to the fund. Do you think an insurance company would view it in that light ? I think it is quite a good idea, but I cannot agree with your summing-up ? Mr. Hargest.] You are building up a case on the Government having contracted to make certain payments —you object to that contract being altered. Half-way down the page you approve of the alteration in regard to the removal of the £300 bar. If it cuts one way, it must cut another ? —You will notice in the second paragraph I have said we would agree with that. That is only agreeing to something that is going to confer some benefit. Another point is as regards the married allowance. Do you not think it unwise to mention the married allowance at all ? You question the right for the teacher to pay contributions on the married allowance ? —To suffer a reduction in superannuation accordingly. That is a variable amount-. You call it a " married allowance." Yours is practically the only profession that gets the married allowance ; and some might wonder why a married officer is of more use to the State than a single officer. Mr. Ansell.] On page 1 you make the statement that " we as an association are not unwilling to consider alterations so far as they are not due to the default of successive Governments in the payment of subsidy." Do I understand from that statement that you are quite willing to bear the ljurden of enforced retirements, for instance ? —No. We think that the past benefits have been too generous —that is quite candid ; that the subsidy that would have been required from the Government would have gone too far. I have a table here which shows the proportion which teachers in various parts of the Service would get in certain cases on their contributions, plus compound interest, and it shows an exceptional case of a retired primary woman teacher, who would, if she lives to 77 years of age, receive over four times from the fund what she had put in, with interest. In another case a technical-school teacher would benefit very considerably less —he would receive one and a half times what he had put in, with interest. Others would receive 1-43, 1-3, 2-7, and so on. The proportions that would be received from the fund in some cases show that the fund is too generous. Have those figures been computed at simple or compound interest ? —Compound interest, at 5 per cent. With regard to the widow's pension, that Mr. Dickie has referred to, would it not require a higher scale of contributions, or a lower scale of annuities, if you are going to deal more generously with the widow's pension ?—The fund benefits by the amount of interest that is earned on the contributions that a widow might receive. Well, the question is, should some people benefit at the expense of a deceased contributor's widow ? Should not these things be taken into account, and the allowances made all round so that a fair thing should be done by the deceased contributor's widow ? You say, generally speaking, that a man is more concerned about his dependants than about himself. To me it would imply this : that a man, to secure the greater benefit for those dependent on him, must be content to take less during his lifetime, or else pay at a higher scale of contribution for the benefits that his dependants would receive ? —I do not think our Association would be against allowing him to pay an extra percentage in order to secure something for his widow. Mr. W. Nash.] At the bottom of the first page you suggest that present contributors, especially women teachers, be allowed to contribute at a higher rate. Is that from the women members of your Association ? —Yes. They want to contribute at a higher rate, to get the present benefits ? —They would prefer to have them without, but they see they have been very generously treated in the past, and they have to give something, and they would prefer to be able to retire then by paying more.

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They have come and said that they have been so generously treated in the past that they ought to pay higher contributions ?—They acknowledge that they have been. Perhaps lam granting too much. Too crudely ?—Shall I say they acknowledge they have been benefiting well out of the fund. On what account—on account of the fact that they have had some back service for which the Government has not paid anything into the fund, or because they have had a greater superannuation than they have paid for ? —lf there had been none but women teachers in the fund, the subsidy that would have been required from the Government would have been more than is required now. You do not confine it to women teachers. You say, " all contributors " ?—lf the fund is not going to suffer, there seems nothing to be gained by not allowing any man who might wish to do so to do that also. You suggest that the present contributors, leaving out the women teachers for the time being, be allowed to contribute at a higher rate calculated in order to secure the present benefits. You say your Association feel that they have been generously treated in the past, and therefore they are quite willing to pav more for it in the future ? —The Association has taken into account the present position, that what the Government can do is limited. It knows that the Government has not paid in contributions in the past as it should have done, and it feels that the exigencies of the present circumstances require that the women, who have been benefiting more than the men, should be willing to give something —and they are willing to give something. Now they ask, instead of giving it in the way the Government proposals ask, that they be allowed to contribute more. That was not what you said before. You said before that it was because they thought they had had such good benefits «—Perhaps I should not have said that—they would be very foolish indeed to say to the Government, "I do not want to take what you want to give me. But they recognize that they are on a better wicket than men in connection with superannuation. We have had all the Women's Associations here, teachers and others, and they have all affirmed that they are not. How many women members are in your Association ?—There are fewer women than men, perhaps about a hundred women. In the Technical Branch ? —Yes. And they say they feel they ought to pay more ? —They are prepared to give way to this extent, that they would ask that they be allowed to contribute at a higher rate, instead of as the Government proposes. That is, presuming that the Government are determined to go on with this Bill?— That is it. And to treat them unfairly, and break the contract already made, then for the purpose of ensuring the same benefits they would sooner pay more than lose what they have had in the past ? — Yes. That is not what you say here. If you say that, it would be a totally different proposition. You say if the Government had paid in £1 for £1 from the beginning of the fund it would not have been enough. Then you say, assuming the Government had paid £1 for £1 . . . ? —I had no figures, it was just my impression, to put the fund on an actuarial basis more than £1 for £1 would have been required to finance all the present benefits throughout the years, in addition to all the extra drains that have been put on the fund ; but I did not say that, knowing it —it is just an impression, so that I would not ask you to take that into account. The National Expenditure Commission show here that the Government has paid in, I think, £4,360,000 less, so that if they had paid in £1 for £1 there would have been over £4,000,000 in the fund, plus compound interest. Then there are the special retirements —you do not mention the fact that there have been special retirements the annuities for which have been paid out of the contributors moneys. The Chairman.] In making the proposal about being prepared to contribute at a higher rate, had you or your Committee in mind, when you discussed the matter, the fact that there was provision for the removal of the £300 bar ?—There are not many of our women teachers who would be affected by the bar. The highest salary is such that two-thirds of it would be less than £300 ; and there are not many principalships available for women. That had no influence with you. Now, going back to March, 1931, at the time of the cuts, were all the members of your organization notified about the cuts at the time, and the rights that they had about paying on the old rate ? —Yes. They all had sufficient notice ?—Yes. Mr. Gostelow.] I think you said that if the proposal regarding the £300 limit were not proceeded with it would be a fair equivalent- if contributors paid only on £450 ?—lt would be equally fair. They would not retire on such an allowance. Why did you fix £450 as the amount ?—£3oo is two-thirds of £450. Supposing a man joined at 35 years of age, he would have only thirty years service ? Then there would have to be adjustments accordingly. I took the standard, of forty-sixtieths. If he joined at 35 years of age, he would only get £225 maximum pension ?—Yes. Go a step further, and take a man becoming medically unfit—a man drawing £1,000 a year, medically unfit after ten or fifteen years' service ; you would only give him one-sixth or one-quarter of the £450 ? —There is that difference.

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In other words, that £450 of yours is quite wrong, is it not ?—Speaking generally, it is the second option that we have put forward. We would sooner have the bar removed, but next to that we would sooner have the £450 limit put in. Mr. F. W. Millar.] In regard to the £450 limit, you say it would be quite as fair to limit payments on £450 ? —No, I said just now we would sooner have the £300 bar removed. But you said earlier that that would be just as fair. Have you taken into account the fact that since 1909 all men in excess of £450 per annum have been compelled to pay on their full salary for superannuation purposes ? —They have. Can you say it was fair for those particular officers ?—lf they are subject to the £300 bar now, and they are going to be still subject to the £300 bar, it would be better for them to contribute on less for the remaining years of their service than it would be to contribute on the full sum. And what of the money they have sunk in during the last few years ?— An allowance could be made for that in the future contributions. I did not go into all these details. I would prefer to see the £300 bar removed straight-out; the other is only secondary. A lot of complication arise, as you point out, in connection with it. You would sooner have the £300 bar removed ? —Yes. It is an added burden to the fund ? —lt is an added burden to the fund. In the same breath you approve of the proposal to increase the contribution percentage of women by 2 per cent. That is an added liability for them. The Chairman.] Mr. James did not say "by 2 per cent." He said "an increase." Mr. F. W. Millar.] An increase, we will say ?—Yes. Those women were consulted beforehand throughout the Dominion as to their views ?—I speak on behalf of the Executive, and I am expressing the Executive's views. In regard to your remark about the present basis being too generous, you referred to certain officers who would receive out of the fund one and a half times to four times more than they paid in ?—lf you take out individual cases, there are quite a lot of teachers in the technical schools who will not draw out under normal circumstances on a pound-for-pound basis with the Government. Are you taking into account the fact that all their service prior to 1908 was presented to them by the State—that they did not pay for that period ?—Teachers who joined since 1908 In the case of teachers who joined since 1908, they have not actually gone out of the Service ?—No. How, then, can you assess what they would have paid in by the time they go out ? —For instance, a male technical-school teacher in Division I starts at £240 —these are figures, by the way, before the cut. After forty years' service—joining the fund at 22 years of age and retiring at 62—he would pay in £770. He would have £1,278 added to it as interest. If he lived to age 77, drawing out for fifteen years, subject to the bar of £300, the present value of his annuity would be £3,114, which is 1-52 times the present value of his contributions plus 5 per cent, compound interest, which is practically a 10s. subsidy from the Government. You will admit that most of your conclusions are based on assumptions ?—Yes. -They are really hypothetical, up to a point. It has been admitted that the permissive early retiring-points of thirty-five years' service or 55 years of age after thirty years' service are too generous—that has been admitted by many people before this Committee. Do you consider that the original terms are unreasonable ? That is, retirement at forty years' service,' 65 years of age, or permissive retirement at 60 years of age ?—The Executive have not gone into that. They took'the present arrangement, and the Government proposals, and authorized me to submit what I have. You are not prepared to say that the original terms were too generous ?—I cannot say. Ido not know that they are. You know they were based on an actuarial basis originally %—Originally, yes.

Major-General Sinclair-Burgess, Commanding New Zealand Military Forces. (No. 45.) 1. It is desired to place before you the present position in regard to superannuation of the members of the Permanent Military Forces of the Dominion and to show the effect the proposals embodied in the above-mentioned Bill will have on the rights to which they are at present entitled, with a view to some special provision being made for them. 2. The New Zealand Permanent Forces number 346 of all ranks. Under the Regulations for the Military Forces of the Dominion of New Zealand persons enlisting are required to be between the ages of 18 and 25 years. The age for retirement is fixed at 55, except that in special cases the G.O.C. may grant an extension — (а) Not exceeding two years. (б) Up to 60 years of age or such earlier age, when they will, if retired, have become entitled to a retiring-allowance under the provisions of the Public Service Classification and Superannuation Act.

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3. The regulations also provide that the General Officer Commanding is not to be retired for age during his tour of four years as General Officer Commanding, but unless specially granted an extension of command will be retired on completion of such tour. 4. It has been the practice to extend the term of service of members of the Permanent Forces to 60 years or such lesser age as may be necessary to enable them to qualify for superannuation. Lnder the Public Service Superannuation Act of 1927, the members of the New Zealand Permanent lorces have the following rights with respect to retirement on superannuation, subject m each case to the consent of the Minister in Charge of the Defence Department :— (i) Retirement at 60 years of age. (ii) Retirement on attaining 55 years of age with thirty years' service. (iii) Retirement after tliirty-five years' service. (iv) Retirement at age of 55 years with a substantive commission dated prior to the Ist November, 1920. As regards (iv) above, it should be explained that following the conclusion of the Great War- a number of officers with war service were appointed to the Permanent Military Forces. Owing to their age they had no prospect of qualifying for superannuation between the date of appointment and the date they would retire—namely, on attaining 55 years of age—and hence special provision was made for them in section 52 of the Finance Act, 1920, which is now embodied in section 26 of the Public Service Superannuation Act, 1927. This section provides that the officers referred to may be retired with the consent of the Minister at the age of 55 years notwithstanding that they had not had thirty years service, but provided they held a substantive commission dated prior to Ist November, 1920, and on retirement they became entitled for every year of service to one-sixtieth part of their annual salary. The number of officers coming within this category at that time was sixty-eight. Forty-eight have since retired on superannuation, leaving twenty still entitled to the special statutory provision, in order that the Superannuation Fund should not be prejudiced in any way, by the operation of this provision, Cabinet on the Ist November, 1920, approved of a payment into the fund of £20,000, and this was duly made. Of the total of 342 of all ranks of the Permanent Military Forces now contributing to the Public Service Superannuation Fund, it is found that 226 will be entitled under the Public Service Superannuation Act, 1927, to retire on superannuation with the Minister's consent at the age of 55 and 116 with the like consent at the age of 60. If the provisions of the new Bill are applied to the military staff it will have the following effect on the rights of members : Only ninety-six of the total number of contributors—342—will have had forty years' service on attaining the age of 60 years, qualifying them for the maximum allowance of forty-sixtieths of their average salary for the last ten years of their service. Ihe remainder of the contributors numbering 246 can receive only an actuarial pension. It will be seen from the above figures that well under 33| per cent (ninety-five out of 342) will receive a full pension on retirement. Of the other 246, they will have the following service to their credit, provided they are allowed to continue to serve until they arrive at 60 years of age : 114 will have over thirty-five and under forty years ; sixty-one will have over thirty and under thirty-five years ; seventyone will have under thirty years. It may be taken, therefore, that the pensions of those under thirty-five years' service, if calculated on an actuarial basis, will show a substantial reduction on what they will be entitled to if based on one-sixtieth of the annual salary for each year of service. Were it possible to allow them to serve until 65 years of age, the retiring-age laid down in the Bill for the Public Service, another 114 equivalent to per cent, of the total number of military contributors to the fund would qualify for the full pension. Thus the effect of the new Bill is to further accentuate the disadvantages at present suffered by the military personnel as compared with other branches of the State Service. Whereas in the Public Service the age for joining is sixteen years and the retiring-age 65 years there being an interval of forty-nine years between the age of appointment and age of retirement, in the Permanent Military Forces the age for enlistment is 18 years and the age for retirement in ordinary course is 55, there being an interval of only thirty-seven years between these ages. It is true that in the Military Forces the age for retirement may be extended beyond 55, but the contributor has no rights in this matter. The Military Regulations merely conferring on the General Officer Commanding the power to grant an extension. Each appointee contributes on the same basis, but the soldier has not the same rights as the Public Servant in regard to obtaining a full pension, nor by reason of his shorter service has he the same prospect of obtaining as large a salary on which to base a pension. Furthermore, the opportunities for advancement in the Military service are very limited as compared with the Public Service. The soldier may therefore be said to be already penalized to a certain extent in the following directions : (1) Earlier retiring-age ; (2) smaller salary on which to base superannuation ; (3) limited promotion. No military man joining after 25 years of age can look forward with certainty to thirty years service in which to qualify for superannuation, whereas the Civil servant joining up to the age of 35 years has a reasonable certainty of being allowed to serve until he is 65 years of age, a,nd thus become entitled to a superannuation allowance. The earlier retiring-age enforced upon the military personnel is not in the interests of the Superannuation Fund or of the individual, but is made necessary by military requirements. During the late war, 45 years was laid down as the maximum age for acceptance of troops for overseas service, so that it will be seen that in allowing military personnel to serve until 55 years and

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60 years of age, military efficiency is to some extent being sacrificed, as, except in the case of the higher ranks, no officer or other rank above 45 years of age would be eligible for service overseas with an Expeditionary Force, which is the principal aim of our military preparations. The services of the officers and men so situated would, however, be necessary for the training of reinforcement drafts and to maintain an instructional staff in New Zealand. The effect of proposals in the Bill is thus to further penalize the present members of the Permanent Military Forces. The great majority of them would have the prospect of receiving only a proportion of the pension allowance that they expected to be granted on retirement, necessitating their endeavouring after retirement to augment their actuarial pensions by some civil occupation. As a military career does little towards fitting a man for any very remunerative work in civil life, the superannuated soldier is compelled to depend largely upon his pension for the means of livelihood of himself and his family. To overcome the prejudicial effect which the proposals contained in the Bill will have upon the members of the Permanent Military Forces contributing to the Superannuation Fund, and at the same time to ensure that the burden upon the fund is not increased, the following recommendations are submitted for consideration :— (a) The existing provisions of the Superannuation Act enabling retirements to take effect in the following circumstances, with the right to a pension based on one-sixtieth of the annual rate of salarv for each year of service to remain as at present. (i) Upon attainment of 55 years of age with not less than thirty years' service. (ii) Upon attainment of 55 years of age and being the holder of a substantive commission dated prior to Ist November, 1920. (iii) After not less than thirty-five years' service. (iv) Upon attainment of 60 years of age. (b) That with respect to the retirement on superannuation of any military contributor, in accordance with the foregoing paragraph, and who has not qualified for a pension under section 6 of the Bill, the Government Actuary calculate the amount of additional liability thus imposed upon the Public Service Superannuation Fund, and such additional liability be paid into the fund at the date of retirement out of the Defence vote. Attached is a list of officers and other ranks who will be eligible to be retired under these provisions during the course of the next ten years, showing age and length of service at retirement. These recommendations, if adopted, would, to some extent, compensate the military contributors for the earlier retiring-age and shorter term of service, with their consequential disadvantages in the matter of salary, which the exigencies of military service render it necessary to impose upon them as compared with the Public Service. Without some such modification as suggested, it is felt that the proposals embodied in the Bill if allowed to become law, would tend to prejudice the Defence Department in the eyes of those who may in the future contemplate taking up a military career. The personnel of the New Zealand Permanent Forces, both officers and other ranks, represents a high type of New-Zealander, and it would be regrettable if anything were allowed to lower the standard in the future. The Territorial Forces have recently been changed over to a voluntary basis, and the success of the scheme more than ever now depends upon the morale, efficiency, and character of the men composing the Permanent Military Forces of the Dominion. This scheme has now been successfully inaugurated in face of unusual difficulties, and it would be unfortunate if its progress were interrupted through any falling-off in the keen and willing spirit which at present actuates all ranks of the Permanent Forces. It pointed out that special retiring-allowance schemes are in operation with regard to superannuation in the Imperial Army and in the Canadian Forces. These schemes are as follow :— Canada. Officers contribute 5 per cent, of pay towards pension, but not for more than thirtyfive years service. Officers retired compulsorily after twenty years' service or voluntarily after thirtyfive years service receive pension of one-fiftieth of the pay and allowances of rank or appointment at time of retirement for each completed year of service. Retiring-allowances on retiring at age of 55 after thirty-five years' service are as follow :— Per Annum. p er Annum. £ £ Lieutenant .. .. .. 409 Colonel .. .. .. 756 Captain .. .. .. 483 Colonel-Commandant or Colonel on Major .. .. .. 582 Staff .. 833 Lieut.-Colonel 666 Chief of General Staff .. .. 910 If an officer is constrained to quit the service through medical unfitness or is removed to promote efficiency or economy prior to completing the period necessary to qualify for pension, he may be granted a gratuity not exceeding one month's pay for each year of service. Widows of officers who die white on strength or on pension receive half the pension the officer would have been entitled to. Children are granted a compassionate allowance on a scale according to rank, provided that the total paid to widow and children shall not exceed the amount of pension which the officer was in receipt of or to which he would have been entitled.

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Imperial.—Officers contribute nothing to retiring-allowance, and qualify for retired pay after fifteen years' service based on fixed amounts with an added service and rank element. Maximum annual rates of retired pay are as follows : — Per Annum. Per Annum. £ . £ Captain or Lieutenant .. •• 300 j Major-General .. .. 1,000 M a i or .. .. .. 4:50 | Lieut.-General .. .. 1,200 Lieut.-Colonel .. .. ..600 | General .. .. ..1,400 Colonel .. • • • • 800 j Officers retired with less than fifteen years' service may, after ten years' commissioned service, receive a gratuity of £1,000 with an increment of £100 for each year over ten up to fourteen years' service. . Widows of officers on the active or retired list receive a liberal pension on a sliding scale with a compassionate allowance of £16 per annum for each child.

List of Retirements from New Zealand Permanent Military Forces taking Place over Next Ten Years.

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Year _ Unit. Name. Age. Service. Total. Y. M. Y. M. iom BNZ.A. .. .. Barwell .. • • •• 60 0 35 11 2 '" '' g.D.S White 55 0 35 5 1934 .. ,. R.N.Z.A. . • • • Colonel Symon .. .. • • 55 0 35 9 1 1935 | , N.Z.S.C. .. ■ • Major-General Sinclair-Burgess .. 55 0 24 1 1 ioqk .. N.Z.S.C. .. .. Captain Jurlson .. .. 55 0 16 8 4 N.Z.P.S. .. .. Browning .. .. . ■ 55 0 32 5 N.Z.P.S. .. .. Cummings .. .. . . 55 0 33 10 R.N.Z.A. .. .. Ryan .. .. .. • • 55 0 31 10 iqq7 .. N.Z.S.C. .. .. Lieut.-Colonel Nicholls .. .. 55 0 26 6 5 N.Z.P.S. .. .. Clough.. .. .. .. 60 0 16 4 N.Z.P.S. .. .. Collins .. .. •• 60 0 25 11 R.N.Z.A. .. .. Baker, J. R. D. . . .. .. 55 0 32 3 N.Z.P.S. .. .. Jordon .. . - • • 60 0 18 1 1938 .. .. N.Z.S.C. .. .. Colonel Duigan .. .. .. 55 0 35 1 6 R.N.Z.A. .. .. Captain Gillespie .. .. 55 0 35 2 N.Z.S.C. .. .. Captain Davis .. .. .. 55 0 27 3 N.Z.P.S. .. .. Frazer .. .. • ■ 60 0 13 10 N.Z.P.S. .. .. Edmonds .. .. •. 60 0 25 0 R.N.Z.A. .. .. Sinclair .. .. • • 55 0 33 10 ioqo .. N.Z.P.S. .. .. Betteridge .. .. •• 60 0 26 7 3 N.Z.P.S Walker 60 0 28 6 Ordnance .. .. Young .. ■ ■ • • 55 0 35 9 1940 .. .. N.Z.S.C. .. .. Captain Stedman .. .. 55 0 29 0 13 N.Z.S.C. .. .. Captain Johnson .. .. 55 0 25 7 N.Z.P.S. .. .. Bell .. .. •• 60 0 27 11 N.Z.P.S. .. .. Dunlevey .. .. .. 60 0 20 4 N.Z.P.S. .. .. Frank .. .. . . .. 60 0 28 10 N.Z.P.S. .. ■ ■ Milne .. .. .. 60 0 28 7 N.Z.P.S. .. .. Rudd .. .. .. | 60 0 27 11 N.Z.P.S. .. .. Tustain . . . . ■ ■ 60 0 27 3 R.N.Z.A. .. .. Kivell .. .. .. .. 55 0 35 0 R.N.Z.A. .. .. Power .. .. .. . ■ 55 0 39 5 A.S.C. . - • • Sharp .. .. • • • • 60 0 28 7 Ordnance .. .. Clapshaw .. .. .. 60 0 27 10 Ordnance .. .. Lyons .. .. ■ ■ • • 55 0 36 2 1941 . .. N.Z.S.C. .. .. Major Bell .. .. •. 55 0 36 10 8 N.Z.P.S. .. .. Booth .. .. .. • • 60 0 28 9 N.Z.P.S. .. ■ • Glanville .. .. .. 59 0 30 0 N.Z.P.S. .. .. Matheson .. .. ■. 60 0 21 1 N.Z.P.S. .. . ■ O'Sullivan .. .. .. 59 0 30 3 N.Z.P.S. .. .. Quayle .. .. .. 60 0 21 8 N.Z.P.S. .. ■ • Ritzema .. .. .. 58 0 30 0 Ordnance .. .. Buckley .. • • - • 60 0 26 8 1940 .. N.Z.S.C. .. • • Captain Burge .. .. .. 55 0 22 4 12 R.N.Z.A. .. .. Captain Pollard.. .. .. 55 0 36 8 N.Z.S.C. .. .. Captain Walker .. .. 55 0 22 4 N.Z.P.S. .. • ■ Beaumont .. .. .. 60 0 27 10 N.Z.P.S. .. • ■ Corkill .. .. .. 55 0 31 0 N.Z.P.S. .. •. Emerson .. .. .. 60 0 22 3 N.Z.P.S. .. •. Fletcher .. .. .. 60 0 29 3 N.Z.P.S. .. •. Ryan, J. .. ... .. 55 0 30 0 N.Z.P.S. .. • ■ Little .. .. .. ■ . 60 0 22 2 N.Z.P.S. .. . ■ Oliphant-Rowe .. .. .. 55 0 32 7 R.N.Z.A. .. .. Christensen .. .. .. 5511 30 0 Ordnance .. .. Lieutenant Erridge .. .. 55 0 28 8 Grand total, 55.

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List of Retirements from the Defence Department under Section 39 of the Finance Act, 1930 (No. 2).

Retired under Section 26, Public Service Superannuation Act, 1927, and not affected by Section 39 of Finance Act, 1930 (No. 2). Brigadier Whvte, J. H. Clerk Fordyce, R. Lieut.-Colonel Griffen, H. M. Clerk White, C. W. Captain White, A. R. C. Miss Napier, J. S. Clerk Rudkin, G. I'. Miss Larehin, L. E. Clerk Porteous, H. G. Retired Medically Unfit under Section 32, Public Service Superannuation Act. W.O. I Milroy, W.

284

Actuarial ' Average Salary aS'ftmdn n eligMeTor AUowName. Betlring-allow- i tor Thr <*. Tears length of o n êī 3l xtieth ance under ! ass »««■ ,;?•£ S, tXiST Ij or 5ervice - annuation Act. £ s. d. £ s. d. Yrs. ms. £ s. d. W.O. II Adamson, J. A. .. .. 156 4 0 369 11 3 31 11 197 0 0 30/4/34 Capt. Bell, W. M. .. .. .. 201 9 0 548 8 0 23 8 252 16 0 27/3/34 27 8* S/Sgt. Butler, A. C. .. .. .. 66 1 0 328 10 0 16 9 91 14 0 29/1/35 Mrs. Brown, F. .. .. .. 32 1 0 185 0 '0 10 9 33 3 0 Bdr. Chapman, E. P. .. .. 120 11 0 323 18 9 28 11 156 3 0 25/8/34 Sgt. Ching, F. W. .. .. .. 174 14 0 331 10 10 34 0 188 0 0 11/3/32 Lieut. Clements, L. A. .. .. 112 3 0 383 5 0 24 0 153 6 0 22/11/34 S/Sgt. Carter, G. A. .. .. .. 115 13 0 346 15 0 28 8 165 13 0 20/1/36 Sgt. Collins, T. .. .. .. 30 15 0 328 10 0 6 0 32 17 0 9/12/31 W.O. I Connolly, J. J. .. 180 9 0 383 5 0 29 6 188 9 6 9/10/31 L/Cpl. Crowder, H. .. .. .. 31 4 0 301 2 6 6 9 33 17 0 16/2/32 W.O. II Elvy, C. A. .. .. 141 3 0 355 17 6 29 6 175 0 0 28/1/34 W.O. I Fieldsend, P. .. .. .. 169 16 0 383 5 0 30 0 191 12 0 25/10/32 Corpl. Eraser, S. A. .. .. .. 59 2 0 314 16 3 13 9 72 2 0 16/7/33 W.O. I Eretwell, H. .. .. .. 122 14 0 383 5 0 26 1 169 4 0 29/4/35 Lieut. Gallagher, C. H. .. .. 184 15 0 383 5 0 33 1 211 6 0 14/2/33 Brig. Gard'ner, M. M... .. .. 399 14 0 850 0 0 32 9 467 10 0 4/3/33 S/Sgt. Gerrard, J. P. .. .. .. 156 16 0 337 12 6 30 8 172 12 0 26/6/32 Major Gibbs, G. A. .. .. .. 91 13 0 615 0 0 11 6 118 9 0 11/2/34 Major Glendining, H. C. .. .. 179 2 0 615 0 0 20 2 207 14 0 19/2/33 Gunner Harris, H. J. .. .. .. 129 14 0 292 0 0 29 0 141 2 0 14/4/32 W.O. II Hunter, J. F. .. .. 154 19 0 348 15 6 32 4 187 19 0 22/11/33 Clerk Inglis, T. .. .. .. 166 18 0 335 0 0 32 4 180 10 0 5/4/32 Lieut. Ivimey, F. E. B. .. .. 126 13 0 383 14 11 26 6 169 11 0 29/3/35 Private Jewiss, P. .. .. .. 96 11 0 292 0 0 26 6 128 19 0 1/6/35 Corpl. Johnstone, M. P. .. .. 146 19 0 313 7 0 33 0 172 7 0 17/4/33 Lieut. .Jones, V. G. .. .. .. 141 16 0 364 13 11 29 6 179 7 0 23/4/34 Clerk Jones, W. W. .. .. .. 51 6 0 295 0 0 15 5 75 16 0 7/11/35 Corpl. Leighton, A. C.f W.O. I Logie, R. V. .. .. .. 168 8 0 383 5 0 31 7 201 M 0 7/8/33 Lieut. Lyons, M. J. .. .. .. 117 15 0 383 5 0 25 9 164 9 0 27/6/35 Bdr. Mahoney, T. J. .. .. .. 138 5 0 314 16 3 28 10 151 5 0 23/5/32 Sergt. Meeehan, R. .. .. .. 77 1 0 339 10 6 18 11 106 19 0 31/1/35 Bdr. Milroy, C. .. .. .. 122 16 0 314 16 3 29 7 154 9 0 21/4/34 W.O. I Morgan, R. P. .. 211 2 0 375 2 4 34 8 216 16 0 5/8/31 Sgt. Morgan, W. J. Lieut. Mulholland, H. J. .. .. 182 18 0 383 5 0 33 1 211 6 0 28/2/33 Clerk McGill, E. J. .. .. .. 170 1 0 350 0 0 31 7 184 4 0 14/4/32 Sgt. Melllraith, W. H. .. .. 110 19 0 328 10 0 26 6 145 0 0 20/9/34 Sgt. North, A. T. .. .. .. 106 0 0 334 11 8 27 0 150 12 0 10/12/35 Gunner Neighbour, F. A. .. .. 114 18 0 295 0 10 30 8 150 17 0 3/11/34 S/Sgt. Norris, G. G. .. .. .. 149 12 0 337 12 6 29 0 163 0 0 15/4/32 Sgt. Petersen, E. C. .. .. .. 26 18 0 328 10 0 6 8 36 10 0 17/10/34 Lt.-Col. Pilkington, H. E. .. .. 433 13 0 765 0 0 34 9 442 16 0 10/7/31 Gunner Porter, R. G. .. .. 101 11 0 292 0 0 28 7 139 2 0 13/6/35 W.O. I Pryde, D. P. .. .. .. 84 8 0 381 5 4 19 5 123 7 0 19/9/35 Sgt. Quinn, N. .. .. 145 14 0 342 3 9 32 0 182 0 0 3/4/34 W.O. II Robinson, W. H. .. .. 48 12 0 355 17 6 10 10 63 7 0 6/7/34 L/Cpl. Robinson, W. L.f L/Cpl. Ryan, E. .. .. .. 129 10 0 301 2 6 28 7 143 10 0 30/7/32 Sgt. Salt, J. G. W. .. .. .. 25 13 0 327 7 3 6 6 35 19 0 18/12/34 Major Sandle, S. G. .. .. .. 231 12 0 625 0 0 30 5 317 0 0 17/10/35 Corpl. Sawyer, J. .. .. .. 27 17 0 314 16 3 6 8 35 0 0 14/11/33 Lt.-Col. Smythe, R. B. .. .. 282 15 0 765 0 0 30 5 387 16 0 15/6/35 W.O. I Southgate, J. O. P. .. .. 213 19 0 383 5 0 34 7 220 18 0 31/8/31 S/Sgt. Sutton, A. J. .. .. .. 145 1 0 340 13 4 30 8 174 2 0 24/8/33 W.O. II Stokes, C. G... .. .. 71 11 0 345 5 10 18 11 108 19 0 17/3/36 Lt.-Col. Thorns, N. W. B. B. .. .. 180 9 0 728 6 2 20 1 243 17 0 5/4/35 W.O. I Thomson, A. .. .. 206 8 0 377 3 4 34 1 213 1 0 30/9/31 Lieut. Tingey, E. .. .. .. 92 17 0 383 14 7 20 3 129 8 0 14/2/35 S/Sgt. Walker, A. .. .. .. 155 2 0 343 14 2 32 5 185 14 0 2/8/33 Sgt.-Mjr. Warren, J. .. .. .. 187 12 0 383 5 0 32 6 207 12 0 2/8/32 Corp], Williams, E. J. .. .. 89 18 0 314 16 3 25 1 132 0 0 15/2/36 S/Sgt. Woodward, E. H. .. .. 145 13 0 337 12 6 29 6 166 1 0 11/12/32 W.O. II Walsh, P. J. .. .. 198 5 0 355 17 6 33 10 200 15 0 3/6/31 ' * Includes tropical service. f Elected to take refund of contributions.

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The Chairman.'] Is there anything you would like to add to your statement ?—ln my statement I dealt with the Force under my command, but I would like to say in regard to those until recently in the Permanent Forces and who, through emergency measures which have been brought in, were compulsorily retired, that extreme hardship was imposed on them by the actuarial pension. They were retired through no fault of their own, through no lack of efficiency or anything of that kind, but through the emergency situation which arose. They were retired because they were within five years of 55, and, as you will see by referring to the table I have put in, some of the officers and men with years of good service behind them have been very heavily penalized. Mr. W. Nash.\ You are putting that table in ? —Yes. Mr. McCombs.] Does the table show the amount of superannuation they are receiving ?—lt does. It shows the name, rank, retiring-allowance, average salary for the last three years, length of service, and retiring-allowance based on one-sixtieth for each year of service, also the earliest date eligible for an allowance under section 26 of the Public Service Act. I think the whole lot is there. It shows the one-sixtieth, does it show the actuarial ? —Yes. Mr. Dickie.] Your suggestion is that the contributors in the Defence Department should be allowed to pay an added contribution in order that they would be entitled to one-sixtieth for each year of service, no matter how short the term ? —ls there anything in my statement which says that there should be an added contribution. I did not mean to infer that. Do you suggest that that should be a still further burden on the Fund ? —lf you will look at the table we have supplied you will see the officers who go out for the next ten years, and we put up the proposal that the Defence vote should make a contribution to the fund of the actuarial equivalent of the burdens imposed by the retirement of those men, and that would take the burden off the fund. The actuarial equivalent would not bring it to one-sixtieth for each year of service. You think the Defence vote should make a payment to the fund to bring the pensions up to one-sixtieth for each year of service ?—Yes. A subsidy should be paid in to maintain the same rates of superannuation as exists at present. Not based on the actuarial computation ? —No. Mr. Bodkin.'] The men who have been compulsorily retired will lose some of the benefits that were contemplated by that payment of £20,000 in 1920. That amount has actually been paid in, has it ?—Yes. So that if they were retired five years before the due date they would lose the benefits of that prepayment for five years ?—Yes. Have the benefits of that ever been computed ? —No, we have not computed that benefit. Mr. McCombs.] In regard to your table showing the officers who have already been retired, a few of them have not been penalized very considerably, whereas others seem to have been struck very hard indeed by the comparison between the one-sixtieth and the actuarial. Have you computed how much money you would need to give them one-sixtieth—give all these officers one-sixtieth for each year of service ? —I am afraid I cannot answer that. Ido not know if that has been computed. It is only a question of taking column 1 and column 4 and substracting one from the other to give you the average ?—One shows what they expected to get; the other shows what they actually get through being retired five years before their time. Even if they got one-sixtieth most of them would only be getting thirty-sixtieths ?—Some of them have longer service, as you will see, but on an average it is very difficult to get in more than that. There are very few over the thirty years ?—There are some officers who joined at a very early age as cadets and others who had previous Civil service before they joined the Military service. There are only about ten, as you will see, military and civil members of the Department who draw their full pension. You put in a special plea for special circumstances in your particular Service. What would you suggest should be done to meet the case of these retired officers that have already gone out on the actuarial basis instead of the one-sixtieth ?—I understand that if our proposal were agreed to and we retained the present procedure and the military personnel go out at 55 years of age and we pay into the fund each year an amount to cover the burden, over and above the actuarial equivalent and according to the number of retirements during that year, then it would to a certain extent safeguard those who have given service for a lifetime and gone out, because if that were done it would automatically prevent any further reduction of the actuarial pension. The point I wished to make was that these officers suffered very heavy loss through being retired through no fault of their own, and if the Bill goes through it will impose on them, in some cases, further drastic reductions on the actuarial pension they are now drawing. I think lam correct there. I only wanted to draw your attention to the fact that this Bill has a reaction on them. They are on a reduced pension now, and if this Bill goes through it will inflict on them a very drastic further reduction. Your main statement mainly concerned the present officers ? —They are really the only people I am entitled to talk about. You want to put the recently retired officers in as good a position as you think the present staff should be put in. Something extra would have to be done for those retired officers ? —I see what you mean. Those men who were retired before 55 should, I think, get compensation for the early retirement, but what I am drawing out and suggesting is that you secure the actuarial pension they are now getting. You are not suggesting that a man should retire with twenty-five years' service and get thirtysixtieths. You suggest he should get twenty-five-sixtieths instead of the actuarial ? —Quite. I have the right in some cases in connection with my warrant officers—l have never withheld that right—to extend the time up to 60 if they are physically fit, so that they may qualify for a pension at the end of their service.

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Mr. W. Nash.] The military service is about the most healthy service of the whole lot ?—Except in war. Would you imagine that the average member of your Force would automatically live longer than the ordinary man if they did not go to war ? —I do not think a soldier's life is any longer. Ido not know what the actuarial calculation of expectation of life is in peace-time, but their work is very strenuous even though it is healthy, and we have accidents and pay out a considerable amount of money in compensation. I know that I have in my Permanent Staff warrant officers who have had a life service and life experience as instructors, and I know, if I had to send them to war next month, some of them would crack up within three months on active service. Taking the war service out of account altogether. The military life is one of the healthiest lives, even up to 65 years of age ? —lt is particularly healthy outside war service. Yes, outside the war service ? —They ought to be, because they are picked men. They are picked medically, physically, and morally, but they are subject to human ills just like any one else. If you have a force of men medically, physically, and morally fit, do you think they should retire five years before the average ?—I have never indicated that they were superior to the average. I say this, that you cannot have a platoon commander of 65 in Flanders, for instance. lam exempting war service. I know you have to make special provision for war service ? —I have to hold 60 per cent, of my men ready and physically fit to leave for active service next week, if required. They have no option ; they would have to go. When they go to war the country will do anything for them ? —And I want to try and get it done in times of peace. They do not want better conditions than the average man when there is peace ; it is only w T hen there is war ? —Are you suggesting that I should keep them on up to 65. lam not suggesting 65 is the right age. According to your advertisements the military life is a healthy life. According to that, and it is correct, I think, there does not seem to be any reason why they should retire five years before the men in other branches of the Service. lam not questioning the age. If 60 is the right age for men in the other brandies of the Service is it not the right age for men in the Defence Service ? —No, because I have to keep a fighting force ready. I have to keep a force ready for active service at short notice, and I can do it at present. Is it not possible for you to keep those men beyond 55 years of age for home service I—The1 —The older warrant officers and some of our officers who are not up to physical standard would be held in New Zealand for training and instructional purposes and would not be sent out on active service at first, though they might have to go in the long-run. If they are kept here there is no reason why they should not go on for the same number of years as a man in the Railway Service ?—I do not know what the railway conditions are. Would you ask for special conditions for men in the Defence Department as compared with the men in the Railway Service, if all circumstances and conditions are equal ? —I do not know the Railway conditions, but I must hold a large proportion of my officers and men ready for active service if they are wanted. I think they ought to be paid for that. Ido not question that. My point is in connection with physical fitness. If they are physically fit is there any reason why they should be retired five years before the other man ?—lf you come down to the gymnasium and watch a warrant officer of 60 you will readily see that his age is a handicap. He is not quite as good an instructor on the physical side as a man of 30, and that is why. I agree with that, but if they can be retained for other work inside your Service, is there any reason why they should have the right to retire five years before the men in the other branches of the Service ?—I do not know about the right to retire, and, as I said before, I have warrant officers of 60 in my Service at the present time, and they are doing good work. If you can keep them on and they are doing good work and are healthy you do not want any special preference because they are in the Defence Service Mr. Dickie.] Would the reason for not keeping them beyond 55 be that the average age would be too high ?—1 cannot say. All I can say is that the age limit was 45 during the late war, and many of my senior warrant officers are now getting on to 60 and they are doing good work, because they are not being subjected to exposure or anything of that sort. Mr. W. Nash.] Under present circumstances you would not ask for them to be in any different position than the other men ? —I have the right to extend their term to 60 years of age to enable them to get a pension at the end of their service. And if there is any extra charge on the Superannuation Fund you do not want that charge to be on the present contributors. You think a payment should be made out of the Defence vote ? —I do not think it would be fair to put it on to the contributors. There are two points to be considered. From the point of view of the individual it would be advisable to allow them to remain to 65 years of age, but from the point of view of military policy it would not be advisable, because you would have the Department loaded up with men who were too old for war service. The point is that the whole of the military force should be fit for war. I am just wondering, taking all those factors into consideration, why there should be any special difference between the Defence Force and the Railway Force ? —Yes, I think there should be. That is all right then, if you think there is a just and good reason for it ?• —Have I not made that clear. lam trying to keep together a fighting Force and I want the bulk of my men to have the kick and vigour of youth in them. A man of 60 or 65 would crackgjup in a trench much sooner than a younger man. lam exempting war service. lam not suggesting anything|about the'trenches. lam leaving war out of it ? —-But I cannot leave war out of it while lam doing my duty. I have to keep a war in

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view. I have to have a fighting Force, and I cannot have a Force comprised of men of 60 years of ago on an average. They do not all go to 65 ?—You are talking about times of peace. I see your point of view. A number of these men are kept on because they are doing good work and because they are splendid instructors, but I know some of them ; they would crack up in war service. You look at it from the point of view of peace, I have to look at it from the point of view of war. You mentioned the men who had been retired on an actuarial basis, and you say they have been subjected to grave injustice. Can we find out whether those actuarial pensions will be adversely affected if the Bill goes throiigh ? The Chairman : Mr. Gostelow will tell us that. Mr. W. Nash : I know one man getting £120 a year and he expected £195. Is he going to have the £120 further reduced ? Mr. Gostelow.] It is very difficult to say. The calculation would have to be recomputed under the new Act. I think, in that connection, it is advisable to point out that those men were not entitled to any pension at all. That was a special concession given by the Finance Act, 1930. I think the General mentioned that those men did not get what they expected to get, one-sixtieth for every year of service, but the point is that in respect of their service they were not entitled to any pension at all ? —We are compulsory contributors to the Superannuation Fund. All military members are compelled to join that fund and to pay on a certain percentage basis throughout their service, and what I say is that if they have paid for it and expected it they should draw one-sixtieth for each year of service of their average salary for the last three years. Legally you say they are not entitled to it, but morally I say they are. What would have happened if that Finance Bill of 1930 had not been passed and those men had been compulsorily retired ? They would only have got their contributions back ? —I hope that if that Bill had not been passed those men would still have been with me. I would not have lost a large number of good men from the Force. They would have been compulsorily retired. Mr. Millar : The fact remains that they are going to be hit under the proposed Bill. Mr. Gostelow : It is quite likely. I would not like to say they are not. I would like to state in connection with the £20,000 mentioned by Mr. Bodkin that every one of those officers had his pension computed as though he had the right to go out at 55 years of age and, in that respect, they got better treatment than the other members of the Service. This Bill will bring them into line with the other public servants. Mr. IF. Nash : The better treatment is to be taken away from them ? Mr. Gostelow : They will be put on the same basis as the other public servants. The Chairman: Following on Mr. Nash's question about the men staying on until they are 65 years of age. Could you say what percentage of your personnel now represents men who served in the late war ?—Nearly all of them. Probably you have that in your mind when you ask for special consideration to be shown to them ? —We have not got the exact number. What percentage ? —I should say nearly 90 per cent, have had war serviceThen they have done their war service already ?—Yes, but they would be liable for further war service. Undoubtedly. Mr. Gostelow.] The General suggested that the additional liability thrown on the fund should be paid into it by the Defence Department at the date of retirement. Was that to be in one lump sum or a contribution each year ?— Each year as they retired. If there were two or three retirements in one year it would be computed what amount would be necessary to pay into the fund to make up the basis of one-sixtieth. Would you pay it in in one lump sum ? —So far as each person is concerned in one lump sum. Would it not be better to have some option in the matter. If you had an inefficient officer whom you found it necessary to compulsorily retire after twenty-five years' service there is no reason why you should pay the balance between his actuarial pension and the normal number of sixtieths. I am suggesting that it might be left to the option of some authority to say whether or not his pension is to be made up to the normal number of sixtieths ?—lt is a difficult question because you have discipline on the one side and finance on the other. For disciplinary reasons I can put any man off to-morrow. If he has had twenty-five years' service he must get an actuarial pension whether he is compulsorily retired for discipline or anything else. You propose to pay into the Superannuation Fund a lump sum to bring that man's pension up to the normal number of sixtieths. I think that should be limited ?—Who would you say should limit it, the General Officer Commanding ? Yes, or the Defence Minister ? —That would be reasonable ; it would be decided whether he should be allowed to get the normal number of sixtieths, and, if so, the subsidy would be paid in. You can see that if for any reason you have to practically sack a man he should not have his pension made up as you suggest. Mr. Verschaffelt.] He would not get a pension at all if he is dismissed ?— He would not get a pension if he was sacked. Mr. Gostelow.] If he was sacked it is all right to give him an actuarial pension, but there is no reason why you should pay him the balance between the actuarial pension and the normal number of sixtieths ? —lf for disciplinary reasons I have to put a man off he would not be entitled to his full pension.

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That is so, and that is why I think there should be some discretion in the matter ?—That is quite a different matter. But where an officer or a senior non-commissioned officer has served for many years and is tried by Court-martial and found guilty, then out he goes. Mr. Verschaffelt.] He would not get a pension at all ? —Ail I know is that he goes out. It is difficult to reconcile military discipline and financial niceties. Mr. Gostelow.] I am suggesting that some discretion ought to be left with yourself or the Defenee Minister to see that this subsidy is not paid in for men who are retired through their own fault ? —I think it ought to be the Defence Minister for this reason —I am not trying to shelve the responsibility —that the Minister cannot have any individual feeling in the matter, at all. If lor my predecessors had to decide they might say that we had a " down " on some one, and therefore I think it should be out of the hands of the military authorities to exercise any option regarding a matter of finance like this, because then there can be no personal feeling brought in. It ought to be out of military hands. If you are going to give a concession it should only be given to deserving cases ? —Practically every case that reached the superannuation stage would be deserving. lam just suggesting that you reserve that power ? —I do not think it would mean very much. It would require to be exercised but very rarely. I have been here eight years, and I cannot recollect a single case where that question has cropped up. I cannot remember a case where a man has been put out for inefficiency. The Chairman.'] You have had cases where you had to suggest that it would be better to put in their resignations ?—Yes. That is an easier way out of it. Mr. W. Nash.] The General referred to " military discipline and financial niceties." I suggest that it is " military niceties and financial discipline." Lack of financial discipline has caused all our trouble to-day ? —I only know military law, Ido not know anything beyond that. Mr. Millar.] Is it not a fact that up to the present time no man in the Defence Department has ever attained 65 years of age ? —Not to my knowledge. The cases in'which officers have reached forty years' service before they have retired have been few and far between ? —I think there are only four. Only four ?—Yes, and that was because "they had had previous service in the Civil Service. That means that if this Bill goes through every Defence officer who has been retired will have his pension reassessed, whether he has been retired on an actuarial basis or on a normal basis he will have his pension reduced by 20 per cent, almost automatically ? —I have suspicions to that effect. But you would not regard it as right if that happened ? —Not equity. In regard to the cases of those still in the service : you have pointed out that only ninety-five out of 342 contributors will ever reach forty years' service ? —That is so. The Bill would mean that every other officer who went out would go out on an actuarial basis ? — It looks like that. And you know what that means ?—I can guess. Would you regard that as reasonable in view of the conditions of employment in the Defence Department ?—We have made a clear statement. We realize what lies behind it. Up to some five or six years ago the retirement age was 55, originally 55 ? —Yes. It took many years of effort on the part of interested parties to get that altered from 55 to 60 years of age. If the Bill goes through the whole result of that effort will be wiped out ?—You are very pessimistic. From the point of view of efficiency would you say that 60 years of age is the very highest point to which an officer should be retained in the Service ?—That is what I say. I have extended several cases up to 60 where it is necessary to enable them to get a pension. There has been talk about the added burdens placed on the fund by way of early retirements in the Defence Department. Do you think you could retain your officers up to 60 years of age ? —Now you are getting on to delicate ground. In the case of an Imperial officer the General is 62, and as lam a General I am diffident about talking about that, but the age-limit for an expeditionary force is 45. In the original Act relating to superannuation there was a specific provision for retirements at 60 years of age irrespective of service ? —That is so. If that were retained in any amending legislation, would that not meet the position of the Department ? —That is what we are claiming. Do you appreciate the fact that on an actuarial basis that does not increase the liability. It was a determining factor when they assessed our contributions in the first place ? —How many years service ? Irrespective of service. If that point were retained would that not meet the position of the of the Defence Department ? —Yes, that is what we are claiming.

STATEMENTS PRESENTED. Colonel M. M. Gabd'ner, on behalf of Officers and other Ranks of the Permanent Military Forces compulsorily retired in 1931 in Order to effect Economy in the Defence Department. (RR.) Note.—lt is understood that various organizations have dealt with the question of the breach of contract involved in the Rill and drawn attention to the statement by the National Expenditure Commission that the State's liability is one " from which the State cannot honourably escape." I am therefore confining my statement to points that have special bearing on the case of those compulsorily retired last year from the Defence Department. My own case is typical. On joining the superannuation scheme in 1908 I had good reason to assume that my future (on retirement) was adequately provided for, and I could therefore devote the whole of my energy and

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available money towards improving my efficiency as a soldier. Accordingly, instead of making further provision by insurance or otherwise, I began systematic study and spent what I could afford on importing books, &c., on military subjects, and, as a result, was the first officer of the New Zealand Military Forces to qualify by examination for entrance to the Staff College. The cost to my pocket of books and coaching, and of proceeding to the Staff College with my family totalled about £300, but I did this willingly, as I naturally felt that this made my future secure beyond all doubt, so long as I continued to carry out my duties satisfactorily. My compulsory retirement, therefore, in 1931, was the heaviest blow I have ever experienced. It must be remembered that a professional soldier retired before his due time suffers a much greater hardship than a Civil servant, as not only does he lose salary at once, and a proportion of superannuation for life as the Civil servant does, but in addition is deprived of the opportunity of practising his life profession. His military experience and training are of little help towards obtaining Civil employment, and he is still on the Reserve of Officers until reaching 60 years of age, and liable to be called up at short notice in emergency. Furthermore, those retrenched last year from the Defence Department are the only public servants of any Department of New Zealand Services to be deprived of the leave due to them during the period of the Great War, though this leave was recorded on their files as due to them and to be granted on retirement, if not taken before then. (Blow No. 2.) Now, as to the conditions of our retirementWe were selected for retirement purely on the basis of age—as being within five years of the normal retiring-age—it being thought that thus our superannuation rights were guarded, and consequently the necessary retrenchment could be carried out with a minimum of hardship. When the figures of the actuarially reduced retiring-allowances were made known, however, it was found that they were very much less than any one had expected. (Blow No. 3.) It will be seen that the hardships we have already suffered in the interests of the country's economy establish at least a prima facie case for special exemption from further hardship under this Bill. To have our retiring-allowances reviewed on the basis of the average salary for the last seven years would be bad enough, but to go back to the last ten years would include the period of the cuts in pay of 1922 which were not restored till Ist April, 1925. Those retired prior to Ist April, 1921, and whom this Bill proposes to protect from any reduction got the advantage of the full rates without any cuts, though they had paid in to the fund fully ten years less than we had, and, in some cases, had contributed for only a few months. Surely this position should be reversed, and those who have paid for twenty-three years should be given more consideration than those who have done so for less than thirteen years. As to the age for retirement: It is recognized in all armies that the age for retirement of soldiers must be lower than in civilian life. The age fixed in New Zealand (55 years) is higher than in the British Army except for General officers. This age 55 was definitely recognized, and in 1921 a special sum of £20,000 was paid into the Superannuation Fund from the Defence vote to compensate that fund for providing retiring-allowances at age 55 instead of 60 or 65. If the retiring-age when the retrenchment took place in the Defence Department had been 60 or 65 instead of 55, we should not have been within five years of it, and consequently would not have been selected for retirement. Some other basis would necessarily have been devised such as that of the least efficient or deserving being the first to be retired. In this case many of us would still be serving. It is therefore more than ever inequitable that new retiring-ages now introduced should be made applicable to past retirements which, as in our case, would not have taken place if the new retiring-ages had then been in force. The National Expenditure Commission in paragraph 1462 referring to officers who had completed forty years' service say, " These officers complied with all the requirements as to length of service, and were in many cases invited to retire, and we hardly think it would be equitable to suggest the recalculation of their annuities on an actuarial basis according to age." It would be far less equitable to do so in our case where we have been not merely " invited " but forced to retire at great sacrifice to ourselves in the interest of the country's economy.

W. H. Williams, 213 Broadway Avenue, Palmerston North. (SS.) With reference to Government's Superannuation Bill now before your Committee : I beg to place before you my strong objections to the proposed legislation, which is, without doubt, a grave and serious breach of contract; and I desire to stress the following points : — When I entered the Government Service in 1885 I came under the provisions of the Compensation Act entitling me to compensation on retirement. In, I think, 1905 I was credited with approximately £400 compensation, and this amount would increase yearly until my retirement. On joining the superannuation I surrendered my rights to compensation, virtually handing back to Government £800 or more, and I would ask your Committee to fully consider this point. Later members of fund did not surrender any monetary rights. However, I do not for one moment think that your Committee will uphold Coalition Government's proposed legislation to treat as " a scrap of paper " (as did Germany in 1914) their solemn and binding contract with us. We have fulfilled our part of the contract faithfully and well. Had the respective Governments done likewise, there would be no necessity for the proposed alteration in the Act which, if carried, must destroy, for all time, our faith in integrity of Administrators of our country. I trust that your Committee will give due consideration to my objections.

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Suggestions Submitted by Members op the Public Trust Office Staff. (TT.) 1. That the maximum period for contributing to the Public Service Superannuation Fund be fixed at forty years. 2. That officers who are retained in the service for a period in excess of forty years be exempted from contributing to the Superannuation Fund in respect of all service over forty years. It may be claimed that persons concerned will be drawing salaries from the Government and should therefore make contributions, but the opinion is expressed that the aim of the legislation should be to fix the amount of contribution in proportion to the benefits that are to be obtained. 3. That clause 7 be amended to provide that any officer who reaches the age of 60 years but has not completed forty years' service should have the option of retiring on an actuarial retiring-allowance. A considerable number of professional officers have joined the service, particularly in the Public Trust Department, at an age which will necessitate their continuing in the service until after the age of 60 in order to qualify for a retiring-allowance. The suggestion as put forward would give these officers the opportunity of retiring at a younger age than the proposed Act would allow, and if the pension is discounted to cover the circumstances of the case the fund would not be prejudiced. 4. That in the case of officers attached to those Departments which are required to subsidize the contributions of their officers retiring voluntarily or otherwise, and receiving a refund of contributions only, with or without interest, that any amounts contributed by the Department should be returned to the Department, together with interest which such amounts have earned. 5. That some definite basis of calculating actuarial retiring-allowances should be stated in the Bill. According to the Carlisle Life Data Table the expectancy of a person age 60 is 14-337 years, and if this is to be the basis of the actuarial calculations, then it is considered that the expectancy is too great in respect of officers in the Civil Service. Members of the Civil Service are mostly indoor workers and their expectancy is considerably below that of the period mentioned in the Carlisle Life Table. It should not be difficult to ascertain a reasonable expectation through a review of the retirements which have already taken place in the Service since the Public Superannuation Act came into force. 6. That forty years' service is sufficient, and that on no account should this term be extended. There seems to be no objection to any contributor retiring before forty years' service being penalized to the. extent that his pension would be actuarially reduced. It is also open to doubt whether by extending the term of service there will be any saving to the Government. It appears that there will be a likelihood of an extra burden being placed on the Consolidated. Fund. 7. That a hardship would be caused if a maximum reduction of 20 per cent, on existing pensions was insisted upon. The salaries in the Public Service have recently been reduced, in some cases by 15 per cent., and in other cases by 20 per cent., and it is only feasible that the same ratio should apply in respect of superannuation. It also appears equitable that should the salary cuts be reinstated, the retiringallowances should also be reinstated. 8. That as a compulsory retirement on completion of forty years' service but before reaching the age of 60 years would adversely affect a contributor's pension, his interest should be safeguarded by a right of appeal to a duly constituted Appeal Board. 9. That as a greater liability will fall on the contributor if the Bill is passed in its present form, provision be made for the review of allowances to widows and children. The allowances at present paid, especially to the widows, are most inadequate, especially in those cases where the officer dies a short time before reaching the age of retirement. 10. That the Service be given an opportunity of obtaining an independent actuarial investigation of the funds prior to the Bill being brought before Parliament. 11. That the Select Committee obtain a return showing how far the deficiency in the funds is due to — (1) The Government failure to pay subsidies ; (2) The payment of post-war pensions on a higher scale than was warranted by the pre-war and war payments of contributors ; (3) The payment to officers retired before serving the full term of higher allowances than the contributors had actually earned. 12. That as the value of the savings is a factor to be taken into account in deciding which proposals for the placing of the funds on a sound basis are most acceptable, a return be obtained showing — (1) What will be the effect of valuing the fund at 5 per cent, if the Government guarantees that rate of interest; (2) What saving will result from (a) extension of the term of service ; (b) altering the basis of calculation for future pensions ; (c) reducing existing pensions by the same rule ; (d) placing men who were retired early on actuarial allowances. 13. That the provisions of clause 14 (2) of the Bill be amended by deleting the words " out of moneys appropriated from the Consolidated Fund for the purpose," and substituting the words " from the Consolidated Fund without further appropriation than this Act." If this amendment were made, it would remove the necessity for an appropriation of moneys before the payment of the Government's contribution to the fund could be made, and there would be less excuse for the Minister failing to comply with the provisions of the Act. Assuming that the moneys were actually paid by the Minister into the fund, as required by the provision amended as suggested, then presumably Parliament would have no alternative but to confirm the payment.

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14. That in view of the fact that the Government has definitely broken its contract with the present contributors to the fund by — (a) Altering the basis on which pensions are to be paid ; (b) Lengthening the period for which contributors must serve before being entitled to a pension ; and (c) Raising the age at which contributors with forty years of service shall be entitled to retire, — it seems most unfair that section 37 of the Public Service Superannuation Act, 1927, should remain without alteration. The Government having broken its contract, some, at least, of the present contributors who were contemplating retirement at, say, the age of 55 on completion of forty years' service or who find themselves less satisfied with the prospective pensions to which they will be entitled, may decide to retire voluntarily from the service before they are entitled to a retiring-allowance under the new provisions. It would seem only fair, therefore, that these contributors should receive a refund not only of their actual contributions to the fund, but of interest at a reasonable rate on such contributions. Probably the actuarial rate of 4 per cent, would represent a reasonable addition to the contributions. 15. That the Bill be amended to provide for — (a) Cesser of contributions after forty years' service, provided salary increments after forty years' service are not counted for pension computation. (b) No reduction in the pension of present annuitants as far as adjustment on an actuarial basis is concerned. This is too drastic in addition to adjustment on a basis of the last ten years' average salary instead of the last three years' annual salary. It wrecks the life adjustment of the present annuitant to what, in many cases, would be an alarming extent when his past decision re retiring based on the then arrangement is entirely irrevocable and irreparable. The adjustment on the ten years' average salary appears perhaps unavoidable, and not too drastic, but both adjustments are altogether too drastic. (c) That the right to elect to pay on higher salaries granted in 1931-32 be reopened. This enables a contributor to reconsider a decision which now involves new aspects, and it really involves no disadvantage to the fund.

A. E. Allison, Commissioner, Government Life Insurance Department, Wellington. (UU.) I desire to draw your attention to certain provisions in this Bill which do not seem to me to be satisfactory as far as this and other trading Departments are concerned. Under clause 15 (1) the Minister of Finance is given power to assess the proportion of the pound-for-pound subsidy which clause 14 (2) imposes on the Government. If some readily understandable rule—such as a pound-for-pound subsidy payable by the Trading Departments on the contributions of their own officers—is not to be adopted, I suggest that provision should be made for the subsidies to be calculated on an equitable basis by the Government Actuary. The clause apparently leaves the proportion of the subsidy an open question. Clause 15 (2) provides that certain Departments shall pay into the fund such a sum as represents the accumulation at 4 per cent, interest of the excess of a pound-for-pound subsidy on their own officers' contributions over the actual amounts paid to the fund by those Departments for each year from 1908 up to date. The subsidy paid by the Government in the past has not been on a pound-for-pound basis. Hence it is manifestly unfair that these Departments should be compelled to subsidize the contributions of their own officers to a greater extent than the Government has subsidized the contributions of officers of other Departments. Since 1924 (?) trading Departments have paid what is presumably their just proportion of the subsidy actually paid by the Government and, as the Government proposes to liquidate its past deficiencies by future payments of a pound-for-pound subsidy on officers' contributions—an equitable proportion of which will be paid by each trading Department — there is no just reason for demanding from these Departments any more than the accumulated portions of the subsidies actually paid by the Government during the years 1908-1923, justly applicable to the Departments concerned. Putting the matter another way, if each of the trading Departments pays for the years 1908-1923 the proportions of the subsidies actually paid by the Government for these years, accumulated to the present time at, say, 4 per cent, interest, then, as employers of the officers in the trading Departments, they will stand on exactly the same footing as the Government in respect of the officers of the remainder of the Service ; and both will liquidate their liability to the fund by future payments on the same basis. If the conditions provided in clause 15 (2) of the Bill were passed into law, the trading Departments could justifiably claim that they will be making an extra subsidy to the fund, and that, as they will therefore pay more than other Government Departments, the excess payment so made should be earmarked for the benefit of the officers of such trading Departments. I should be glad if you could see your way to bring this aspect of the matter under the notice of the Superannuation Fund Bills Committee.

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J. H. Jerram, General Manager, State Fire and Accident Insurance Department, Wellington. (VV.) Under clause 15 (2) of the Bill, this Office —together with the Public Trust Office and the Government Insurance Department —is to be called upon to pay a retrospective pound-for-pound subsidy on contributions back to the inception of the fund, plus compound interest. No similar subsidy is to be paid out of the Consolidated Fund on behalf of the officers of other Departments. The rights of officers in the trading Departments are exactly the same as those of officers outside them, and actuarially cannot impose any greater liability on the fund than the rights of officers in non-trading Departments. It follows that as the pension rights of officers outside the trading Departments are now considered to be effectively provided for under the Bill without a retrospective subsidy the rights of the trading Department officers must be considered as similarly safeguarded without the need for any special retrospective subsidy. Therefore the retrospective subsidy provision cannot be justified, and would impose an invidious burden upon this Office. It is, however, considered reasonable for this Office to pay whatever amount, if any (plus interest), has been short-paid in the past on account of the actual subsidies paid out of the Consolidated Fund for officers of this Department : This would bring the Office contributions strictly into line with those made out of the Consolidated Fund on behalf of non-trading Departments.

F. E. Hunt, 208 Queen's Drive, Lyall Bay, Wellington. (WW.) 1. I, Francis Everard Hunt, have wife and child dependent upon me. lam now in my fifty-fifth year, and joined the Railway Department on Ist April, 1900, so on the 31st day of December, 1931, would have served thirty years eight months continuously in the service of the Department. 2. That by notice dated 21st September, 1931, it was stated by the General Manager that the Department intended to retire me compulsorily from the service. 3. At the time I received the notice of compulsory retirement I occupied the position of Stationmaster at Ngahauranga. 4. The Government Railways Superannuation Fund was established by the Government Railway Superannuation Fund Act, 1902, and that when this Act was placed on the statute-book it did not contemplate the drastic reduction of benefits which the application of section 14 of the Finance Act, 1931, will inflict on any member who is retired before he has served thirty-five years. Had my period of service been about four years longer I would have been entitled to retire with the consent of the Government Railways Board with a superannuation allowance of thirty-five-sixtieths of £355 — that is, approximately £207 per annum. If the allowance were calculated on my actual service at date of my retirement without the actuarial cut prescribed by section 14 of the Finance Act, 1931, it would amount to approximately £184 per annum. The retiring-allowance paid to me under section 14 of the Finance Act, 1931, is £126 Bs. Such a large and drastic reduction, £58 per annum, of which I have been deprived, cannot, in my opinion be equitably justified, particularly in view of the fact that the Railway Department's Regulation No. 163 provides that whenever the Minister decides to order that the services of employees shall be dispensed with in order to reduce the staff he may make such equitable arrangements to give effect to this as he may deem proper. 5. I ask that retiring-allowance be computed at the rate of one-sixtieth part of the sum of £355 (the amount which I was paying into the fund on) for each year of service, which would give me approximately £184 per annum, or, if an actuarial adjustment cannot be obviated, that the computation of the actuarial adjustments be made on a thirty-five-year basis instead of a forty-year basis, and that section 14 of the Finance Act, 1931, be amended for that purpose. That is, I ask that Ibe treated the same as Mr. H. H. Sterling. He was allowed to "go on the fund " after thirty years' service, but was credited with thirty-five years, and so was not subjected to actuarial cut. 6. Now, I find that after having reared a family of five, at fifty-five years of age I am thrown out of employment. I find that my age and fact of receiving superannuation is against me in reestablishing myself. The only thing open is earning moneys on commission : Fire insurance at 10 per cent, is—well, not much. I find that my clothes, boots, &c., as also the clothes of my wife and daughter, do not last for ever, and all are shabby and worn. lam not one who " whines," but I consider that I am entitled to that which I was paying for, and that which was held up to all members of the Service as an inducement to stop in the Service—that is, superannuation due without cuts. I have not been able to keep up my life insurance. lam struggling, living from hand to mouth on £126 per annum. I do not intend to elaborate, but I would be grateful for any assistance the Committee could give me to regain that which I consider I am at present being robbed of.

Hugh Cox, 32 Mangere Road, Otahuhu. (XX.) I take the liberty to seek your consideration of a point so far unnoticed in representations to the Committee on the Superannation Bill—viz., the case of those contributors who, assuming retirement under the new provisions, at 65 years of age, will have contributed much in excess of forty years and will secure a pension computed on the same scale as those retiring at 65 with forty years' service.

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In my case, I joined the Teachers' Fund in 1920, at 16 years of age, and would, normally retire on full superannuation at 56. In view of changed circumstances lam of opinion that readjustment should be made and suggest— (1) Contributions to cease after forty years' service without prejudice to pension ; or (2) Refund of contributions made prior to attaining the age of 25 years, thereby causing the forty-year period of service to coincide with retirement at 65 ; or (3) A credit equivalent to contributions up to the age of 25 and relief from current payments until such credit is absorbed.

Miss E. M. Ryan, Oneroa, Waitemata. (YY.) As a retired school-teacher, I feel very much alarmed at the unsound condition of the Teachers' Superannuation Fund and the alterations proposed in the Amendment Bill now before the House of Representatives. My position is as follows : I am a single woman, well on in years, not in good health, and quite unable to enter into any occupation, or comply with any alterations in my superannuation allowance. Most of my service took place in the backblocks under many disadvantages, during which I paid into the fund hoping to be provided for when my service ended, according to the agreement with the Government. When I retired I bought a home, which is under a mortgage to the State Advances Department, and entered into other obligations in the firm belief that the State would honourably fulfil its bargain. If any reduction is made in my superannuation allowance, it just means this : I shall probably lose my home and be thrown on the mercy of the public or friends for support. I hope, sir, you will do your best to see that the Teachers' Superannuation Fund is put on a sound footing ; that myself, and others in like position, may not be made to suffer after faithful service and our trust in the Government to do what is right and fair.

Geokge H. Smith, Port Albert Central. (ZZ.) From paper reports one is led to believe that a drastic alteration is about to be made in superannuation benefits to school-teachers through default on the part of past Governments in not contributing to the fund in accordance with the provisions of the Act. My personal knowledge convinces me that any attempt to break the contract will be most abhorrent to you, and I confidently anticipate that you will use your best endeavours to prevent injustice being done to this branch of State employees.

D. E. Leslie, 130 Wheturangi Road, Auckland. (AAA.) I am an ex-Inspector of Schools who was retired last April after forty-three years' service. I am so keenly interested in education (joining at thirteen years of age in Napier) that I should not have voluntarily retired till I had reached the full retiring-age. My superannuation allowance is jeopardized by the Bill now before a Select Committee of the House. Since the inauguration of the Teachers' Superannuation Fund in 1906 I have paid 6 per cent, contribution on my salary, believing that the benefits stated in the Act were as safe of fulfilment as are the conditions of an insurance policy, in, say the A.M.P. It would appear that I have been living in a fool's paradise. My retiring-allowance is now calculated on the average salary earned during the last three years : the proposed amendment makes it calculable on the average of the last ten—the Commission recommended seven. Either would make a great difference to my allowance, which I consider I had justly earned. If the amendment made the allowance calculable on the average of the annuitant's salary for the last five years, surely that would be severe enough—if repudiation of a contract is to be made at all! A reduction in one's superannuation means a reduction throughout one's life : a reduction in salary means a reduction till more prosperous times. My superannuation is my sole means of livelihood for my wife and children and myself. ****** Might not the contributors to the National Provident Fund just as reasonably be asked to make unfair superannuation sacrifices as, say, the teachers ? The National Provident Fund is actuarially sound only because the State has fulfilled its obligations there year by year, neglecting the other funds. In any case, while ideally it may be proper to put our Superannuation Funds on a sound actuarial basis, in practice is this necessary or desirable in view of all the circumstances ?

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Edwin Greensmith, Riverhead. (BBB.) Twenty-seven years or so ago I contracted with the Government of the time to receive certain benefits by paying certain premiums, at 7 per cent. It appears that lam bound by the contract, but the other party is not. In the interests of good Government and of myself and class, I ask that you will do your best to place the Teachers' Superannuation Fund on a sound basis without any breach of faith to contributors or superannuitants.

T. C. Robinson, 37 Mewburn Avenue, Mount Eden, Auckland S. 2. (CCC.) With reference to the Superannuation Funds Bill now before Parliament, I wish to call attention to the particular hardship which would be caused to the members who retired after thirty-five years' sefvice with the consent of the Minister. The Bill appears to assume that these members did not comply with the law as regards length of service, and provides that the retiring-allowance shall be on a purely actuarial basis. The fact is, of course, that these members did comply with the law, and in retiring after thirty-five years' service, with the consent of the Minister, they received a proportionately less allowance. To differentiate now between these and others retiring after forty years' service would be most unfair, and I respectfully suggest that the Bill before the House be amended accordingly. Any cut in the retiring-allowance is in many cases a serious matter, and although exception cannot be taken to putting the funds on a more secure basis, I hope allowances will not be reduced below what is considered a living wage, for any cut to those who have already retired on a Government-guaranteed allowance is in effect a special income-tax. I notice that the Committee is to report to the House whether alterations to the Bill are advisable, and I should be glad if you would use your influence in the direction named, viz. :—• (1) Thirty-five years' service members already retired not to be drastically penalized, but to be treated on a similar basis to others. (2) Allowances not to be reduced below that of a living wage.

Thursday, 9th February, 1933. The Chairman: It was arranged at our last meeting that Mr. Gostelow should prepare a certain statement in connection with the evidence that was given, particularly in regard to the railway funds —the case that Mr. Ryan made, you will remember, Mr. Mcllvride, and yourself. We now have Mr. Gostelow's reply, which is being circulated amongst members of the Committee, and we propose to take this evidence, and also to enable you (Mr. Mcllvride) and Mr. Ryan to be here, next Wednesday morning at 10 o'clock ; so there will be no other business before the Committee this morning which will be open. We have one or two matters which we are taking in Committee. Mr. W. Nash: You could let Mr. Ryan, Mr. Mcllvride, and Mr. Millar have a copy of Mr. Gostelow's reply. Mr. Bodkin: Have they a copy of the evidence originally presented by Mr. Gostelow ? Mr. W. Nash : No, I do not think so. Mr. Bodkin : I think they should have that, if Mr. Ryan's case is to be criticized by Mr. Gostelow ; I think that is only fair. Mr. W. Nash : There is nothing in Mr. Gostelow's original statement that cannot be printed, and cannot be published, and it would be helpful to Mr. Mcllvride, Mr. Ryan, Mr. Millar, and Mr. Caughley, if necessary, to have copies of Mr. Gostelow's reply. The Chairman: Ido not know whether we could do that; we are bound by the Standing Orders, which confine it to members of the Committee. Mr. W. Nash: Cannot a copy of the Committee's proceedings containing Mr. Gostelow's evidence be given to them ? All the other proceedings have been published—have been made public. Mr. Bodkin: That was by resolution of the House. I think the resolution passed in the House would cover the position. Mr. W. Nash : It was passed in the House prior to Mr. Gostelow giving the evidence. Mr. Bodkin: I think the resolution moved in the House would authorize the publication. Standing Order 297 read by the Chairman. Mr. W. Nash : How does that fit in with the resolution passed by the House to take the proceedings of this Committee in open meeting ? Mr. Bodkin: I think that Standing Order was suspended. Mr. W. Nash: What was the resolution you moved in the House, Mr. Chairman ? Mr. Bodkin: Was the resolution passed in the House sufficiently wide ? I think it was. Resolution read by the Clerk. Mr. W. Nash: That means that all the proceedings of this Committee are open to the press. The Chairman: I will ask Mr. Speaker about it, and if it is in order Mr. W. Nash : Then the evidence will be supplied to them ? The Chairman : I will do that. Mr. Millar tells me he will not be here on Wednesday next, and he is asking that a substitute should be appointed. I take it there is no objection to that.

294

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Cecil Gostelow, Government Actuary (recalled). (No. 46.) With reference to the request that I should supply for the information of the Committee answers to the questions submitted by Mr. W. M. Wright on behalf of the Associated Body of Superannuated Public Servants in New Zealand, I submit hereunder Mr. Wright's questions and my replies _ (1) Have you not in your reports from time to time stated the financial position of the Superannuation Funds and drawn attention to the failure of the Government to provide the amounts of subsidies needed to place the funds in a sound actuarial position ? That is common knowledge. (2) Can you tell the Committee what is the total amount of unpaid subsidies plus interest compounded at 5 per cent. ? , I have already advised the Committee that the shortages m subsidies at the date ot the J J3O valuations amounted to £1,301,000 in the Public Service Superannuation Fund and £735,251 in the Teachers' Fund {vide Tables X and IX respectively of the appendices to the statutory reports of these funds —parliamentary papers H.-26a and E.-8a of 1932). If these tables are extended for the purpose of including the shortages for the years 1930-31 and 1931-32, the total subsidy shortage to date m the Public Service Superannuation Fund amounts to £1,793,000 and in the Teachers Fund to £998,084. Compound interest at the rate of 5 per cent, per annum would increase these amounts by approximately £1,100,000 but it has, of course, to be pointed out that there is no statutory provision for any such C ° n For reasons fully explained to the Committee in my memorandum of the Bth November, there is no subsidy shortage in the Government Railways Superannuation Fund, since the Act does not lay down any method of determining the amount of annual subsidy, but merely guarantees the fund. (3) If this amount were provided would the funds be in a sound actuarial position now ? Such action would obviously not place the funds in a sound actuarial position, since a payment now of approximately £3,900,000 would not liquidate a deficiency of about £24,500,000 sterling at the end of the financial year 1931-32. (Note.—The £23,000,000 deficiency quoted by the National Expenditure Commission was only a conservative estimate.) This is foreshadowed by the next (4) If this were done, what amount of annual subsidy—{a) computed on an actuarial basis, (6) an equated amount, would be needed to maintain the funds in a sound actuarial position ? If an amount of £3,900,000 were paid into the funds now, the future annual subsidy necessary to maintain the funds in a sound actuarial position would be £927,000 per annum in perpetuity or its equivalent in varying annual subsidies, together with such additional annual amount as was necessary to cover the inadequacy of the contributions of future entrants to the Service. (5) With reference to the alleged deficiency of £23,000,000,— {a) Does this include the actual amount now owing to the funds % (6) Is it based on the existing conditions of retirement ? (c) What would be the amount of the deficiency if the original conditions of retirement had been adhered to ? (a) Yes. It is obvious that had additional amounts been paid into the funds during the past the deficiency disclosed by valuation would have been decreased to the extent of such amounts and interest accretions thereon. . (b) Only to a certain extent. In each of the statutory actuarial reports an experience table and a life and service table are given {vide Tables YII and VIII of the Appendix to each such report on the Public Service Superannuation Fund), showing, for each age, probabilities of withdrawal, death, or retirement within a year, assumed in the valuation. These estimates of the future experience are naturally influenced by the conditions ruling at the time of the valuation, but they obviously do not envisage the wholesale retirements recently effected, particularly in the Railways Department, m respect of officers with thirty-five years' service irrespective of age. (c) It would not be possible to compute this without the construction of hypothetical experience and life and service tables for each fund, obtaining the necessary actuarial cards and other data from the Superannuation Boards, and making actuarial valuations as at the present time. This would involve an immense amount of work, and, as the difference in amounts paid to pensioners could not be recovered, it is questionable whether the results would be of other than academic interest. (6) If the' original conditions of retirement were reverted to, what amount of annual subsidy computed as a proportion of the contributions would be needed 1 ...... Without an actuarial valuation of each of the funds {vide previous question (5) (c)) it is impossible to do more than indicate that the future annual subsidy would not be less than 100 per cent, nor more than 200 per cent, of the employees' contributions. The lower limit involves retrospective action, and includes the other modifications of benefits provided in the Bill under consideration by the Committee. (7) If the present indebtedness is paid, and a pound-for-pound subsidy provided, would it be necessary to reduce benefits ? Yes, to the extent of the equivalent of an aggregate capital value of approximately £10,500,000 (8) From your knowledge of other Superannuation Funds, would a pound-for-pound subsidy be reasonable ? . . , In my statutory actuarial valuations of the funds, I have, on more than one occasion, pointed out that a pound-for-pound subsidy was not too great a price to pay for a superannuation scheme, and that such a plan was very commonly followed in the pension funds of other Governments, local authorities, and private employers.

295

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It has also been suggested that I supply any information that would be of assistance to the Committee along the lines suggested by Mr. Caughley. Possibly the most important issue raised by Mr Caughley m connection with the National Expenditure Commission's Report is contained at the end of his paragraph 66, which reads Note that in the first case it is stated that " The adverse position of the fund to-day is largely due to this policy of early retirements," while in the second case it is stated " that there is a relatively little saving to the three funds " by the operation of the £300 limit. This is followed by an implication in the following paragraph that in actual fact the policy of early retirements may represent only a small additional liability on the fund, while the retention of the arbitary pension limitation of £300 may be a large saving. In this connection it is probably unnecessary to do more than glance at the evidence submitted to the Committee. It is significant that almost without exception every organization making representations to the Committee stressed the enormous burden thrown on the funds by early retirements, while the only organizations to definitely oppose the lifting of the £300 maximum pension limit were certain Railway associations, few (if any) of whose members would be eligible to receive a pension in excess of £300 and the Association of Superannuated Public Servants, all of whom are exempt from the limitation' and many actually m receipt of pensions in excess of £300. As a great deal of misconception appears to exist regarding the degree of cost involved in lifting this £300 bar, it may not be out of place to analyse the position. Of the total of 1,231 retired teachers receiving pensions of £218,110 per annum at 31st January, 1930, 168 were in receipt of pensions in excess of £300 per annum, and the total of such pensions m excess of £300 per annum was £13,495, which excess represents 6-19 per cent, of the total annual pension bill. Some of the Railway witnesses mentioned under examination the annual outgo due to pensions over £300 in respect of the Railways Fund, and from memory the percentage given of these excess pensions to the total pension bill was also around 6 per cent. I have no similar figures m connection with the Public Service Superannuation Fund, but even assuming the percentage to be as high as 10 per cent., we would have a maximum of about 8 per cent, for the combined funds as compared with 3 per cent, certified f>y the Government Actuary in 1920. The difference between these two percentages is, of course, entirely due to the increase in retiring salaries during the period In view of the misleading figures put before the Committee in paragraphs 46-49 of Mr. Caughley's statement and his unwillingness to admit under cross-examination that a comparison at different dates of average salaries at all ages was meaningless as far as the relative amount of pensions is concerned 1 submit hereunder figures taken out in connection with my 1927 valuations of the funds, giving a comparison of the average salaries of all existing contributors aged 50 and over at 1913, 1919, and 19271' '

■ — L_ ' 1 I These figures give an unmistakable indication of the extent of the increase in average pensions due to increases in the retiring salaries. As the arbitrary pension limitation of £300 will not be fully effective till 1949—that is, forty years from the 1909 Act, any estimate of the effect of its removal renders necessary an endeavour to forecast how the 1949 retiring salaries of the senior officers will compare with those of pensioners existing at 1919 and with those of pensioners now existing. In this connection it is important to realize that pensions are based on " final " salaries, and that in the interval from 1919 to the present time there have been three salary cuts in these " final " salaries of senior officers—namely, £35 in 1921-22 10 per cent, in 1931-32, and from 10 per cent, to 12§ per cent, in 1932-33. As it may be taken as an axiom tnat almost every officer who was approaching the date of retirement exercised his option to contribute on his salary prior to the cuts, it is clear that recent pensions are based on final salaries that are about 25 per cent, higher than salaries now being paid. It follows that officers who joined the Service after December, 1909, and who accordingly have some twenty years of service in front of them can scarcely expect to reach the level of retiring salaries on which the pensions of present annuitants are based. It will, I think, be readily agreed that 1949 retiring salaries are more likely to approximate nearer to the salaries received by pensioners who retired prior to 1919 than to the post-war inflated salaries T ponn present P enslons are bas ed, and that the percentage of 1949 and subsequent pensions in excess of £.300 per annum to the total pension bill will accordingly approximate nearer to the 3 per cent, calculated by the Government Actuary in 1920 than the present estimate of approximately 8 per cent.

296

Average Salary of Members aged 50 and over. Increase of — 1927 over 1913 Level. 1913. 1919. 1927. Teachers' Fund— £ £" £ £ ales • • • ■ • • • • .. 288 390 491 203 Females .... .. .. .. 162 265 323 161 -Public bervice Fund— 7 M ales • • • • • • ■ • ■ • 275 346 398 123 Females m m 243 m Kail ways I 1 una— First Division 304 397 i2 9 125 (second Division .. .. .. .. i 6 4 216 264 100

1.—15.

No investigation has ever been made into the extent of the funds' liabilities in respect of the number of present contributors who joined the Service after the 24th December, 1909. If, as a rough approximation after allowing for the fact that the bulk of their pension liabilities will not emerge until 1949, we assume that such pension liabilities represent half of the present pension liabilities in respect of all existing contributors, we obtain a capital liability of £10,000,000, and if we further assume that the excess pensions of such officers over and above £300 per annum represent 3 per cent, of the total pensions granted to officers joining after 1909, we see that the effect of removing the arbitrary £300 pension limitation would not increase the present total capital liabilities by more than £300,000. In actual fact, the extra capital liability thrown on the fund would be much less than this figure of £300,000, since a large proportion of the contributors affected would have contributed more than the value of a £300 pension, and would make representations to be compulsorily retired so as to receive the benefit of return of contributions with interest at 3 per cent. As this benefit would, in general, be more costly to the Superannuation Funds than the granting of a retiring-allowance of £300 per annum, the above-mentioned estimate of the cost involved in removing the arbitrary limitation would be correspondingly reduced. I have pointed out in statutory actuarial reports on the Superannuation Funds that the difference between retiring an officer with thirty-five years' service on a pension of thirty-five-sixtieths of salary and. on an actuarial pension is represented by an increased liability averaging over 30 per cent., so that it will be seen that it is ten times as costly to embark on a policy of retiring men after thirty-five years' service without the safeguard of an actuarial pension as it would be to lift the embargo regarding the £300 pension limit. There is a further aspect of this arbitrary pension limitation which has not been set before the Committee, and that is its anomalous effect on actuarial pensions. If an officer paying contributions on his salary of £900 per annum retires after the completion of forty years' service, he receives a pension computed at a rate for each year of service equal to only one-half of the rate received by an officer of similar age and service retired on £450, but he at least receives the same annual pension (£300). If, however, after twenty-five years' service these officers are retired on actuarial pensions in accordance with the compulsory provisions of the Act, the officer receiving a salary of £900 per annum will actually be granted a pension of smaller amount than the officer drawing a salary of £450, this paradoxical result being due to the fact that the loss to the fund of his future contributions would be greater than in the case of the officer drawing £450 per annum. The fund, having in each case to provide for a deferred pension of £300, requires less capital in hand if its future income from contributions is greater, and accordingly will pay a smaller immediate pension to the larger contributor if he is compulsorily retired on an actuarial pension. Having established that with an arbitrary maximum limit of £300 the higher the officer's salary the smaller will be his actuarial position, it only remains to be seen whether it is possible for an officer's actuarial pension to vanish altogether—i.e., a reductio ad absurdum. Such a position would arise in the case of any officer joining the fund after 24th December, 1909, at age 20 who succeeded in attaining a salary of £2,840 or over at age 45 and was then retrenched. We have recently seen a General Manager of Railways in receipt of £3,500 per annum at age 45 retired under the compulsory provisions of the Act, and if he had been subject to the £300 pension limit, his actuarial pension would have been nil. This may readily be verified from the fact that future contributions to the Superannuation Fund of £175 per annum from age 45 to age 60 would be of greater capital value than a maximum deferred pension of £300 per annum at age 60, and accordingly if future contributions are more than sufficient to provide the benefits the fund would lose by his compulsory retirement even if it paid him no pension. Amid the welter of evidence that has been submitted to the Committee, there is also the danger that in connection with this £300 arbitrary limit, the aspect of grave injustice to the higher-paid officers —which has never been denied —may obscure one of the fundamental reasons for establishing a staff superannuation scheme —namely, to induce men of ability to join and continue in the Service, and to offer a suitable reward to those who rise to high positions as the result of outstanding merit. A superannuation scheme is not established by an employer —whether a Government or a private firm —from philanthropic motives, but rather from motives of enlightened self-interest. The State, in common with any employer of labour, does not remunerate its officers on philanthropic grounds nor on the basis of levelling-down all salaries to a uniform amount irrespective of the work performed, and it is unreasonable to suppose that it has in mind an intention to depart suddenly from sound business principles just when some of its employees reach old age. My object in stressing this aspect of the employer's motive is that once the principle is admitted that the establishment of a superannuation scheme is from an enlightened self-interest, we are infallibly led to a certain line of reasoning regarding the relative benefits a Superannuation Fund should pay and the way the employer's subsidy should be allocated. The opinion of any competent critic on the New Zealand Government superannuation scheme with its maximum pension of £300 per annum, especially when considered side by side with the minimum pension of £300 provided by the superannuation fund of the Bank of New Zealand, would not only be unflattering to the State, but would also bring out prominently that those responsible for the 1909 amendment lost sight of the elementary principles of a staff superannuation scheme. Compared with the generally accepted idea that merit should be rewarded and an adequate subsidy paid on the contributions of all employees, the State is actually penalizing its future senior officers, and in effect allowing the funds to confiscate portion of their contributions and interest accretions.

297

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Mr. Caughley further submitted a lengthy list of requests for information, prefacing his application as follows : — " It can readily be seen from the reports already made by the Actuary that nearly all of the information thus desired must be already compiled on his working-sheets, so that the chief extra work would be the re-arrangement of available sectional data in the form requested by the Committee." Apart from the fact that these working-sheets only cover to 1930 in the case of the Public Service and Teachers' Funds and to 1927 in the case of the Railways Fund, the problem is unfortunately not so simple as to permit of the bases being taken to pieces in sections or hurriedly rebuilt under altered conditions. It may not be out of place to point out that a valuation of the liabilities of a superannuation fund involves following each contributor through his service to the date of his retirement or withdrawal, estimating his future increases in salary 011 which pensions and contributions are based, and in the case of those who die in service making further investigations into the probability of leaving a widow, her age, and the number and ages of surviving children, &c. As the Government Superannuation Funds have a membership of about 46,000, it will be clear that practical considerations of time and effort require the fixing of certain fundamental experience rates of withdrawal, mortality, retirement, marriage, remarriage, &c., all of which are interwoven in the formulae employed in valuation. If it is subsequently decided to test the effect of alterations in the rates of retirement or other fundamental factors, it is not practicable by a few additions here and subtractions there to readily ascertain the effect of such an alteration, but it is necessary to compile fresh experience tables and make another valuation. Any one familiar with the immense amount of routine work involved in the valuation of a pension fund would realize the amount of delay involved in supplying the information sought by Mr. Caughley. Furthermore, it is submitted that the information, while possibly of academic value, would not advance the Committee one step forward in its deliberations. Each Superannuation Fund is in a very sick condition, the diagnosis of the complaint is concurred in by every expert who has made an examination and never seriously questioned by any service organization. Mr. Caughley's suggestion to delay the necessary major operation so vital to save life, and hold instead a series of hypothetical post-mortems is dangerous, as it would probably necessitate an actual post-mortem two or three years hence. A post-mortem may be of scientific interest, but is powerless to restore a corpse to life. In order that there may be no possibility of the Committee being misled by some of the irresponsible statements put forward that the funds can carry on as they have done in the past, I have prepared as an appendix to this report a concise financial summary of each fund at the successive dates of actuarial valuation, together with a rough estimate of the position of the combined funds at the end of the financial year 1931-32. It will be seen from these summaries that I have adopted for illustrative purposes the plan of regarding the accumulated funds as applicable first to a hypothetical " Pensioners' Account " and the balance (if any) to a " Contributors' Account." This strips the problem of all technicalities, and throws the position of the funds into a clear perspective. The tables should convince every thoughtful investigator that reconstruction is urgently needed, and that the alternative, is for the State to ultimately shoulder the enormous liability shown therein. A perusal of the last annual report of each of the funds shows that the outgo for the last financial year exceeded the income, and it became necessary to liquidate assets to provide the balance, and it is clear this feature must be cumulative in the future. For the purpose of examining the position more closely, and considering the prospects of future liquidation of assets, I submit herewith in a somewhat amplified form the figures given in the appendix for the Combined Superannuation Funds as at the 31st March, 1932 : — " Pensioners' Account." Dr. £ Gr. £ £ Approximate present value of pensions of Government securities .. .. 966,850 £1,099,891 per annum to 5,823 pensioners 11,000,000 Rural Advances bonds and Rural Approximate present value of allowances to Intermediate Credit bonds .. 467,196 2,481 widows and children .. .. 600,000 Local-body debentures .. 876,496 Mortgages .. .. ..3,298,356 Miscellaneous assets .. .. 15,975 5,624,873 Deficiency .. .. .. .. 5,975,127 Total.. .. .. ..£11,600,000 Total .. .. .. £11,600,000 " Contributors' Account." Dr. £ Or. £ Approximate present value of prospective Approximate present value of future contripensions, allowances, &c., to 40,308 con- butions of existing contributors .. .. 5,600,000 tributors .. . - 24,000,000 Deficiency .. .. .. .. 18,400,000 Total.. .. .. ..£24,000,000 Total .. .. .. ..£24,000,000 It will be seen from the above that there is a deficiency of approximately £6,000,000 sterling in the hypothetical " Pensioners' Account " and over £18,000,000 in the " Contributors' Account," giving a capitalized total deficiency of over £24,000,000 sterling to be made good by the State in future subsidies.

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A simple calculation shows that it will require an annual subsidy of more than £1,000,000 sterling to keep this deficiency from increasing, or a much higher subsidy if the deficiency is to be eventually redeemed. I have mentioned above that as the result of the present inadequate Government subsidy each of the funds was compelled to liquidate securities last year to enable benefits to be paid, and that such a process will be cumulative. In order to see to what extent continued liquidation of securities is practicable in the future, I submit approximate statements of estimated receipts and expenditure taken from evidence submitted to the Committee by the Accountants of the several Superannuation Funds : —

It is perhaps advisable to mention in connection with these figures that they are not estimated Revenue Accounts, since in compiling them the officers ignored accrued interest on doubtful mortgages, &c., and that the main purpose of their compilation was to furnish an approximation to the amount of assets the Superannuation Funds would require to liquidate for the year 1932-33. It will be seen from the figures that the Combined Superannuation Funds require to liquidate £326,700 of assets in the current financial year in order to meet pensions and allowances. If reference is made to the hypothetical " Pensioners' Account " submitted above, it will be seen that the total Government securities (£966,850) will have to be sold within the next few years, after which action must be taken in respect of the Rural Advances bonds and the local-body debentures. As far as mortgages are concerned, it is probably hopeless at the present time to consider the realization of such securities. Looking at the Superannuation Funds separately, the Public Service Fund is in the best position as far as Government securities are concerned to meet its current liabilities by liquidation of assets, the Railways Fund represents the average, while the Teachers' Fund is in the worst position. As shown in the above table the income for the current year is expected to fall short of the outgo by £130,200. As the Teachers' Fund has only £108,800 in Government securities, the whole amount will,_ in the absence of a more adequate State subsidy, have to be liquidated this year. In the two succeeding years the whole of the Rural Advances bonds and local-body debentures will have to be realized, leaving only the mortgage securities, which totalled £884,354 out of the total funds of £1,218,166 at the 31st January, 1932. I have repeatedly stressed in statutory actuarial reports that the pension and other outgo would tend to increase for many years to come, and that the accumulated funds were not increasing fast enough to enable the dormant liabilities to be met as they emerged. This stage of the funds' history should under normal circumstances be a " paying in " stage, and the mere fact that the funds have been compelled to liquidate securities to meet their liabilities, and in a short period will be left with assets consisting solely of mortgage securities that are practically unrealizable except with very heavy loss, is sufficient indication of the vital need of immediate action to strengthen the funds by more adequate State subsidies or by reconstruction of the benefits, or by a combination of both.

299

p— - j j Public, i , t* m I Combined — Service. Teaohers • j Railways. | FundsReceipts, £ £ £ £ Contributions 214,700 106,000 121,200 441,900 Government subsidy 86,000 43,000 170,000 299,000 Interest .. "3,500 55,000 67,000 235,500 Sundries 900 •• 100 ] - 000 Shortage '' 92 > 400 130 > 200 104 > 100 326 ' 700 507,500 334,200 462,400 1,304,100 Expenditure. Pensions and allowances .. .. •• •• 455,000 300,200 435,300 1,190,500 Refunds on withdrawal .. .. •• •• 45,000 3( ?' 0 ®® o'cnn if!'inn Expenses 7,500 4,000 3,600 15,100 507,500 334,200 462,400 1,304,100

1.—15.

Appendix. Public Service Superannuation Fund.

Teachers' Superannuation Fund.

Railways Superannuation Fund.

Government Superannuation Funds (Combined).

Note.—The first valuations were made as at 31st December, 1910, for the Public Service and Teachers' Funds and 31st March, 1912, for the Railways Fund. The last valuations were made as at 31st March, 1930, for the Public Service Fund; 31st January, 1930, or the Teachers' Fund ; and 31st March, 1927, for the Railways Fund.

300

And if the Value of Aa , With ProspecSlr, With „ . „ Existing Widows' While the iJ'I t ( - The Net On Pensioners Pen3kms Capital and Orphans' Allow- Amount at Leaving there were t/'wurf Beratt is a on the amounting v^e of ances are added > 0redit ° f the 8 Contrihn Benefits less Deficiency on tne to value oi giving a Total Fund was Oontnbu Beneiits Jess . Fund Current Liability of tors Contnbutionsof (1) (2) (3) (4) (5) (6) (7) (8) (9) £ £ £ £ £ £ £ 31/12/10 .. 380 38,253 320,623 337,372 263,948 Dr. Bal. 73,424 8.371 1,658,684 1,732,108 31/12/13 .. 539 56,744 464,919 502,303 537,914 Gr. Bal. 35,611 10,809 2,417,077 2,381,466 (Increase, of) (164,931) (273,966) (Gr. 109,035) (758,393) (649,358) 31/12/16 .. 710 80,343 660,139 727,366 896,568 Gr. Bal. 169,202 13,313 3,176,283 3,007,081 (Increase of) (225,063) (358.654) (Gr. 133,591) (759,206) (625,615) 31/12/19.. 840 107,505 946,777 1.052,110 1,288,198 Or. Bal. 236,088 14,216 4,379.077 4,142,989 (Increase of) (324,744) (391,630) (Gr. 66,886) (1,202.794) (1,135,908) 31/3/24 '.. 1,377 236,5092,198,747 2,323,988 2,103,543 Dr. Bal. 220,445 15,021 5.313,728 5,534,173 (Increaseof) (1,271,878) (815,345) (Dr. 456.533) (934,651) (1,391,184) 31/3/27 .. 1,563 299,504 2,779,977 2,924,825 2,493,790 Dr. Bal. 431,035 16,914 6,228,735 6,659,770 (Increaseof) (600,837) (390,247) (Dr. 210,590) (915,007) (1,125,597) 31/3/30 .. 1,706 338,009 3,079,044 3,375,540 2,882,504 Z)r. Bal. 493,036 17,976 7,378,403 7,871,439 (Increase of) (450,715) (388,714) (Dr. 62,001) (1.149,668) (1,211,669)

And if the Value of witl > ProspecThere wiUl | Existing Widows' While the The Net were Pensions | and Orphans'Allow- Amount at TenvW tw» r ® vS rf" Result is a OT the amounting | , ances are added, Credit of the Leav,n 8 Contribf Benefits less Deficiency [Fund to Value of Fund was Contota of of (1) (2) (3) (4) (5) (6) (7) (8) (9) £ £ £ £ £ £ £ 31/12/10.. 179 12,845 123,858 136,492 154,212 Or. Bal. 17,720 3,247 1,001,538 983,818 31/12/13.. 334 27,932 277,705 293,454 265,136 Dr. Bal. 28,318 4,017 1,415,279 1,443,597 (Increase of) (156,962) (.110,924) (Dr. 46,038) (413,741) (459,779) 31/12/16 .. 455 42,190 416,664 436,823 381,158 Dr. Bal. 55,665 4,653 1,746,151 1,801,816 (Increase; of) (143,369) (116,022) (Dr. 27,347) (330,872) (358,219) 31/12/19 .. 568 59,*985 634,581 662,549 526,702 Dr. Bal. 135,847 5,016 2,677,329 2,813,176 (Increase of) (225,726) (145,544) (Dr. 80,182) • (931,178) (1,011,360) 31/1/24 .. 830 114,511 1,223,700 1,256,441 858,662 Dr. Bal. 397,779 6,852 3,676,769 4,074,548 (Increase of) (593,892) (331,960) (Dr. 261,932) (999,440) (1,261,372) 31/1/27 .. 1,003 166,867 1,733,206 1,770,374 1,083,155 Dr. Bal. 687,219 8,371 3,960,579 4,647,798 (Increase of) (513,933) (224,493) (Dr. 289.440) (283,810) 573,250) 31/1/30 .. 1,231 218,1102,220,515 2,293,201 1,198,711 Dr. Bal. 1,094,490 9,614 4,464,712 5,559,202 (increase of) (522,827) (115.556) (Dr. 407,271) i (504,133) (911.404)

1 And if the Value of : . with Prospecwere ' Wlth : Having Existing Widows' While the Addition The Net On PenMoners] Penslons ! Canita! and Orphans'Allow- Amount at ; Lea vine there were ft Valueof Result is a on the amounting ' an,.es are added, Oredrt.of the ; ConUu BeieXs less Deficiency Fund to | Current Liability of j tors Contributions(1) (2) (3) (4) (5) (6) (7) (8) (9) £ £ £ £ £ £ £ 31/3/12 .. 714 52,463 390,828 442,021 233,457 Dr. Bal. 208,564 9,248 1,568,287 1,776,851 31/3/19 .. 1,001 89,315 756,663 867,818 363,804 Dr. Bal. 504,014 10,657 3,455,441 3,959,455 (Increase of) (425,797) (130,347) (Dr. 295,450) (1,887,154) (2,182,604) 31/3/27 .. 1,417 221,522 2,034,431 2,257,446 985,828 Dr. Bal. 1,271,618 13,310 5,538,586 6,810,204 (Increase#/) (1,389,628) (622,024) (Dr. 767,604) (2,083,145) (2,850,749) 31/3/32 .. 2,296 415,954 4,500,000* 1,454,173 Dr. Bal. 3,045,827 12,828 6,400,000* 9,445,827* * These capital values as at 31st March, 1932, have not been obtained by actuarial valuation, but are rough estimates only.

And if the Value of I With ITospec'Si™ 6 ! With IT-Wmu Existing Widows' 1 While the ArfriVi™ wltViaSfes— The »«t it Pensioners Pralaions CapitaT and Orphans'Allow- Amount at Leaving ttere vere ?eValue of Result is a At Pe oS thl i amounting V °X of ances are a(Wed > Credit of the g Contribu Beneflts less Deflcieney E to valUL ot giving a Total Fund was t„" hu ™ of Fund j | current Liability of tors Contributions— (!) (2) (3) (4) (5) (6) ' (7) (8) (9) £ £ £ £ £ £ £ First valua- 1,273 103,561 835,309 915,885 651,617 Dr. Bal. 264,268 20,866 4,228,509 4,492,777 tion 1919 valua- 2,409 256,805 2,338,021 2,582,477 2,178,704 Dr. Bal. 403,773 29,889 10,511,847 10,915,620 tion (Increase of) (1,666,592) (1,527,087) (Dr. 139,505) (9,023) (6,283,338) (6,422,843) Last valua- 4,354 777,6417,333,990 7,926,187 5,067,043 Dr. Bal. 2,859,144 40,900 17,381,701 20,240,845 tion (Increase of) (5,343,710) (2,888,339) (Dr. 2,455,371) (11,011) (6,869,854) (9,325,225) 31/3/32 (T. 5,823 1,099,891 .. 11,600,000* 5,624,873 Dr. Bal. 5,975,127 40,308 18,400,000*24,375.127* 31/1/32) * These 1932 capital values have not been obtained by actuarial valuation, but are rough estimates only.

L—ls.

Wednesday, 15th February, 1933. The Chairman: Members of the Committee will remember that the question was raised at our last meeting as to whether copies of the evidence tendered in committee by Mr. Verschaffelt, Mr. Gostelow, and one or two others could be given to the press and to the different service organizations. I said I did not think we could do it under the Standing Orders ; but, in order not to override the Committee in any way at all, it was agreed I should confer with the Speaker. The Speaker has ruled that under present conditions it cannot be supplied. Mr. Veitch : I suppose that bar remains until the Committee has reported to the House ? The Chairman : That is so. Also, during the recess there were issued to you copies of the letters that were to be put in as evidence on behalf of a large number of superannuitants in particular. I want now just formally to move that all letters that have been received be included in the minutes of evidence and be printed —they have been printed, but I want to get it on record. Agreed to.

Colonel T. W. McDonald examined. (No. 47.) 1. Compulsory Early-retired Annuitants. I am chiefly concerned with that class of superannuitant that comes under the provisions of section 52 of the Finance Act, 1920, and section 28 of the Finance Act, 1921. The former Act provides that the Defence Minister may retire contributors whose commissions dated prior to the Ist day of November, 1920, and whose age is not less than 55 years. This amendment was made to enable those officers who, by an amendment of the Defence Regulations made after they joined the fund, had their retiring-ages reduced to 55 years of age, to qualify for superannuation. There were about sixty-seven such officers, and the Government, presumably after referring the matter to the Actuary to fix the sum required to prevent any extra burden being placed on the fund by these compulsory early retirements, agreed with the Superannuation Board to pay into the fund the sum of £20,000. This sum was actually paid to the Superannuation Board out of the Defence Vote from the Consolidated Fund in 1920 expressly to meet the extra liability that would otherwise have been thrown on the fund by the compulsory early retirement of the sixty-seven officers. The actual wording in the Defence estimates when the sum passed the House was as follows : " Grant to Public Service Superannuation Fund to provide superannuation allowance for those officers at present (1920) in the employ of the Defence Department, who, although contributors to the Public Service Superannuation Fund, cannot under present conditions qualify for annuities, £20,000." From this it will be seen that even if all these sixty-seven officers had retired under this provision at one-sixtieth of their average salaries for the last three years for each year's service—and this was the basis on which the £20,000 was granted—their early retirements would not entail any extra burden on the funds, because that extra burden has been specially provided for. But of these sixty-seven officers some thirty retired of their own volition in preference to waiting to retire under the above provisions. They received a return of the contributions and compensation for the loss of office. For the purpose the State made a further grant of some £7,000 to be paid to those thirty officers in lieu of superannuation, so that the special grant of £20,000 has to meet, the deficiencies through early retirement of only thirty-seven officers instead of sixty-seven. Therefore the fund has been assisted in these cases instead of being injured as the Bill implies. The last thing these sixty-seven officers wanted was early retirement, as they were fit for much longer service and the goal of their careers lay ahead of them. But the Government who recognized this fact was anxious, on the ground of a general retrenchment and reorganization scheme, to retire several of these officers without waiting until they reached the age of even 55 years, and in order to legalize the matter Parliament passed section 28 of the Finance Act, 1921. The retired officers concerned were informed that the £20,000 had been granted by the State to meet these particular cases, and that their names were included in the purpose of the grant. The Superannuation Board and the Actuary must have been supplied with the names of these sixty-seven persons and been made acquainted with and approved the arrangement. The Claims Committee that deals with individual claims must also have been informed of these names and the arrangement made, and must have approved the terms on which these persons were to have the deficiencies to the funds made good out of the £20,000 specially granted for the purpose. 2. Retiring-allowances limited to £300 per Annum. The Finance Act, 1921 (section 28), placed a limit of £300 per annum on the amount these officers could draw as retiring-allowances, and this resulted in heavy losses to some of those concerned who, instead of receiving their agreed-upon allowances, received only £300, although the £20,000 grant provided for one-sixtieth of the last three years' average salary for each year's service. This section specially provides a safeguard against these retiring-allowances being affected by the discontinuance of that section. It reads, " Save that the expiry of this section shall not affect the continuance of any retiring-allowance granted thereunder." It must therefore be obvious that, as far as these officers are concerned, they did all that it was possible for them to do ; that their compulsory early retirement caused no extra burden on the funds ; that their retiring-allowances as now being received have been fully paid for, partly by contributions by themselves, and the balance by the State ; and that there is nothing to make up and therefore no legal or moral reason for including them in the provisions of the Bill, unless, indeed, their retiring-allowances are to be paid for twice.

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3. Method recommended by Actuary and others. The very method adopted in these cases of compulsory early retirements through no fault of their own, or wish of their own, is recommended by the Actuary in his 1932 report to be applied to all similar cases. He states, "It is not my function to comment on policy matters, but I would be lacking in my responsibility if I did not enunciate the general principle that any additional financial strain on the Superannuation Funds due to policy measures of Government should be a charge on the Consolidated Fund by way of special subsidy." I understand that this view is generally held, and it certainly has been admitted by the Government who adopted it in these cases. 4. Compulsory Early-retired Annuitants suffered most. That the officers who were thus compulsorily retired early through no fault or wish of their own suffered more loss than any other class of annuitant will be apparent from the following facts taken from a typical case of one of them : — Age when notice of retirement was received, years (approximate). Salary when notice of retirement was received, £800 per annum. Number of years before reaching normal retiring-age of 65 years, 12J. Difference per annum between salary and retiring-allowance, £500. Total difference for period between date of retirement and normal retiring-age of 65, £6,166 13s. 4d. Difference per annum between present retiring-allowance and what it would have been at normal retiring-age of 65, £224 Bs. lOd. per annum. Thus it will be plainly seen that this class of superannuitant has suffered most whilst the State has gained most of their early retirements, and the funds have not suffered at all. Yet, strange to relate, this is the very class of annuitants that the Bill proposes to deal most drastically with. 5. Why were these Persons not exempted by the Bill. Under the circumstances related above it is not understandable how these persons, whose retiringallowances have been fully paid for without any extra burden to the funds, were omitted from the exemptions under clause 12 of the Bill. If the Bill is proceeded with, as I hope it will not be, it is only justice that these persons should be included in the exemptions. 6. An Irreparable Hardship. If the exemptions referred to are not made not only will their retiring-allowances be paid for twice, but an irreparable hardship will be inflicted on the annuitants concerned. These persons (in common with all others who joined the scheme) accepted the assurance of the Government to the effect that those joining the scheme would be enabled to make provision for their old age, wife, and family, and that the savings under the scheme could never be lost; that in the majority of cases the contributors would live to become pensioners, and that the pensions they would receive would come to far more than their own contributions could have purchased, and " that the balance would be provided by the Government subsidy." Surely there could not have been a more definite undertaking on the part of the State to provide any balance beyond contributors' contributions required to keep the funds solvent than this promise which was made in writing to members of the Public Service when the Government was inviting them to become contributors, and on this clear understanding they became contributors. Therefore, if there is any honour left in the Government it will stand four-square to its obligations under its contracts and not seek by passing this Bill to make those who have strictly performed all their obligations also pay for the default of the Government. 7. Too late now to make other Provision for Old Age, &c. By accepting the assurances held out to them by the Government when inducing them to join the scheme, public servants placed implicit faith in the Government's promises and undertakings, and, not being able financially to support more than the scheme to provide for their old age, wives, and families, they decided to accept the State's offer and joined the superannuation scheme in preference to any other. Some who had made other provision abandoned it in favour of the Government's scheme, firstly, because the inducements were better, and, secondly, because they considered it a duty to support the State's scheme. Now when many of them have reached old age and it is quite impossible for them to make any other provision for their remaining days, the Government by this Bill threatens repudiation. It is quite a different matter for those who are young enough and able to make other provision, but it would be difficult to imagine an act so brutal and so atrocious as to bring under the Bill those whose age precludes the possibility of their making other adequate provision. It is also a fact that even if public servants had not joined the Government scheme at the very beginning the law was soon amended to make it compulsory for them to do so in 1909. Then again, once the contracts had been signed, sealed, and delivered, so to speak, and contributors became annuitants on a definite sum for life, they were justified in entering into liabilities, and did so, which they knew they could meet, but which under the proposals of the Bill spell absolute ruin for them and grave injustice to those with whom they entered into the liabilities. Surely this vital point of difference between these and other cases has been overlooked.

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8. The Bill adopts the Principle that those who have Most shall receive More and vice versa. This is proved by the fact that under paragraph (a) of subclause (1) of clause 12 those who have contributed to the funds for the short periods of from one to thirteen years only have received the maximum benefits from the funds and from the State by way of salaries, and towards whose retiringallowances the State undertook to subsidize most, from thirteen to thirty-nine years are absolutely exempted from the provisions of the Bill. Whereas most of those who come under subclause (3) have contributed to the funds for longer periods than those under paragraph (a) above, the State had to accept considerably less liability for back service for them ; they suffered heavy loss of salary through their compulsory early retirements ; they receive considerably less retiring-allowances. Yet these officers are singled out for the harshest treatment under the Bill. To say that those under paragraph (a) above completed their service and therefore carried out the original Act is saying no more than that the Government specially favoured them, and because of that favour they are entitled to another favour at the expense of their fellow-annuitants who were not so favoured in the first instance, and that first favour has degenerated into a vicious circle. 9. Bill aims at making Annuitants and Contributors pay the State's Debts. The chief object of the Bill appears to be to compel annuitants and contributors to pay the shortages in the funds caused by default on the part of the State over a period of years, when it had overtaxed the people by millions of pounds, squandered millions of pounds on unnecessary undertakings, and instead of conserving the contributors' contributions to meet their retiring-allowances the State has used them to meet current retiring-allowances instead of meeting those allowances out of State subsidies for back service in accordance with its contract with those who joined the funds. 10. The Scheme has materially relieved other State Liabilities. Through the introduction of the Superannuation scheme the State was able to, and did actually, transfer to the Superannuation Funds a liability of about £700,000 created under former Acts and having nothing to do with the superannuation scheme. There is not the slightest doubt that in addition to the scheme ensuring vastly increased efficiency in the Public Service it ensured provision being made that kept at least one hundred thousand people from State-aid in other directions, either directly or indirectly, and, above all it, fostered a spirit of self-reliance in a very large section of the community, which spirit of self-reliance is of considerable national importance. It relieved the unemployment problem considerably, so that it ill becomes the State to shirk its responsibilities in a matter of such importance to it. 11. Honour and Sanctity of Contracts at Stake. Every annuitant and contributor has a contract with the State, which contract was made by offer and acceptance in writing, such offer and acceptance imposing upon both parties thereto obligations to one another. " The law relating to contract is intended to ensure that what a man has been led to expect shall come to pass ; that what has been promised shall be performed " (Anson). " Contract," says Garrow, " is an agreement enforceable at law, made between two or more persons by which rights are acquired by one or more to acts of forbearance on the part of the other or others." Pollock says that " a contract is a promise or set of promises which the law will enforce." It is therefore upon this foundation that law, the object of which is order, that " men are enabled to look ahead with some sort of security as to the future." The contracts between the State and superannuitants and contributors respectively not only conform strictly to the definition of Anson, Pollock, and Garrow, but they have also had the approval of Cabinet and the Superannuation Board and in some cases, if not all, the special approval of the Attorney-General. Definite offers were made by Act of Parliament, and promulgated in writing through a responsible Minister of the Crown and with the sanction of the Superannuation Board. These offers in the case of annuitants were duly accepted, also in writing, by the persons concerned and confirmed by the Board and by Cabinet, and the confirmation communicated to the annuitants concerned. It was not possible to become a contributor to the fund until the offer had been so accepted. Thus were concluded the most solemn and binding form of contract which Anson, Pollock, and Garrow say is enforceable at law. It is certain that if such contracts had been made between subjects of the same State that is now threatening to repudiate them because they are made between that State and its subjects, that State would be enforcing the contracts through its Courts of law. Lord Chatham said " that the weak (the ' subject'), the defenceless, shall not be governed by the arbitriiim of any man, but only by the due and orderly process of the justice which is necessary for their liberties and their defence." But because the State is the more powerful of the parties to these contracts it is assuming in this Bill the right, through its omnipotent power, to disregard its obligations to its subjects, whose power against the State is impotent. And be it remembered that the annuitants and contributors have done all they undertook to do, or that the State made it possible for them to do, whilst the State itself has defaulted on its part and is threatening to use the force of Parliament in order to contract itself out of its liabilities to the other parties to these contracts, who have strictly complied with the terms of those contracts, thus exercising that powerful and world-condemned weapon of might over right and thereby embarking upon a policy of dishonouring its lawful obligations and treating its agreements as mere " scraps of paper."

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12. A Gentle Reminder. Lest Parliament and the Government forget, it might be well to remind them that the greatest conflict of armed forces in history was due to a breach by the then strongest military nation in the world of an agreement with a weak military nation, and the violating nation sought, just as this Government is seeking by this Bill, to enforce its breach by might against right. The lesson that the Government should learn from that great tragedy is that although might had an initial success, yet right triumphed in the long-run, as it will in this case. Germany persisted that " Self-preservation is the State's highest ideal, and justifies whatever action it may take as a means to that end," and added that " The State is the sole judge of its own morality—of its own action." It is in fact (she said) above morality, or in other words, whatever is necessary is moral, just as this Government is implying by this Bill. Again Germany said " Becognized rights are never absolute rights ; they are of human origin and therefore imperfect and variable. There are conditions in which they do not correspond to the actual truth of things ; in this case the infringement of the right appears morally justified." After reading the above an impartial observer would say that the Bill was made in Germany. 13. Which of the Two Doctrines, the British or the German, does the Government subscribe to now ? The following communications that took place between representatives of the British and German States when the latter was threatening a breach of the Treaty of Belgium and the use of might over right: Britain requested Germany to settle the dispute by a conference of nations and without resort to armed conflict. Germany replied as follows : "It is to us a vital matter of strategy, and it is beyond argument." Britain answered that "It is to us a vital matter of honour, and is beyond argument." The latter view was endorsed by Parliament and the Government of this Dominion then. How do they stand on this question to-day ? Are they going to stand by their professions of 1914 or have they since discovered that Germany after all was right and " that no promises are binding where the vital interests of a State are in question ? " The Bill is weighty circumstantial evidence that the German view is now favoured, and that " necessity knows no law." 14. What this Country did to preserve the Sanctity of Contracts and to defend Right against Might. The German doctrines against which the world war was waged for four long weary years, and in which New Zealand organized and dispatched to foreign countries over one hundred thousand citizen soldiers, of which over sixteen thousand, including thirteen nurses, paid the supreme sacrifice, and about forty-one thousand were wounded, and created a war debt of approximately seventy million pounds, was fought in order to uphold the sanctity of contract and to defend right against might. About thirty-two thousand of this army were forced by Parliament and the Government under penalty of imprisonment if they refused to go overseas and fight against the German doctrines of dishonouring contracts and of using might against right. 15. A Strange Coincidence. It may be a pure coincidence that to enable the Government then to more effectively put its plans into operation against the German doctrines, a Coalition Government was formed and the life of Parliament was extended without the consent of the people, and force was used. Now in order to enforce the German doctrines on a section of the people of this self-same country that sacrificed so much to oppose those doctrines a Coalition Government has been formed and the life of Parliament has been extended without the consent of the people, and force is threatened to be used. 16. A Hypothetical Illustration. It is perhaps another coincidence that the superannuitants, contributors, and dependants number somewhere about equal to the total army mobilized for war, and, speaking in a purely hypothetical way, I wonder what attitude the Government would take if this vast army of persons who are threatened with such an invasion of their rights directly and indirectly, as were the people of Belgium in 1914, were to agree to organize themselves into a volunteer army and offer their services to the State to assist, as many of the same persons did during the war with Germany, to enforce the honouring of contracts and for the defence of right against might ? Would Parliament and the Government support the high principles it so ably supported during the war, or would it be forced to support its changed attitude and descend from its lofty pedestal of high ideals of 1914 to the depths of the German doctrines of that time ? These persons whose contracts are being threatened by sheer might could not be blamed if they showed their consistency and offered their services to the State to support the same high principles that they volunteered to support then. At least an interesting situation would arise. "So long as there are wrongs to be redressed, so long as the strong oppresses the weak, so long as injustice sets in high places, the voice of the orator will be needed to plead for the rights of man. He may not be called upon to sound a battle-cry to arms, but there are bloodless victories to be won as essential to the stability of a great nation and the uplifting of its millions of people as the victories of the battlefield," said Wendell Phillips. 17. Counting the Cost of Repudiation. I might be pardoned if I suggest that the Government has not counted the possible, nay probable, cost of its contemplated acts of repudiation. For instance, what would be the effect "of its total disregard of the sanctity of contracts upon the Courts of law that exist, amongst other things, for the purpose of enforcing the rights under contracts if Parliament, the highest Court in the land, refuse

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to be bound by its contracts and adopts the rule of might as the sole determining factor in contracts ? How could the Courts enforce contracts between the State and subjects of the State when the State itself repudiates such contracts ? 18. The National Provident Fund. Then take the National Provident Fund contributions, which are guaranteed to the extent of 25 per cent, by the State. Surely if the State repudiates with the superannuation annuitants and contributors it will follow by repudiating with those of the National Provident Fund. So far as the Local Authority Superannuation Funds that are linked with the National Provident Fund are concerned the State has up to now kept faith with them at the same time as it has defaulted with its own employees. But if the Bill goes through, then the National Provident Fund may be the objective of the next attack. 19. The Post Office Savings-bank. Then again, what would be the effect of such repudiation on the Post Office Savings-bank ? Of course the depositors will lose confidence in the State's guarantee, and a run on the bank may be expected, with dire results to the Dominion. 19a. Government Life Office, State Fire Office, &c. A similar line of reasoning may be applied to the Government Life Insurance Office, the State Fire Insurance Office, and the Public Trust Office. The Loans to Local Bodies and Rural Advances Branch are, I believe, also guaranteed by the State. 20. Private Financial Institutions. The bad example with these or any of them must have a serious effect on private financial institutions, and there might be no end to the disastrous results which might follow. 21. Government Default Cause of the Trouble. An important factor in considering the Government's proposals is the fact that the whole trouble has been caused by the default of the State in making the payments it undertook to make, and what is equally important is that there was absolutely no financial reason for the State's default. 22. (a) No Financial Reason for Default. From 1908 (the coming into force of the Superannuation Act) to 31st March, 1930, the financial position of the country was, on the average, in a flourishing state, over thirty million pounds having been transferred from surplus receipts over expenditure to other accounts. In 1921 the accrued surpluses stood at about £23,000,000. (b) Writing-off Value of Land purchased for Discharged Soldiers. Of this great sum some millions of pounds were expended on the purchase of land for discharged soldiers from a few already well-to-do persons, and soon after these persons had pocketed the cash the State had to write off the value of this land, no less than about £1,600,000, or a sum nearly equal to the total amount by which the State has defaulted in paying to the Public Service Superannuation Fund, both principal and interest, and if the right thing is done it will have to write off much more. (c) Will the Government break these Contracts ? Will the Government who purchased this land when land-values were high bring down a Bill providing that all land purchased prior to 1921 shall be deemed not to have been purchased on the then agreed-upon terms, but upon new terms to be computed upon the present land-values, and that all contracts for the purchase of that land are to be repudiated ? That would certainly be consistent with its attitude in bringing down the Superannuation Bill ; but they will never try it on with those influential persons or with any one else who is not a public servant under their control and whom they can sack on three months' notice. The big stick in extremis. (d) Money to play with but not to meet Government Obligations. Included in the sums of money that the Government had to spare when it was defaulting with its subsidies to the Superannuation Fund were the following amounts transferred to other accounts as under :— £ To Discharged Soldiers Settlement Account .. .. 13,700,000 Reserve Fund in London .. .. • • • • ■ • 1 > 200,000 Debt (or Loan) Redemption Account .. .. .. .. 7,390,439 Education Loan Account .. .. • • • • • • 1,000,000 Working Railways Account .. .. .. •• •• 473,392 Special Account (Bank of New Zealand shares) .. .. .. 750,000 Purchase " C " long-term mortgage shares in Bank of New Zealand 233,782 Rural Intermediate Credits Board .. .. .. •• 272,100 Advances to State Forests Account .. .. •• 45,000 Subsidies to Local Bodies .. •• •• •• •• 537,416 Public Works Fund .. .. •• .. •• •• 5,375,000 £30,977,129

20—I. 15.

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Mr. Hargest: I would say that the evidence Colonel McDonald is about to give is highly improper, inasmuch as it deals with the private affairs of a man. Ido not think Colonel McDonald is strengthening his case at all by showing up the record of another Civil servant. Mr. W. Nash : Does not this show one of -the main factors why the Superannuation Funds are not able to meet their ordinary contracts ? Colonel McDonald : That is my contention. Mr. W. Nash : I think it is unwise at any time to bring the personal actions of any man into account, but this illustrates the vital fact that the payment out of a large sum by way of superannuation on high salaries received during the latter period of service is one of the causes of the deficiency in the funds. The Chairman : I think you might go on ; if there is anything here that should not be read we can stop it. Colonel McDonald : I will be quite willing to omit the particular position held by the particular officer, or any reference to the particular position, in order to get my point mentioned by Mr. W. Nash—that is the sole object of bringing it in. There are a number of cases which Ido not want to mention —it would take too much time. The Chairman : You see you begin, " Take the case of the late Chief Engineer of the Public Works Department." Why not say, " Take one case of an officer of the State. Colonel McDonald : I am quite willing to do that. The Chairman : Will you agree to that, gentlemen, to substituting " an officer of the State " ? Mr. Veitch : From this list that we have had placed before us he would not seem to be the only officer who will be under review before this is finished. The Chairman : That may be, but I think it is only fair to start off that way. Mr. W. Nash : Have not we had said during the hearing of evidence before this Committee everything that can be said in connection with the retirement of the General Manager of Railways ? Now we have some scruples when we come to the Engineer-in-Chief of Public Works. We have said everything that is. to be said with regard to every one else ; we have lists of what they have paid into the fund, how long they served, and the amount of their superannuation. (e) The Last Straw. As further evidence that the Government still has money to play with, and that it aims at giving more to those who are already in opulent circumstances, and at taking away from those who find it very difficult to make ends meet, take the case of an officer who recently retired from a Department of the State. At the beginning of 1928 he was receiving a salary of £1,500 per annum. During the session of that same year the Minister of Public Works, in his Supplementary Estimates, made provision for the extraordinary increase of £500 in the salary of this officer. This brought his salary to £2,000 per annum. Although the two cuts reduced his salary to £1,575, he contributed to the Superannuation Funds on the £2,000. He had about thirty-nine years' service, and must have retired with a retiring-allowance of nearly £1,300 per annum from the Superannuation Funds. Now the Minister of Public Works has given this officer out of the Consolidated Fund a solatium of £250 per annum, consulting engineer. This was done right at the time when the Bill was under consideration. Whilst the Bill threatens to reduce the retiring-allowances of a class of annuitants from £300 to £240 per annum, this particular person, even if the maximum reduction under the Bill is applied to him, will still, as long as the solatium lasts, draw £1,200 per annum. I submit that it would not be possible to find a more glaring example than this of insincerity m dealing with the Superannuation Funds and in the much-vaunted economy measures of the Government. It is simply ludicrous to give the excuse that this officer is to act as consulting engineer. Everybody knows that there is absolutely no need for a consulting engineer with such a capable successor as Mr. McKenzie is. Besides, if there were need for a consulting engineer, why was this officer compulsorily retired before he reached the retiring-age, especially as he will actually draw more money per annum after retirement (between £1,500 and £1,550) than he drew before retirement as net salary (£1,475). This is my point. : How can the Superannuation Funds escape insolvency when administered m this manner by the Government that now has the temerity to threaten to rob superannuitants with small retiring-allowances to make good the shortages in the funds due to this kind of thing and to the default of the Government ? It is high time that such manipulations of the funds were exposed, and this is a suitable occasion for doing it. 23. Default not Understandable. It is difficult to understand why the Government, when it had such huge sums to play with as above detailed, actually defaulted between 1912 and 1930 in its agreed-upon payments to the Public Service Superannuation and Teachers' Funds to the extent of £2,036,257, together with a loss to the funds of interest amounting to another £763,242, or a total default on these two funds alone of £2,799,493. 24. Another Paradox. It is even more difficult to understand how the Government on the eve of Christmas, when so many thousands of persons —men, women, and children —are in need of the bare necessities of life, and wages are being still further cut, could volunteer to resume payment of our war debts to England, which would mean finding about £850,000 at a time when the country, according to the Government's

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attitude, is practically bankrupt and threatening repudiation of its contracts, and especially when the Government knew that the British Government did not wish a resumption of the payments at present. According to the Government's own statements it has not got £850,000 to resume payments with. This offer is making people think that the financial position of the country is not in such a parlous state as to warrant deliberate repudiation of contracts with its own employees and ex-employees in order to pay twenty shillings in the pound to overseas creditors when they do not desire payment at present. If the country is in the serious position alleged by the Government, let the Government call a meeting of its creditors and let them all share in the losses in proper proportion. 25. Suggested Remedy. That until the Government is able to treat all its creditors without partiality, fear, or favour, I recommend that it drop this Bill and face the situation that is now confronting it through its own default and meet its liabilities under its own contracts with as much courage and confidence as was displayed in 1914, when every man and every shilling was pledged to the cause of upholding the honouring of contracts and the defence of the weak against the strong, when the defaulting party was a foreign State. Do this with a full realization that this time it is not a foreign nation that is threatening the violation of the sanctity of these high principles and treating contracts as mere scraps of paper and might as superior to right, but that it is the Government of a British dominion of that great Commonwealth of Nations, under whose flag the people are always assured of British fair play and justice in dealings between man and man, and man and State. To fail to meet these legal and moral obligations of the State would leave a blot on the Government s hitherto high reputation that it would be impossible to efface. I entered into this contract—this properly constituted contract—in a most solemn form, by an offer in writing, accepted also in writing, with a definite assurance by the Government that all other moneys required to be found in connection with the superannuation would be found by a subsidy from the State. When that solemn contract was completed I was satisfied that for the rest of my life, after I retired on superannuation, nothing could possibly interfere with that, once retired. But apparently no contract is worth the paper it is written on according to this present Government; and if contracts of this solemn nature, never before departed from within my knowledge by any State, are to be so lightly interfered with, then what is the position of any contract in the future made by this Government on behalf of the State with anybody else ? I say that it will strike a blow at the State that will be irreparable. Besides, the strong point I wish to make is this : I have not been dealing with any particular case till now, but I will give my own case. I had the option of insuring my life for an annuity—in fact I had my life insured—but when inducements were held out to me by the State to take on the State scheme, and I was told very plainly it was my duty to do it, I dropped the other and took this on. At my age (if any one wants to know what it is, it is sixty-three) it is absolutely impossible for me now to take up an annuity with any insurance office in the world. It could not be done—it is a matter of practical impossibility ; and that is the great hardship that lam putting forward on behalf of all people similarly situated to myself. What is to become of a man where a contract made, and which has been acted on for years, is now to be repudiated ? And, by the way, a contract that has been fully paid for. Every penny required to pay my superannuation to the end—and all the others now in the same class—has been paid for to the Superannuation Board, partly by my own subscriptions, which amounted to £56 a year when I retired, and the balance by a special grant by the State. Surely there can be no answer to cases like that. lam against the Bill altogether, and lam against breaking contracts altogether—I think it is quite wrong. But here is a case that has been carried out strictly in accordance with the Actuary's proposals for all similar cases ; nothing is owing, there is no liability on the fund at all, and yet this is the very class of case that is singled out in the Bill to receive the harshest treatment of all—subclause (3) of clause 12 of the Bill. Ido the justice to those who framed the Bill to say that this important fact must have escaped their memory ; I do not think they were aware at the time that these superannuation payments were fully provided for. If there were a remedy, an adequate remedy open to me, I would consider it I would consider any remedy—but where the remedy is taken absolutely from under my feet by the State itself, and then for them to be the repudiating party, with all the might and power that they have got, and with the impotence of myself not in a position to fight the State, I say there is neither morality nor justice nor equity of any kind included in the proposals of the Bill, and I hope they will not be put into operation. Mr. Dickie.~\ Do you think it right and proper that in the case of the gentleman you mention his superannuation should be based over a ten-year period ? What is your opinion about basing superannuation over a ten-year period ?—My opinion is that no interference with contracts properly made should take place. But I think this was a grossly improper thing to clo ; and I think the £250 extra should never have been paid. I think the man should never have been retired ; I think he should have been allowed to go on. I am not referring to the £250 ; I am referring to the ten-year average.—That is a thing I could not deal with in his case without dealing with all similar cases. Ido not believe in altering the period now over which it should be paid, but I do think there should never have been a thing like this. Ycu believe in keeping to the contract even though it leads to repudiation, even if we have to call a meeting of our creditors ?—I say stick to them all until you treat them all alike. You have stated that no other country has broken agreements ?—I said, as regards superannuation. But those are not the only agreements ?—They are the only ones before us just now. No, we have to take all the circumstances surrounding it. What about compulsory conversion of loans at a lower rate than agreed upon, before they were matured ?—I think loan conversion should take place, but I do not say compulsorily,

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It is practically compulsory when you tell a person he has the choice of either taking a lower rate than agreed to or that ho would be taxed the difference ?—There are still opportunities for all those to make good. In the case of the superannuitants for whom lam pleading all opportunity has gone— there is no remedy ; the remedy is not there ; that is the difference. Mr. Savage.] You think that the present contracts should be allowed to stand, and that any alteration should be made to apply to future entrants ? —That is exactly my opinion. Mr. Ansell.] Colonel McDonald has appealed on behalf of superannuitants. Has he any authority to present this statement on their behalf, or is it a personal statement ?—My statement here to-day is a purely personal one. lam dealing with a class ; lam acting for no one else. Do you think the superannuitants you refer to would agree to the case you have put up ? —I have met several casually, and they very heartily agree. They have seen your evidence ? —No, they have not seen it. But Ido not see how they could possibly disagree with facts. The reason I ask that question is because it seems to me that Colonel McDonald has gone out of his way to do more than assist the Committee in the matter which we have before us. Would you explain to the Committee what you would suggest as a remedy ? I cannot see much of a remedy outlined. We are looking for alternatives, if you can assist the Committee by suggesting some practical remedy, which I cannot find in your statement ? —lt is hardly for me to suggest a remedy to Government for the whole of its superannuitants. In paragraph 25 you suggest a remedy ?—And that is the best remedy that can be applied, for Government " to meet its liabilities under its own contracts with as much courage and confidence as was displayed in 1914." But if you want one specific way in which I think this country could be relieved of a great deal of its troubles I will suggest one —it has been mentioned here already this morning— and that is by a loan conversion, both external and internal. I think that is the very first thing that the State should undertake. Mr. Dickie.'] Wouldn't that be a breach of contract ? —No, I do not suggest a breach of contract. England has done it. The Chairman.] Those loans wefre due ; ours are not due. That is a contract, is it not ? —Yes, but I have enough faith in the people of this country that, if properly appealed to under the circumstances But not the superannuitants ? —Yes. The superannuitants, I would like to point out, have never been appealed to, and that is one of the things I complain bitterly of. I believe if the Government were to appeal to the superannuitants in the same way as they are appealing to another section of the community, then they would get something done, and done by the right people, that could afford to do it. But this kind of treatment gets one nowhere. Mr. Ansell.] Can you suggest any way to the Committee whereby, to take your own words, " Government can face the situation and meet its liabilities ? " How do you suggest the State could do that ? —lf the State is bankrupt —and your question implies bankruptcy —then I say, let it meet its creditors, and ask them for their opinions about it, and treat them all alike. Don't let the poor unfortunate ex public servant and the public servant be called upon to meet the State's liabilities — let all the creditors be called upon to assist in meeting the State's liabilities. The superannuitants will fall in with the rest of them quite readily, lam sure. That is the remedy, in my opinion. You think that the superannuitants, if appealed to, would assist the Government by accepting lower annuities ? —I believe that the majority of the superannuitants would do everything within their power to assist the Government if appealed to on a voluntary basis. Ido not say to what extent they could do it, but I believe they would. Mr. W. Nash.] In the arrangement made for the payment of the £20,000 you say in your evidence that a limit of £300 per annum was fixed as the amount that these officers could withdraw as retiringallowances ? —That was subsequently fixed. Taking my own case —and that is the only one I can go by —my amount at that time was £332-odd ; that was the amount that it came to then. On my actual date of retirement it was £351, but at the prior date of retirement when it was considered it was £332. After the Government's contract with me they then brought in a Bill to give effect to it, but slipped in a clause limiting it to £300, and I lost £51 then, even though that was paid for by the £20,000 subsidy. Why is it, then, that there are two names on this list who are getting more than £300 —MajorGeneral Chaytor £440, and Colonel Potter £355 ?—I happened to look at something that disclosed these names to me, and for the life of me I could not understand that when the limit was fixed at £300. Perhaps they did not go out under that same section of the Act. lam not sure about that. Mr. Gostelow (Government Actuary).] They probably had thirty-five years' service ? —No, twentyfive years, less than what I had ; I had twenty-seven years' service. Then they must have attained age 55. Mr. Dickie : Colonel Potter's year of birth is given as 1875, September ; he would only be 57 years of age now. Mr. W. Nash.] But 55 years of age at the time of his retirement. Mr. Gostelow : If he retired at age 55, that would account for the difference. Mr. Verschaffelt It limited them throughout the Service, not only in the Defence service. Mr. W. Nash.] You think that the Government ought to keep its contract, no matter what happens ?—I do. You think it ought to keep its contract with Mr. Furkert, the Engineer-in-Chief of the Public Works Department ? —I think it ought to keep its contract, having made it; and make remedies for the future. If, for instance, the Government has agreed to pay some millions of pounds for shares that are only worth £500,000, do you think they should keep to the contract ? —No. I think if an unconscionable

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thing like that were done it should be remedied forthwith. But this was done with the Government's eyes open. Assuming that you had made contracts with various people that are " unconscionable," that you agreed to pay them more than you ought to have paid them, and then in later years the people who are responsible for providing the funds for the payment of those contracts that were unconscionable are in such circumstances that they would experience hardship in paying them, do you think they at that time ought to be subject to the extra taxation to keep to those contracts that were unconscionable ?—No ; that deficiency should be made up by the State, as they undertook to do originally. But assume that it is the State that has to pay ?—lt is a difficult thing to answer. I would rather not go further with that, because I cannot see a way out of it. lam just trying to get at this point: Assuming that contracts ought to be kept —and it is good law and good ethics and good judgment that they should be kept—but that circumstances arise whereby it is not possible, without creating hardship on another section of the community not responsible for the contract, to keep the contract, do you at that time think the contract ought to be kept ?—I think this might be done in that case —that those with more than a comfortable standard of living, those with a surplus income, might be dealt with first. But I certainly would not carry it to the extent of making it general. It may be that some basis of fixation of a standard of living, or a standard of income —say, £500 a year might be the maximum—might be brought into operation. But then that again means breaking contracts with so many that it seems to me to be difficult to give effect to. Assume we have a case of a man having paid £800 into the fund, who now receives £20,000 out, who is continuing to draw £2,000 a year. Do you think, seeing that it creates hardship on the people now, that they should continue to pay that ?—I think the annuitant should be invited to review the position. All right —there are certain points at which you think a contract ought to be broken ? —There are certain circumstances in which it certainly ought to be reviewed with a view to remedying that serious state of affairs —I go so far as to say that. I wonder if you can tell us what this £700,000 is «—Certain rights which members of the Public Service had under another Act when the Superannuation Act came in—they had rights under that former Act. tic That money was never paid in ? —No ; but those liabilities were taken over by the Superannuation I think there is one point brought out here that Colonel McDonald could help us on, and that is the illustration he gives about right over might. He objects to the State being the powerful agency, having the power and exercising that power over the rights of the people. You definitely object to their using that might to overcome right ? —Yes, I do. I wonder whether you would tell us how that fits in with page 10, where you definitely drive home the right of the individual to say that it is wrong to fight, and then might comes in and says, " You have got to " —how would you square that ? You refer to the fact that " about thirty-two thousand of this army were forced by Parliament and the Government under penalty of imprisonment if they refused to go overseas and fight against the German doctrines of dishonouring contracts and of using might against right." Wasn't that the might of Parliament forcing the people against the right ? —Yes ; and I object just as strongly to that. You do not think there ought to have been conscription at that time ? —There never should be. They should not have been compelled to go ? —That is so. There should never be might exercised against right «—Never. The Chairman : We seem to be getting a long way away from the Superannuation Bill that we are discussing. I think it would have been as well if it had never been put in the statement. Mr. W. Nash : That might be. The Chairman] But it is the Bill that we are concerned about —It has a bearing on the Bill. Mr. W. Nash.] You do not think your retiring-allowance of £300 ought to be reduced ? —I certainly do not. , , . . , It would be unfair I—lt is now reduced by £16 for unemployment levy, and income-tax, and various other things—it is a mere pittance. And I can tell you this : When I knew I had £300 per annum for life I purchased a property here, a home to live in ; I spent every pound that I possessed, running into about £500 or £600, and there are two mortgages on it to-day totalling £1,950. How am I going to pay the interest ? lam going to be turned out of my home if the Government reduce me in the way proposed under this Bill. . Mr. Dickie.] You got a 20-per-cent. reduction in your interest rate ( —Yes, 1 did ; but that is is only for a certain term, of course ? —I did not bring that about. I would rather it had never been done —I do not agree with that. The Chairman.] But you took it ?—I am like the members who took the honorarium. Mr. W. Nash.] You are of opinion that superannuation should be approximate to the amount paid in by the individual plus the amount the Government agree to pay in ?—Yes. Am I correct in saying that for thirteen years you did not pay anything in ? —I paid in from the date the Superannuation Fund commenced. I started with the Superannuation Fund, and I paid in the whole time. „ r ■ i The Superannuation Bill I think was passed in 1908, and you paid m for fourteen years s I paid in until I left the Service. For thirteen years vou did not pay in—is that right ? —from 1895 to 1908 ; and then on retirement you were paying in £56 a year. Have you any idea of the total that you paid into the

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fund I—No, I have not. Nor am I concerned with. that. The point is that I paid in the whole time I was a contributor. I could not pay in when I ceased to be a contributor. Mr. Dickie.] Nor before the fund was started ? —Because the Government specifically took that liability themselves. They allowed men with only one or two years of service to go to come under the scheme, and all their back service was paid for by the State. Persons who contributed only for a year or two got into the scheme and paid into it practically nothing, comparatively speaking. Mr. W. Nash.] Wasn't nearly one-half of your service back service—thirteen years out of twenty-seven ? And if you criticize the Government for allowing certain men to retire or to go on to the fund at an early period you have to take into account at the same time the fact that you are on the fund for a twenty-seven-year period on a basis of fourteen years' contribution ? —You are misunderstanding me ; I have never criticized the Government from that point. What I have said is that they should honour that undertaking to provide the money in consequence of letting them go on to the fund. Ido not want it altered at all —I think it a good thing. But there should have been a very clear line of demarcation for a limited number of years, or else a limited sum of money to be paid in. I want to get what the position of the people is to-day, and how the Superannuation Fund is going to benefit them. 1 think the Government ought to keep its contract —I think the superannuitants ought to be able to depend on Government; but then if we come to the point that the people that are now doing the work of the Dominion and creating wealth have got to be so charged 011 their wealth to pay an annuity that never ought to have been agreed upon, then at that time you would agree that some thought ought to be given to the matter ? —Oh, yes. I think at the time there should have been different arrangements made. Supposing we take into account the various annuitants who have retired 011 £300 or more, and we find that they have paid in small sums to the fund, and that if the State had not paid in all that it had agreed to pay they could not possibly have had the superannuation they are getting. Do you not think it is up to the people at that time to get some readjustment of the amount to be paid ?—There was an adjustment at the time —it was according to age. My rate was much higher than most —I was paying £56 a year when I went out; I was paying 7 per cent, of my salary, and I was getting £800 a year. For how long were you getting £800 a year ?—Not for long, a very short time ; just long enough I think to draw it. For how many years did you pay £56 ? —I could not tell you. Take Major Rose's case into account —he had his contributions refunded ; he was on the roll for same period as Colonel McDonald ; he served for about the same period, from 1908 to 1920. The Chairman : He came out here while the war was on. Mr. W. Nash.] Major Rose is shown here as having served from the Ist July, 1908, to the 30th November, 1920 \ —l served from 1895 to 1908. But I am talking about the period of contribution ; he contributed to the same fund for the same period as you did, and he received £501 back ? —He had not complied with the law. I am not thinking of complying with the law ; I am trying to get the financial state of the contributions. In the one case £501 is returned ; in the other case —your's —you have had £300 a year for ten years —that is £3,000 ; and the payment in to the fund would have been the same amount ? — That does not follow at all; I might have paid double what he paid. But you did not ? —lt depends 011 one's age. But in actual fact you did not piay into the fund any more than Major Rose, and Major Rose gets £501 back ? —That is due to the fact that the Government undertook to include back service and pay for it, and induced us to give up our other systems of annuities, or insurance, in order to take on the Government scheme. That is the whole trouble. But that does not alter the fact that Mr. Rose served a like period as you did—as far as superannuation is concerned he got £501 back while you have had £300 a year for ten years, and you are going to have it I hope for another twenty. But if, for instance, the paying of that £300 a year is going to create hardship on those getting infinitely less than £300 a year, do you think they ought to continue to pay the £300 ?—There is another side to that question, and that is this : I did not want to be drawing this superannuation —it was the last wish I had to draw superannuation. I wanted, as many others have been prepared to do, to stay in the Service and give my services to the State for my salary of £800, instead of drawing £300 a year superannuation. That is where I suffered. The Chairman.] It is pretty hard to reconcile the statement that you have read to the Committee this morning in regard to the State's liabilities and its suggested refusal to meet them, when you have admitted just now that, as far as some of those who have retired are concerned —those drawing large sums —they should be reviewed ? —I have not admitted that they should be reviewed ; I said that would be one way out of it. Ido not believe in breaking any contracts. You said, " Yes, I think they should be looked into ?—Yes, " looked into," and confer with those people with a view to seeing if they are prepared to do anything. You say now that you do not agree that it should be broken at all ? —I do not. That the amounts they are getting should continue ? —I say I do not believe in breaking any contracts under the Superannuation Act. You have referred very largely to the Bill that is before Parliament now. I presume you understand that the Bill is subject to amendment ? —I think it would be. You know what the Prime Minister's statement was when the Bill was introduced—why it was introduced in the way that it was ? It was practically a statement of the Expenditure Commission's report. You apparently knew nothing about that ? It was all published in the papers. Perhaps the Bill will not be so serious as it looks.

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Mr. Gostelow.] On page 3, under section 4, you give the case of a man who retired at age 52. Have you any idea what the service was I—Yes, twenty-seven years and one day. The point about that is that if that particular Act had not been passed this particular officer would not have got a pension at all, would he ?— He would have got his salary. If he had been compulsorily retired the most that he could have got would have been a return of contributions ? —I would like to point this out: that the Department wrote to all those officers long before they decided to retire them, and asked them whether they would be willing to retire ; they did not want to retire them unless they were going to get this superannuation, and they picked out those who could retire ; and before they retired them they asked them whether they would accept a transfer to another Department, or to the British Army, or to India—they gave them the opportunity. It was only when they found they could superannuate them that they retired them. My point is that this breach of contract in the original Act was in your favour 1 I dare say it was. It was a concession ? —There was no breach of contract m it. But that was a definite alteration of the Act in your favour ?— Not particularly m my favour ; in favour of those particular officers. _ A Had it not been for that clause you would have been entitled to no more than a refund of contributions 'That is, provided they insisted on retiring me then, which Ido not think they WOll TherelsAnother point, too, about the £20,000 that I think should be cleared up. That £20,000 did no more than cover those men who on attaining age 55 would not have had thirty years service . What about the other £700,000 ? _ ... , , ~ That was quite another matter. That £20,000 was quite a small sum. It did not refer to the sixty-seven officers. There were comparatively few who would not have had their thirty years service. I think the Committee should understand that the £20,000 did not give a lot of benefits to Defence officers to go out, because a lot of them already had the service to enable them to go out without the £20 'm°;. Savage.] I take it in 1909 you were compelled to pay under contract with the Government, and that if you did not pay you had to leave the Service 1—- Absolutely ; that was the final notification that came out. . „ . . , You were not in a position to know whether it was actuarially sound or not, or liow they were paying the fund out. And if you were in such a position you had no right to interfere-you could take what was coming to you, or go ? —That was the position _ , Mr. Dickie.l You had to resign from the Service if you did not join the fund ? What about Major Farr ?—The question is a big one. Memory must fail sometimes, but lam inclined to think the question put to me and my answer are correct. _ The Chairman.] Why, then, with all the other cases of superannuitants, when men were asked but decided not to join—they were not dismissed ?— Some disciplinary action would be taken. But surely not, not in the face of the circular that was sent out. It was only giving them the option. A man might say, " I have bought an annuity." Surely you are not going to suggest he is going to be dismissed 'That which you are referring to was the first one—that was m IJOB or 1907. iher was a second one in 1909, and it was not till 1909 that compulsion came m, and it was made compulsory in 1909 for every one in the Service to join. Mr. Verschaffelt: Only new entrants. . . ' Mr Savage.] You entered into the contract with the Government, and having entered into the contract you think it ought to be carried out by both parties I—l most certainly do. Mr. Earnest.l I realize these gentlemen whom Colonel McDonald represents have suffered an iniustice—or will; this Bill will affect them. As a remedy Colonel McDonald suggests that the State should meet its creditors. I have before me the Government Actuary's report showing the position of the fund as affecting superannuitants and also present contributors to the funds if they had to cash in the funds. If the funds were put into liquidation, and existing pensioners treated as preference shareholders " with the prior right of having their claims satisfied before existing contributors shared in the assets, the proportion of existing pensions that the funds could meet would be : Public Service, 85-39 per cent, or 17s. Id. in the pound ; teachers, 52-27 per cent., or 10s. sd. m the pound; railways, 43-67 per cent., or Bs. 9d. in the pound. There would be nothing available for refund to any contributors still in the Service. If on the other hand present contributors were allowed to draw out their money, the proportion of existing pensions that could be met from the balance of the funds after refunding 111 full the contributions of existing contributors in the Public Service and Teachers would be 13-01 per cent, for the Public Service, or 2s. 7d. in the pound, and for the teachers 4-14 per cent., or lOd m the pound while there would be nothing from which to pay existing railway pensions and only 78-14 per cent 'or 15s 8d in the pound, would be available for present contributors. When you suggest a meeting of creditors I think you ought to realize that it is a very dangerous doctrine to pursue -I did not suggest that a meeting of superannuitants should be called ; I said a meeting of all ci editors of the State, overseas bondholders and so forth. That is the position you would be in ? —I think there would be justice there if we were all treated alike, but if one is to get his pound of flesh and the other nothing-—- , Mr W Nash.] Would you be in favour of a new fund being started to which would be transferred all existing contributors, the money that they had already paid m being credited to that fund plus subsidy ?—No I would not be in favour of that at all, because no man could look forward with any degree of certainty to anything, because the State the next week or the next month might go back on it —might do something else.

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You want to stop the existing procedure under which the benefits to retired superannuitants are being paid from the contributions of present contributors ?■—l say the contributions of present contributors should be conserved for the purpose of meeting their annuities when they fall due. Would not that be by a new fund conserving the funds exclusively for that purpose ; and putting all the other annuitants who have been retired earlier, or anything like that, into another fund and making their responsibility the State's I—That1 —That might be a very good idea ; that seems a wise suggestion. The Chairman : We have before us a large number of letters. There are two to whom, I regret to sa,y, I told the clerk to inform them that they would get an opportunity of meeting the Committee. One is a Mr. Parsonson, of Lower Hutt; the other is a Mr. Lundius. They are only short statements, but they have asked to be allowed specially to meet the Committee. I wondered whether they might come before us at the next meeting—l do not like breaking faith with them.

Thursday, 23rd February, 1933. Walter Edward Parsonson. (No. 48.) The Chairman.] Will you read out your statement, Mr. Parsonson ?—Yes, sir. It is as follows : I greatly wish to give evidence on my own behalf. My pension is £163 3s. per annum, equivalent to £3 2s. 9d. per week ; a 10-per-cent. reduction would mean £146 16s. Bd. per annum, equal to £2 16s. sd. per week. A 20-per-cent. reduction would mean £130 10s. sd. per annum, equal to £2 10s. 2d. per week. I had thirty-four years' service, but the Bailway Head Office said my time was broken, although I worked continuously without a break, based my superannuation at thirty-three years ten months. Like many others in the service, I have paid all the time on the higher rate of ]say, before reductions took place. I was compulsorily retired three years before my time. I asked to be allowed to fill in my time, which was refused. I was 62 in August, 1931, and was retired on 14th September of that year. I also asked to be allowed to work the short period to give me an even quota of years. This was refused. I was retired through no misconduct or fault of mine, and was perfectly efficient to do my work. Now, it seems to me from the Act if my superannuation is cut down, I shall not get the sixtieth for every year of service which is my right, but what the Government Actuary thinks is enough. There are five of us in my family, my wife, myself, two girls, and a boy. My eldest daughter is out of work, and the younger one s wage averages £1 7s. 6d. per week. My boy is at present a pupil at the Hutt Valley High School and cannot get work. I wanted to get him into the Government Railways drawing office, but they will not take him on until he has passed the Matriculation Examination, although he has shown great ability in draughtsmanship. I was one of the many compulsorily transferred from Wanganui to Auckland. I have a house in Wanganui for which lam receiving £1 2s. 6d. per week, but there is over £20 rent owing, and I cannot put a man and his wife out into the street with a family of ten children. I have to pay £1 Bs. 6d. per week for a house here. Would you like to add anything to that ? Have you anything further to say to the Committee before you are asked any questions ? —I think not. Mr. W. Nash.] You particularly note the fact that you were not allowed to complete your service m any case, and that this refusal, to a man in your circumstances, was a very definite hardship ?—Yes, that is so. Why they broke my time Ido not know, because I was engaged by Mr. Ronayne, and I was never off work for a day. And yet they considered that my period from January to February was broken time. When I was put on the permanent staff I was given to understand that I had put in all my back time. Why it was broken is one of the mysteries of the Department itself. Ido not understand that at all. I can get no satisfaction from them, and so I have to let it go at that. The Chairman.] What was your work in the railways ?—-I was what they call a trimmer. Since 1931 have you done any other work ? —No. Since you have been retired have you done any work at all ?—No. A man of my age, at the present stage, on the labour market, would not get much show. My only chance would be to take a job at little or nothing, which would mean putting another man out of his living, and I would not do that. Thank you, Mr. Parsonson.

Harry Lundius. (No. 49.) The Chairman.] Will you read out your statement, Mr. Lundius ? —Yes, sir. It is as follows : In reply to your letter of the Bth instant, the following are the lines on which I intend giving my evidence before your Committee. About 1905 I was made European member of the Aotea District Maori Land Board (this was without extra remuneration and in addition to my work as Crown Lands Banger). In about 1910 the President of said Board, the late Mr. T. W. Fisher, was appointed Under-Secretary for Native Affairs, and as he found he could not carry on the presidency of the Board as well, he asked me if I would care to take it on ; the salary would be a considerably larger one than what I was receiving from the Lands Department. I, however, found the appointment did not carry superannuation, and for that reason I did not entertain the offer. This, lam confident, is only one of many cases where Civil servants have refused more remunerative employment on account of the superannuation scheme. In my own case, had I for one moment thought it possible that the superannuation agreement would be interfered with, I most certainly would have entertained the offer made me, as stated above. Have you anything further to add ?—I do not want to occupy your time at all, but my reason for appearing before you is respectfully to enter an emphatic protest against any interference with, or alterations to, agreements entered into between the State and myself, as well as with other persons

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in the Civil Service. Such interference will cause undue hardship, as well as being a breach of faith on the part of the Crown. And then, of course, there is my own case, as expressed in my statement, which I have just read out. I know for an absolute fact that lam not the only one affected in this way, because a good many other Civil servants have refused appointments on account of the superannuation. . Mr. Dickie.'] You say that Mr. Fisher was appointed Under-Secretary for Native Affairs ? —Yes. And that previously "he was President of the Board ?—Yes. He was the retiring President, and he asked me if I would take it on. Was that in his gift ?—Well, being Under-Secretary for Native Affairs, his recommendation would go a long way. I may say that it was recognized that I did very good work on that Maori Land Board, and if Sir Apirana Ngata was here I am sure he would bear me out in that. The Chairman.] What was your salary when you retired ? —I got up to the maximum of £450. What are you getting now ? —£27o. Of course, you have done no work since ? —No. Too old ? —Yes. Thank you, Mr. Lundius, for coming along ?

Leonard Aekins, Railway Department, Wellington. DDD. I respectfully beg to ask that the following application be placed before your Committee for favourable consideration : I joined the Railway service on the 9th June, 1897, as a cadet and resigned in August, 1914, my primary intention being to get away with the Expeditionary Force, but, unfortunately, owing to having no previous military training, and for domestic reasons, I did not go into camp until August, 1915. I left New Zealand with the Bth Reinforcements. During the intervening period I was temporarily employed by the Agricultural Department from August to December, 1914, and from January, 1915, to my entry into camp at Trentham, I was employed as temporary operator by the Telegraph Department. I was overseas with New Zealand Forces until my return to New Zealand in May, 1919. I was then offered and accepted a position as Accountant in the Defence Department, and owing to retrenchment I resigned in August, 1920, and immediately rejoined the Railway service as a casual clerk. I was placed on the permanent staff in January, 1925. Thus it will be seen that I have had continuous service with the Government, including Expeditionary Force service, and, excepting the few odd days between my various positions, from the 9th June, 1897, to the present time, as set out in the following schedule : —■ Railways Department: June, 1897, to August, 1914. Agricultural Department : August, 1914, to December, 1914. Telegraph Department: January, 1915, to August, 1915. Expeditionary Forces : August, 1915, to May, 1919. Defence Department : June, 1919, to August, 1920. Railways Department: August, 1920, to date. At present my services for superannuation purposes only date from my rejoining the Railways Department in August, 1920, and I respectfully submit that, taking into consideration my practically unbroken period of service in the Government from 1897, I am fully justified in applying to your Committee for favourable consideration of my claim for continuous service. I have ascertained that the provisions of section 17 of the War Legislation Amendment Act, 1916, as extended by section 53 of the Finance Act, 1920, applies, by virtue of section 118 of the Public Service Superannuation Act, 1927, to contributors to the Public Service Superannuation Fund and the Teachers' Superannuation Fund. As provision has been made for these contributors, it seems hardly fair that the privilege has not been extended to members of the Railways Department whose cases merit exactly the same consideration as any other servants of the Government. The sections I have referred to are below. The War Legislation Amendment Act, 1916. —Section 17 (1). If any person who, on the fourth day of August, nineteen hundred and fourteen, was a contributor — (a) To the Public Service Superannuation Fund ; or (bj To the Teachers' Superannuation Fund ; or (c) To the Government Railways Superannuation Fund— has before the passing of this Act voluntarily retired from the Public Service, the Education service, or the service of the Government Railways Department for the purpose of joining the New Zealand Expeditionary Force or any other portion of His Majesty's Forces for service beyond New Zealand in connection with the present war, and is subsequently reappointed (whether before or after the passing of this Act) to any position in the service from which he so retired, his period of continuous service for purposes of superannuation shall be deemed to include tne period elapsing between the date of his retirement as aforesaid and the date of his reappointment, if within twelve months from the date of his reappointment or the passing of this Act (whichever is the later) there is paid into the appropriate fund, by him or on his behalf, the amount (if any) received by him from that fund on his retirement, together with the amount (as computed by the Superannuation Board) that would have been payable by him by way of contributions to the fund if he had been granted leave of absence for the period during which he was out of the service. (2) If any question arises as to the amount to be paid by any contributor under this section, the question shall be determined by the appropriate Superannuation Board, and the decision of the Board shall be final.

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(3) The payments required to be made by a contributor under this section may be made by instalments or otherwise, as the Board may determine, and, where made by instalments, may extend over such period as the Board thinks fit, not exceeding three years from the date of the reappointment of the contributor. The Finance Act, 1920.—Section 53. (1) Section seventeen of the War Legislation Amendment Act, 1916, is hereby extended so as to apply to contributors to any of the Superannuation Funds therein mentioned who, on or after the seventh day of August, nineteen hundred and sixteen (being the date of the passing of that Act), voluntarily retired from any of the services therein mentioned for the purpose of joining the New Zealand Expeditionary Force or other portion of His Majesty's Forces for service in the war with Germany. (2) For the purpose of this section it shall be sufficient compliance with the said section seventeen if the amount required to be paid into a Superannuation Fund on account of any contributor is so paid within twelve months from the date of his reappointment or the passing of this Act (whichever is the later). The Public Service Superannaution Act, 1927. —Section 118. (1) Where any contributor to whom the provisions of section seventeen of the War Legislation Amendment Act, 1916, as extended by section fifty-three of the Finance Act, 1920, applied, has complied or hereafter complies with the requirements of those sections, then his period of continuous service for purposes of superannuation shall be deemed to include the period elapsing between the date of his retirement as specified in the said sections and the date of his reappointment. (2) In this section the term " contributor " means a contributor to the Public Service Superannuation Fund or the Teachers' Superannuation Fund.

L. G. Reid, " Longview," Wesley Road, Wellington. EEE. I had intended to submit myself as a witness before the Committee, but as I have been laid up with an illness for the past five weeks, and am now in my 82nd year, I trust you will kindly excuse a personal attendance. With reference to those Civil servants, of whom I am one, who were in the service prior to the commencement of the superannuation scheme, and who continued in such service for several years afterwards, some misapprehension appears to exist both as to their status and the quantum of their contributions to the Superannuation Fund. Both the local newspapers (Dominion and Evening Post) are very much astray in stating that such persons paid nothing or very little for the benefits received from the fund. The article in the Dominion appeared on the sth August, 1932, page 12, while the Post article was published on the 26th October. A letter headed " State Pensions " and signed " Senex " was published in the Dominion of 10th August to which I would specially direct attention. The Post article was well answered and statements contradicted in the Post of 29th October by Mr. F. W. Millar, General Secretary of the New Zealand Public Service Association. The statements made by " Senex " I can verify by my own experience, the only difference being that in my case I relinquished over £1,330 of compensation payable to me, and also paid to the Superannuation Fund the sum of £692-odd, making a total of £2,023, as against the case of " A," £1,900, as quoted by " Senex." In corroboration of this I attach also herewith extracts from the letter received by me from the Secretary, Public Service Association, in August, 1918. Exhibit 2 attached, which show the amount of retiring-allowance granted to me by the Superannuation Board, also the several amounts of compensation under the Civil Service Acts due and contributions paid under the superannuation scheme. During the early part of your Committee sitting (I think it was when an officer of the Railway Department was giving evidence) one of the local newspapers (the Post, I think) reported the following : Mr (member of Committee) asked the witness, " Is there not a feeling that some of the older Civil servants rather got away with it? " The witness replied to the effect that " he did not know as to that." I can only say, sir, that we old Civil servants who have paid £1,500 to £2,000 for our retiringallowance do know as to that, and strongly resent the suggestion of any default or reduction in payment of the allowance on the part of either the Government or Superannuation Board. I would respectfully refer you to the statutory provision bearing on this matter contained in the Public Service Classification and Superannuation Act, 1908, No. 158, section 32, page 843, as amended by consolidated statute, 1908, No. 250.

A. L. Wilson, Honorary Secretary, Southern Hawke's Bay Branch, N.Z.E.I. FFF. In view of the fact that since the 30th September, 1932, the date given for members to elect to pay superannuation on the original salaries at the higher rate, the National Economy's report has been published recommending that the retiring-allowance shall be based on the salary for the last ten years, instead of, as formerly, the last three years. This has put an entirely different conception to certain teachers who did not elect to pay on the higher rate. I have been asked to suggest that you may perhaps be able to have inserted in the Bill that an extension of time be allowed those who previous to knowing the contents of the Bill did not consider it to their advantage to pay on the higher rate. There were also a certain number of teachers who, had they known of the contemplated measures, could have paid superannuation on their house allowances, and would certainly have done so had they foreseen the alterations in the Act.

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As the member for this electorate, my Managing Committee thought that perhaps it would be possible for these points to be brought to the notice of the members of the Commission who have been set up to take evidence on the new Bill.

A. N. Davis, 263 Gloucester Street, Christchurch, 20th February, 1933. GGG. As a superannuated Civil servant I beg to place the following views before the Committee :— We bought our pensions with gold at £3 17s. lOjd. an ounce ; it is now about £6 sterling and £7 10s in New Zealand currency—an inflation of nearly 100 per cent. This inflation quickly stopped the headlong slide in prices, and, in Britain, has already been responsible for some restoration. All economists are agreed that it will eventually have a most potent effect—as I will show later m this statement. , , x , The efforts of all the great nations are directed towards the restoration of prices, and no person, I think should doubt that success in that direction will be achieved. _ ... A study of the economic journals and books of the past year discloses that expert opinion is inclining more and more to the view that the best way to deal with the world's abnormal and dangerous debt position is by world inflation —a controlled inflation, of course but an inflation that will automatically reduce the burden of debt and allow credit once more to function. As you know, many important countries have already taken steps in that direction. America may press for the restoration of the gold standard, but the leaders of British policy say definitely that there will be no restoration until conditions are favourable for free gold movements, and until 1929 values have been reached. If the gold standard is restored Britain will not stabilize sterling at £3 17s. 10fd. an ounce ; a permanent inflation of from 25 per cent, to 40 per cent, may be considered certain. This is apart from our exchange inflation, which in time may be reduced. I need not stress how important this juggling with our currency standard is to the annuitant. To reduce the pension he bought with gold and pay him his annuity with inflated paper is to rob him two pogition ig o{ more rea j importance than is our immediate budgetary position. Length and breadth of view should be the stateman's aim. What is a year m the long life Sir Arthur Salter, Sir Josiah Stamp, Mr. J. M. Keynes, Sir Basil Blackett, Mr. Hartley Withers, and a host of less known economists agree in the view that, with the possible exception of the United States of America, the world has turned the corner and commenced recovery. The usual recovery signs stressed by Burton in his study of " Financial Crises " of 19th Century (published 1902), such as reduction in interest and notable rises in security values are strongly in evidence even m JNew Zealand. Surely we should not throw in the sponge now. If we are eventually compelled to default, the sacrifice I think, should be general, and not thrown particularly upon superannuitants. _ In the past it has been the policy of State Departments to reduce costs by retiring many of the higher salaried officers as early as possible to replace them at the bottom with boys. This worked well from the departmental point of view, but was murderous to the Supernnuation Fund. Annuitants surelv should not now pay for that faulty policy. _ _ Britain returned to the gold standard in 1925 when her financial position was easy, and there was a danger of credit inflation. Credit movements, unfortunately, gather strength and feed upon themselves For instance, the 100 per cent, dividend paid in one year by the H.M.Y. Gramophone Co resulted in the formation of many rivals. During 1927, 1928, and 1929 the newspapers were full of requests for capital for countless new enterprises and huge expansions of old. Too much of the people s savings were thus directed into channels that proved not only unprofitable, but unnecessary ; and many businesses, too, incurred liabilities that it was eventually impossible to meet. Instead of money going into bills representing trading transactions it went into factories, machines, ships, shops, and millions of deferred-payment transactions. Had Britain remained off the standard during that boom period, credit would have continued its inflation longer, and perhaps might have risen as high and collapsed as badly as it did in the United States of America, where some four thousand banks collapsed, and millions of speculators were ruined. _ The perspective has now focussed to show that the application of the gold brake m 1925, and the acceleration of the reverse policy in September, 1931, have already placed Britain m a position superior to her rivals. But a danger still lies in the pendulum movement. We have seen that it took four vears from 1925 to 1929 for the gold brake to stop the credit boom.. The release of that gold brake is now restoring credit and prices, but the pace is that of a snail, and another year may pass before the movement is at all rapid. When 1929 values are reached and the standard is restored, will not the pendulum complete the swing as in 1925 for three or four years ? The huge increases in gold supplies must certainly have a potent effect upon future credit expansion. We read that over £100,000,000 has already come out of hoard m India alone, lhe whole civilized world is melting down its gold jewellery. Heavy increases m production from mines, so outstanding a feature of 1932, will be greater in 1933, and should continue until costs rise m proportion to returns. Important new gold discoveries have been made m Canada, the United States of America, Africa, Australia, New Guinea, and New Zealand. Very little gold is going into industry ; practically all for some years will go towards credit restoration. Taxation is heavy and may yet be heavier ; a large portion of our pensions go back to the State. The world's currency at present, I contend, is too unstable for statesmen to make permanent decisions now. I suggest that a special tax on superannuitants during the depression would be fairer than a permanent reduction of annuities.

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James Kerr, Boyd Avenue, Mangere, Auckland. HHH. I would respectfully place before you the position in regard to my retirement from the Post and Telegraph Department. In 1921 the then Secretary to the Department, Mr. Markman, and the Assistant Secretary, Mr. McNamara, paid a visit to Masterton to consult Mr. S. Gumming, Postmaster, with the object of inducing him to retire. They advised that the Post and Telegraph Department was at . that time overstaffed, and, if some of the senior officers would accept superannuation, this would relieve .congestion and place the younger men on a better footing. When this suggestion was explained to me I discussed the matter with Mrs. Kerr, who agreed with my view that if by making a small monetary sacrifice my earlier retirement would help the general position of the office it was my duty to take that action. I then wrote to the Secretary, who replied thanking me for my kind offer and intimating that, computed on the basis of thirty-seven sixtieths of £400, my retiring-allowance would be at the rate of £234 per annum. To have completed the balance of my service would have been no hardship to me, and, as I was due for promotion up to £450 per annum, I feel confident that it would have been to my advantage to have done so. Even if I had continued on the same salary for the final three years my retiringallowance would have been increased to over £266 per annum. I was quite content to remain in Masterton, and, in fact, did continue to reside in that town until two years ago. Owing to the fact that my son-in-law frequently experiences ill-health and my elder son's employment has been intermittent, I have periodically felt morally obliged to contribute towards the support of their families. As the investments of my savings are producing no income at the present time any reduction in my allowance would render any further assistance quite impossible. I will be deeply grateful if you will place the above facts before your Committee. If necessary my papers of retirement are, of course, always available for perusal. It would be a distinct hardship at this stage to be penalized after already making a sacrifice in the interest of the Post and Telegraph Department.

Miss V. M. Geeig and 4 Others, Wellington Girls' College, Wellington. 111. We wish to draw your attention to a serious position which has arisen in connection with superannuation. Under the provisions of section Bof the Finance Act of 1931, we elected to contribute to the Superannuation Fund on the higher rate of salary —the salary received before the first cut. The Secretary of the Superannuation Board in a personal note, dated 24th September, 1931, to each of us acknowledged this election. We concluded, therefore, that the matter would be left at that for at least a year or two. In spite of this, however, we received, on the 17th November, another personal note from the Secretary of the Superannuation Board informing us that, as we had not made another second election we should no longer be permitted to contribute to the fund on the higher rate of salary. He said : " As no election was made under National Expenditure Act, 1932, contribution is payable on actual salary from Ist of April, 1932." Had we known that this second election was required we should certainly have made it. W e were not conversant with this new position, especially since a few months previously we had already made an election. Some of us knew that a reference to a second election was published in the Education Gazette, but did not think it applied to our case for the following reasons : — (1) A personal note of a most emphatic nature from the Secretary of the Superannuation Board to a member of the staff informed her that the first election was unqualified, and could not be withdrawn. We emphasize the fact that this personal note having been received by this member of the staff, we naturally concluded that it applied to us all, and that a second election therefore was, in our case, unnecessary. This personal note certainly misled us as to the necessity of a second election. At least we should have expected the serving of a further personal note, individually, to inform us of a second election, especially as we had only a few months previously made the first election. (2) In an important matter such as this a personal notice is usual. An announcement in the Education Gazette is not a personal notice. Circumstances arise when teachers are not able to see the Gazette, as, for instance, in the case of absence through illness or through being absent abroad. The Gazette is not posted to teachers individually and personally ; there is, therefore, no guarantee that an announcement in the Gazette will reach all those for whom it is intended. (3) The notices in the Gazette informing teachers of the second election were difficult to read, being embedded in columns of small print which teachers who are working at an abnormal pressure find very little time to read and digest. This was especially the case in the secondary schools last year on account of the departmental examinations for free places and other strain due to the financial situation. In view of these facts, then, we submit that adequate notice was not given about the necessity for the second election, and that there is a strong case for reopening the matter. We hope you can see your way to support this course of action and so prevent a grave injustice being done to teachers who have contributed to the fund from its inception, and who, in many instances, are on the verge of retiring, and, through a mere technicality, would be penalized for the rest of their lives.

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Teachers' Superannuation Board, Education Department's Office, Wellington, 24th September, 1931. Dear Madam, — I have to acknowledge the receipt of your letter of the 18th instant, but have to point out that you have already made an unqualified election under the provisions of section 8 of the Finance Act, 1931, and this election cannot be withdrawn or qualified. The position is as pointed out in my letter of the 13th July, and the contribution will be computed as follows : — (а) As long as your salary is not reduced below the rate payable on Ist April, 1931, nor increased above the rate payable at 31st March, you will contribute on the rate at 31st March. (б) If your salary, by promotion or otherwise, is increased above the rate at 31st March last you will contribute on the actual salary. (c) If your salary is further reduced below the rate payable at Ist April (as, for instance, should you be obliged to accept a " B " position instead of a Grade "A ") contribution will be based on the actual salary plus the amount of the " cut " at Ist April. I have, &c., C. E. Crawford, Secretary, Teachers' Superannuation Board. Miss N. E. Coad, Wellington Girls' College, Pipitea Street, Wellington.

C. E. Crawford, Secretary, Teachers' Superannuation Board. JJJ. With reference to the right of election to continue to contribute on the unreduced salary given by the provisions of the National Expenditure Adjustment Act, 1932, my Board directs me to say that, as many teachers, on account of misapprehension or misunderstanding, unwittingly allowed the time to pass without making the election, it is of opinion that it would be quite reasonable if a further chance be given to these contributors. My Board, therefore, would be glad if the Committee when making its report on the Bill would give consideration to this point. With reference to the letter signed by Misses Greig, Kershaw, Coad, Gibson, and Ward, regarding their omission to make a further election in 1932, I have to comment as follows : — The election made in 1931 to continue to "contribute on the unreduced salary was made under the provisions of the Finance Act, 1931, and referred only to the reductions made under that Act. It is difficult to understand how any teacher could consider that this election covered any reduction in salary made by a subsequent Act. With regard to the special points raised by the teachers, I have to say, — (1) A personal note from myself informed one of the teachers that her election (1931) was unqualified and could not be withdrawn. This is quite correct. The election was made, and could not be withdrawn or revoked by the contributor. The teachers consider that they should have been advised personally and individually of the provisions of the 1932 Act. The Act throws no responsibility on the Superannuation Board or Office of advising contributors individually as to further legislation passed, and in my opinion it would be most unreasonable if such a duty were placed upon this Office. (2) The teachers state that in an important matter such as this a personal notice is usual. This statement is not correct. Copies of the Education Gazette are sent to every school in sufficient numbers to allow of each teacher receiving a copy for his or her own use. This practice, well known to teachers, has been in force for several years, and if a teacher does not receive a copy from the headmaster or headmistress of the school at the usual time it would seem reasonable for the teacher to make some inquiry. (3) Although not bound to do so, I gave full information as to the right of election in the Education Gazette of Ist June, page 88 (the first issue after the passing of the Act). The type is the usual type used, and was prefixed by a heading " Superannuation " in prominent type. In the Education Gazette of Ist August and of Ist September I inserted a further notice drawing attention to the fuller particulars in the June issue, and in this further notice I stated, " If a contributor who made the election last year does not make the further election this year he will contribute on his actual salary only in future." I cannot understand how any teacher reading this notice could imagine that a further election was not necessary, but Miss Coad, one of the writers, admitted to me in this Office that she had read that paragraph, but did not think it applied to her case. The Education Gazette is the best means available to this Office for communicating with contributors (teachers or others), and from the first issue of the Gazette the Education Department has impressed upon teachers the duty of reading the publication. I would be quite pleased if these teachers could be given a further opportunity of making the election, and at the direction of my Board am sending you a separate communication on this point, but I take exception to the statement of any teacher that this Office has misled her or not given sufficient information. I attach copies of the Education Gazette in which the notices appeared.

E. Phillips Turner, ex Director of Forestry, Hamilton. KKK. Being severely affected by the proposals in the Government Superannuation Funds Bill, 1932, I have the honour to submit for your serious consideration the observations made below. As the report of the National Expenditure Commission is the basis of the Bill, I have quoted or paraphrased certain paragraphs, and have added comments which I believe will show that the Commissioners recommendations are not based on considerations of logic and justice and an appreciation of the moral obligation that the State should observe a contract it has made.

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Paragraph 1388. "We also draw attention to the huge potential liability on the State in regard to the funds, a liability from which the State cannot honourably escape." Comment. —After making this pious statement, they propose that the State shall repudiate its moral and legal liability. This liability is the result of accumulated successive negligences of the State. Paras. 1390-1396. "It is shown, inter alia, in these paragraphs that prior to 1908 Civil servants were entitled by law to pensions not exceeding two-thirds of the average salaries of their last three years of service and also that widows and children of deceased officers were granted gratuities. Comment. —The Public Service Classification and Superannuation Act of 1907 relieved the State of this liability to pay the whole amount of the pensions drawn by Civil servants, and provided that a pension fund should be established, also that both the State and Civil servants should be under an obligation to contribute to it. It will be seen, then, that the superannuation instituted in 1907 was chiefly for the purpose of lessening the liability of the State, and not for the purpose of improving the pension conditions of retired State servants. Up to the 31st March, 1931, the total amount paid to Public Service Fund was £6,032,000, and of this the State contribution was only £1,819,000 or less than one-third. Though the State could easily have done its duty in the past, it evaded it. Para. 1414. " In 1909 was enacted the amendment limiting the retiring-allowance to £300 per annum." Para. 1416. " The total shortage of contributions to the Public Service Superannuation Ftmd to which the Government was legally liable was at 31st March, 1927, £804,000, or at 4J per cent, compound interest £1,060,000." Para. 1417. " The foregoing and other factors have led to a present actuarial deficiency in the Public Service Superannuation Fund of over £8,000,000." Para. 1427. " Statutory provision exists for meeting from time to time from the Consolidated Fimd any deficiency in the Public Service Superannuation Fund for the payment of current charges." Para. 1430. " Owing to the failure of the State to meet initial deficiencies (for which it was liable) in the fund, liability for annuities arising from services prior to the initiation of the fund is now being met by current contributions of employees." Para. 1434. " It seems clear that the actuarial liability of the Government in respect of the three pension funds is approximately £23,000,000." Para. 1435. " It is not only the failure of the State to meet its liabilities, but, in addition, numerous retirements of comparaively young officers with long service have contributed largely to the adverse position." Comment. —By the foregoing it is seen that the present bankrupt condition of the fund is due to the Government's neglect to observe its obligations and its forcing early retirements. Nevertheless, the Commissioners, oblivious of the principles of ordinary justice and equity, advise making pensioners the sole sufferers from the Government's faults and neglect. Para. 1453. " Had it not been for the Superannuation Funds the State would have had to pay £700,000 from the Consolidated Fund to officers who have retired and drawn pensions from the Public Service Fund." Comment. —This is further evidence of action by the State, which, with a private concern, would be considered not honourable. Para. 1459. " It will be recognized that a review of the conditions governing future retirements from the service, if unaccompanied by a review of existing annuities, would be unreasonable and unfair, and if it be right to alter the present law to provide more stringent conditions on retirements for the future, it is equally just that those who have retired from the Service under the too liberal provisions of the law should have their annuities reviewed in line with your recommendations concerning future annuities." Para. 1460. " There is a further consideration which has a bearing on any proposal for the reduction of existing annuities, and that is the majority of those who have retired since 1921 have done so on an inflated annuity." " This is, of course, due to post-war rises in salaries." Para. 1461. " We therefore recommend that existing annuities be reviewed on the following basis : (a) The calculation of annuities on the basis of average salary of last seven or ten years of service instead of three as at present : Provided, however, that such average salary shall in no case be deemed to be less than the average salary for the three years ending 31st March, 1921, nor shall any alteration be made in any annuity granted before the 31st March, 1921." Para. 1462. "They advise that officers who retired before 31st March, 1921, having completed forty years' service, but may not have reached 65 years of age should not have their annuities reviewed." " These officers complied with all the requirements as to length of service and were in many cases invited to retire, we hardly think it would be equitable to suggest the recalculation of their annuities on an actuarial basis according to age." Comment. —In paragraph 1459 they adopt the strange moral concept that two wrongs make a right, and profess to come to conclusions based on fairness and justice. This is nothing less than pretence or, at best, self-deception, for justice and fairness have been abandoned and expediency alone is the actuating motive in their recommendations. The position as between present and future annuitants is not quite the same. Present annuitants have made commitments and have arranged their futures relying on the security of the pensions they have earned : those now in the service will have additional years in which to arrange for their futures. Not that I suggest that this fact is a warrant for the Government breaking the conditions under which they entered the Service. With regard to the exclusion from review of the pensions of those who retired prior to 1921 and the statement that those who have retired since then shotild have their pensions reviewed (dealt with in para. 1460) I must point out that I (and probably many others are

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in the same position) tad my salary reduced in 1921, and it was not till 1925 that I received an increment which brought my salary back to the same as prior to 1921. Between those years, however, I paid to the Superannuation Fund the same amount as though my salary had not been reduced. Those who retired prior to 1921 escaped the 1921 cut in salary. The proposal in para. 1461 that the annuities of those who have retired since 31st March, 1921, should, in the future be calculated on a basis of the average salary of the last ten instead of three years of their service is a tyrannical unilateral repudiation of a legal and moral obligation which among private persons would be deemed dishonest. It is proposed that a small number shall be the most heavily penalized. With regard (para. 1462) to those with forty years' service who retired before 1921, and before reaching 65 years of age, the Commissioners admit that it would be inequitable that these officers should have their pensions reviewed. To do so would be certainly unjust to them ; but as a matter of equity these pensioners have no more claim to exemption than those who, having reached 65 years of age or completed forty years' service, retired subsequent to 1921. Para. 1463. The Commissioners admit that in certain cases the review of existing annuities as advised by them will result in drastic reductions. It will affect, among others, those who have had promotion towards the end of their official careers. Nevertheless " reconstruction of these funds " is advised in order to secure " the future interests of both annuitants and contributors," and they " can find no more equitable method of distributing the losses among all parties." Comment. —As stated before, their proposals arise from considerations of expediency, and not equity and justice. Those who have had promotion towards the end of their official careers and have undertaken more difficult and responsible duties will be particularly penalized. Their increased salaries were not for long service, but for more responsible duties. Para. 1464. In view, however, of the drastic reductions that will in many cases follow the calculation of present annuities on an actuarial basis, they advise that no reduction involving a reduction of more than 20 per cent, be made, and that an " Undue hardship tribunal " be set up. Comment. —If the State is going to disregard its honour and adopt the Commissioners' recommendations, then the proposed " Undue hardship tribunal " should be one which is absolutely independent, such as a Judge of the Supreme Court. Para. 1470. " The Commissioners state that the imposition of a limit of £300 annuity to officers " who joined after the 24th December, 1909, is " operating detrimentally to the best interests of the Service." Inter alia, they state that "it helps to defeat one of the main objects of the fund by diminishing the inducement to the best officers to remain in the Service." Comment. —Though it is quite likely that the present limitation of the pension of the officers referred to acts detrimentally to the Service through not encouraging the best officers to remain in the Service, it is not by any means clear that this is also detrimental to the fund. A bad head of a department would pay to the fund as much as a good head would pay. It may be here remarked that in the past good officers (professional ones more particularly) have remained in the Service largely on account of the attraction that a pension—secure as they thought—offered them. In many cases they refused outside better-paid appointments. Further, in connection with this recommendation, it may be remarked that those who joined the Service after 1909 were at the time aware of the limitation of the pension to £300, so they are not now really subject to any hardship. This class of public servant is more numerous than the pensioners and it looks as if the Commissioners had adopted the Machiavellian principle of placating a large number whilst they were indifferent to the interests of a smaller number. Para. 1478. " The Commissioners say that the Government subsidy to the National Provident Fund is sufficient to maintain the solvency of the fund, but the subsidy to the Public Service Superannuation Fund is insufficient to maintain the solvency of that fund. Comment. —If this be the case the logical and equitable action is for an increased subsidy by the Government to the latter fund. Their proposal is, however, that the deficiency in the Public Service Superannuation Fund should be made up by the State breaking its contract, and that pensioners should be deprived of 20 per cent, of their legally due pensions. Para. 1479. " The Commissioners advise that the necessary adjustments in the fund should be final." Comment. —If the action they now advise be taken, will pensioners and those now in the Service ever have any faith in Government guarantees ? Conclusion. —In the foregoing there is a certain amount of repetition, but this results from, the Commissioners having dealt with particular subjects in different places. I have traversed the Commissioners' report rather than the Bill, as I concluded that the honourable members of the Committee, before coming to a decision with regard to the clauses of the Bill—and these embody the recommendations of the report —will desire to be fully acquainted with all the reasons given by the Commissioners as warrants for their recommendations. The Commissioners, with possibly one exception, are representatives of the commercial class of citizen, and if the ethical principles they have given evidence, of having axe prevalent in our commercial class, then not only has the old maxim that " An Englishman's word is his bond " been discarded, but it would appear that it is considered that even written commitments when inconvenient, may be repudiated with propriety. Parliament is the highest authority in the State. In the past New Zealand has had a high reputation because of its observance of British tradition with respect to honourable dealing. The writer believes that after due consideration of the Commissioners' proposals, as embodied in the Bill, the Special Committee will make such amendments as will prevent New Zealand's name being besmirched by a repudiation of a contract made with those who have given the best part of their lives to the faithful service of the State.

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Margaret Wilkie, Girls' Hostel, Opawa, Christchurch. LLL. I beg to submit the following statement concerning my position with the Teachers' Superannuation Fund Department. After training at Otago University Home Science School I began teaching under the Nelson Education Board at Westport in February, 1915. Length of service there three years. Elsewhere— Invercargill —two years. Christchurch Technical College, 1920 to present date. I did not join the Teachers' Superannuation Fund till 1930, when all back service was recognized except the three years under the Nelson Education Board, and for the following reason, which I hope will be overcome by new regulations. My duties at Westport did not commence till the Ist February, 1915, but the Nelson Board paid my salary as from the Ist January. As it was my first teaching position, I accepted this as customary, and when I resigned at the end of 1917 I sent my resignation for the 31st December, 1917. Finding, on reaching Invercargill, that no January salary was forthcoming, I applied to the Nelson Board for it, and was told that my resignation had been accepted and nothing further could be done, so I lost that month's salary. When I joined the superannuation scheme and the records of salary were sent to the Secretary of the Teachers' Superannuation Fund it was, of course, found that January, 1918, was unaccounted for. I gave the explanation, and showed that, as no schools were open, there could not possibly be any break in service, and suggested that for superannuation purposes my teaching service be counted from February, 1915, and the January salary be substituted for January, 1918. This was not allowed, and I was told it constituted a break in salary if not in service. I wish to point out to you the hardship of having three years service deleted for a small technical detail and for which the Nelson Education Board is much more responsible than myself, and trust that the regulations now being framed will enable me to have this matter rectified. I regret being unable to send the complete correspondence, but should you desire it I will endeavour to get a copy from the Secretary of the Teachers' Superannuation Fund.

Thuksday, the 23rd Day of Februaby, 1933—continued. J. W. Macdonald, Public Trustee. (No. 50.) The Chairman.] You mentioned just now that you were Chairman of the Superannuation Board of the Public Service ?—Yes. Now, to what do you attribute the cause of the funds being in the state that they are at the present time ? First of all, we admit that there is the liability of the Government. You can leave that out. We know all about that ?—I put it down, to a great extent, to the early retirements. I have made protests about that. I made a protest, as Chairman of the Board, in 1920, against men being allowed to leave the service at the age of fifty, and drawing full pensions. At that time £50,000 was debited to the fund on account of premature retirements, and I made a strong protest against it, but I have had no acknowledgment from that day to this. You are referring to early retirements brought about through the consent of the Minister ? —Yes. If the Minister says that an officer has to be retired, it has to be carried out ? —Yes. We have no option in the matter. The initiative in the matter is taken by the head of the Department. He gets the approval, and sends it on to us, without any conditions attached to it for an actuarial reduction by reason of premature retirement. We are helpless in the matter. What do you suggest in place of such an early retirement ? —An actuarial retirement. You have protested ?—Yes. Time and time again, we have discussed the matter, and made protests. But it has always ended in nothing. From some of the evidence we have heard there appears to be no option but to grant the early retirements ? —That has been our experience in the past. We have raised the point in writing, and have raised the point with the Minister. A Minister used to attend our meetings. Sir Francis Beil, when Minister of Internal Affairs, attended regularly, and the whole thing was discussed, but nothing was ever done. Do you, as Chairman, on behalf of your Board, say that the provision giving the Minister the right to grant early retirements in the Public Service should be removed ? —I do not say that. But Ido say that it would not matter so much if you enabled the Board, in consultation with the Government Actuary, to lay down restrictions. You say it is advisable that that should be done ? —I say it is absolutely essential. That the Minister should not have that authority ?—Yes. I have known men get out at fifty years of age, to take up well-paid appointments outside. We all know all about that sort of thing. Those men go out and receive their benefits at my expense, and at the expense of the others who have contributed. Mr. W. Nash.] Do you suggest that if the Minister grants their request for an early retirement, they should be allowed to retire on an actuarial basis ; and that, if anything more is granted, that the Minister could arrange for that to be paid direct out of the Consolidated Fund ? —Yes. The Chairman.] There is no doubt a good deal in what you say ? —I have known many cases in the past where the Minister has hesitated about doing it, but the applicants have pulled every wire, and have ultimately got it. Do you say that there should be no provision for giving the Minister that authority ?—Oh, no. I say, let the man have the early retirement, but the condition should be imposed that the terms of the pension should be made by the Board, in conjunction with the Government Actuary. If that is done, he is then getting all that he is entitled to.

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Thursday, the 2nd Day of March, 1933. Paul Desire Nestor Verschaffelt, Public Service Commissioner, recalled. (No. 51.) Cecil Gostelow, Government Actuary, recalled. (No. 52.) The Chairman : We. have met this morning for the purpose of giving any members of the Committee an opportunity of asking any questions on the statements that were submitted by Mr. Verschaffelt and Mr. Gostelow. Mr. W. Nash (to Mr. Gostelow, Government Actuary).] Regarding the suggestion which has been made in the course of the Committee's proceedings that there was compulsion in connection with joining the fund : you say that officers were given the option of joining. Was there compulsion in the original stages ?—No. They could please themselves whether they joined or not ?—Quite. The Chairman.] Then that statement of Colonel McDonald's would not be correct ? —No. He said, you will remember, that they were compelled to join the fund ? —I think that he was misled by the fact that new entrants into the Service were compelled to join. Mr. W. Nash.] The alteration of the situation with regard to interest would affect all your figures that you supplied to the National Expenditure Adjustment Commission, and also to this Committee ?—-Not if the funds got the Government guarantee of 5 per cent. Have you any estimate as to what it would cost for the Government to guarantee 5 per cent ? Assuming that the funds were £10,000,000, 5 per cent, is £500,000 earning-power. If they only get 4 per cent., that means that the State in addition to its subsidy has to find another £100,000 a year ? —Taking the three funds, I estimate at the outside that the Government's liability capitalized would be £3,000,000 to guarantee 5 per cent. —that is, on the assumption that the earning-power fell to 4| per cent. And if it is likely to fall to 4 per cent., would that double the amount ?—Yes, approximately. I would like to get it in the form of an annual contribution —it is only at that point that you can find out what the State's liability is. Ido not know how you could fix a capital sum to determine the contribution of the State to bring the interest payment up to 5 per cent. ? —An increasing amount commencing at about £56,000 a year would have to be made up if the interest dropped to 4 per cent, all round. In the statement you made originally you pointed out that in 1924 Mr. Traversi said that 6-J per cent, of salaries would be required to put the fund on a financial basis at that time ? —Yes. A subsidy of 6| per cent, of salaries ? —Yes. In 1927 you said 8 per cent, of salaries would be required ? —That is so. What about 1930—have you any idea ?—Probably 10 per cent. That means that, to put the fund on a sound financial basis—taking the definition of " sound financial basis " that you use —it would be necessary in future for the Government to pay in 10 per cent, of the salary roll, plus the difference between 5 per cent, and the amount of interest realized on the existing securities ? —Not plus the difference ; that. 10 per cent, was on the basis of the fund earning 4| per cent. Then if the funds only realized 4 per cent, they would have to pay 10 per cent, of the salary roll plus the difference between 4| and what was realized ?—Yes ; probably about another £30,000 a year to commence with. The Chairman : Did not the Right Hon. Mr Coates say, in the course of his explanation of the Bill, that Superannuation Funds were being provided for ? I understood him to say so, when he was asked whether investments were being brought down to 4 per cent. He made some statement, did he not ? Mr. W. Nash.] Yes. But assume that the Superannuation Funds have only a limited amount of their funds in Government securities. That would only affect that proportion, and it would be doubtful whether the Superannuation Funds will be able to maintain even their ordinary loans at 4 per cent. That is what lam thinking of. The Chairman : They are getting 5 per cent, at present on their mortgages. Mr. W. Nash.] But are they getting it ? —They are not getting that on all their mortgages. When Mr. McCombs was questioning some one last time in connection with interest he wanted, and Mr. Wilkinson also, a return showing what they were getting ; not the average rate of interest shown on the mortgages, but what they were actually receiving ; and Ī am wondering whether it would be much more than 4 or 4| per cent, to-day ? —lt would be more than 4| per cent. Then there would not be on that basis any liability so far as mortgage income was concerned ? —No. And 10 per cent, of the salary roll would be sufficient to meet the liabilities, as you see it to-day ?— Yes, subject to conditions remaining as at present regarding retirements. It would not suffice for the Railway Fund, for example, on account of the enormous batches of men thrown out on thirty-five years' service. Does that mean, then, that, if the present conditions are continued in connection with the Public Service, and there are no special retirements, the State would still have to pay 10 per cent, of the salary roll for all the three funds to make the funds sound ? —Yes, that is so, with conditions as they are at present. Have you any idea what the salary roll is ? —lt is ten millions, roughly —£9,800,000. That comes back again to the original million, then ? —Yes. A million a year would be the subsidy ? —Yes. That is again on the £25,000,000 basis ? —Yes. In your original evidence you say that in 1919 the Railway Fund required a subsidy of 7| per cent, of salaries —I think you are referring there to Mr. Muter ; you say, "As already stated, the total pay roll of the employees included in the fund is £2,256,369 per annum, and it may be pointed out that the 21—1. 15.

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subsidy recommended represents approximately 7J per cent, thereon." That is in 1919. How much do you consider would have to be paid to put the Railway Fund on a sound financial basis to-day ? — I mentioned that, I think, further down. " 10 per cent, in 1927 " —but I thought that referred to all the funds ? —No, that is the Railway Fund. You say, " I recommended a future annual subsidy equal to 10 per cent, of the salary roll, commencing at about £340,000 per annum." Would you think that 10 per cent, would be enough ? —Not now, there is no question about that. The Railway Fund, then, requires more than 10 per cent, per annum of its salary roll to put it on a sound basis, or even to enable it to continue to pay out permanently its existing benefits, and those that come on the fund in future ? —Yes, to put it on a sound basis. You estimated in a footnote to your evidence that the 1933 deficiency was likely to be £25,500,000 ? —Yes. Ten millions of that was on account of the Railway Fund ? —Yes. On page 16 there are most astonishing figures. You quote the fact that in the case of a person who retired at the age of 55 a. pension of £35 10s. a year would be equal to a pension of £100 a year at 65. That means to say that any one retiring ten years before age 65 —i.e., at 55 years of age —to receive tlie equivalent from the fund's point of view, £35 10s. at that time is equal to £100 at age 65 ?— Yes ; that is allowing for the contributions in the meantime. That means a cut in pension of 64Jt per cent. ?—Yes. £35 10s. at age 55 and £100 at age 65 would have exactly the same effect on the fund ? —Quite. You quote some other figures that are also extraordinary ; that in the case of a £100 pension at age 55 you could pay a pension of £281 at age 65 without causing any heavier strain on the fund ?—Yes. Retirement at 55 years of age as against age 65 increases the liability on the fund by £181 per annum ? —That is so. Is there any way in which we can check that ? I do not want to question your figures in any way ? —Take an extreme example of a pension deferred ten years. What would be the value of such a deferred pension of a million a year to a man aged 95 ? It would bo nothing, because he would not be likely to live to 105. It is all bound up in the mortality. Can we get from you a table working out one pension, showing the factors that are taken into account in reducing pensions, from the amount that the pensioner expects to get to the amount that he actually does get on an actuarial basis ? Is it possible for an ordinary layman to take that table ? There are about twenty factors, shall we say. Could those factors be set out in a table showing how a pension of, say, £100 is reducible on account of so-and-so by so-and-so, until you get to £35 10s. ? —I think nobody but an Actuary would be any the wiser. Mr. McCombs.] The expectation of life is one factor ?—That is one, but you have several — the rate of contribution, the age, &c., all the factors that crop up in connection with a pension fund. What is the expectation of life ? —There is no such thing as " expectation of life " unless you link it up with the present attained age. What is the average age that you allow for them to die at ? —We do not take any particular age. We take the probability of a man aged, say, 60 living to 61, to 62, to 63, and soon, right up to about 105. Mr. W. Nash.] There must be a table ? —lt is not based on the expectation of life. We make up our own tables as we go along, to take in all the other factors ; otherwise we would never get the work done. Would not it be possible to take one single person who has retired from the Railway, or the Public Service, or the Teachers, prior to the time fixed by the Act —who has received an actuarial pension ? Would not it be possible to show exactly the working of one case, even if it is not possible for the average man to understand the why of it 1 You have certain factors in determining what the pension should be. Would not it be possible for one table to be shown to the Committee ? — No; the Committee would not be any the wiser, because you would have to explain all the different factors you use, and why you use them. Is not that explainable ? —I do not think it is. As a matter of fact, there are quite a number of Actuaries without pension-fund experience who would find it difficult to follow, let alone attempting to explain it to a layman. You have reduced a pension from £100 to £35 10s., after weighing certain varying factors. Even if you do not tell us the reasons for the weight that you attach to the various factors, cannot we get the factors ? —There are no definite factors. It would simply be a matter of figures. Each case —and this is a point that I would like to stress —has got to be worked out separately. No two cases are the same. But there are various factors that you use in making your calculations. For instance, take this £100. The loss of .the contributions for the ten years reduces it, shall we say, to £73 ? —The contributions, as a matter of fact, are not in general a very material factor. Then supposing on that head it is reduced to £93 —I do not mind what the weight of the factor is, but could we not get one specimen case ? —I do not think so; you cannot analyse it that way. Whether we have the capacity to analyse it or not, we could understand that it was reduced from £100 to £93 because of so-and-so, and reduced to £83 on account of something else. I do not want it given in algebraic form, or anything like that; you can work it out in algebraic form, or by the differential calculus —I do not worry about that, but there is definitely a certain percentage of the total pension deducted for various factors. Cannot we get those factors in one case ? Then it is up to us ;if we cannot understand the why of it, that is another thing altogether ? —I think we went into that before some other Committee.

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We discussed it once on the Railway Committee, and at that time we did not get it. I am anxious to get it. I do not want to get it for any other purpose, but I want to get it, to get the average man in the Public Service to understand that these are the factors. " Here is one specimen case. Ilow the percentage of deduction is arrived at I cannot tell you, but that is it " ? —All we could give would be simply a mass of figures dealing with one particular calculation. The figures do not matter. Here is a £100 pension, and here are twenty factors showing why the £100 is reduced. The weight of one factor is 2 per cent., or £2 ; the weight of another £1 10s., and so on ? —The trouble is that you cannot split them up into all those different weights —that is the point. I would be most pleased to be able to give a table to the Superannuation Boards and let them work it if it were possible —it would save me a lot of work. Ī am not suggesting that it is possible for them or for us to work it, but Ī do suggest it is possible to give to us the factors that determine the reduction, irrespective of your calculation in connection with the reduction. If it is, from your own experience, possible to do that, will you give it to us ? Because if there is anything in this Bill that goes through, it will cause dissatisfaction right throughout the Dominion —and justifiably so, if, for instance, I expect to get from you £100 and I get £35 10s., and you say to me, " It is all right, you have no need to worry, Mr. Verschaffelt has worked it out," and I have not the faintest idea of the factors. I would have a feeling of dissatisfaction for the rest of my life. If, however, you tell me why it was reduced from £100 to £35 10s., and then I can see, whilst I might disagree, that there are reasons for it, I would be in a different frame of mind altogether ? —So far I have never been able to explain these things to the satisfaction of any of the people who have had actuarial pensions—l have been able to show them that, although they are getting a smaller pension, they are getting it immediately, they are getting it for a longer term than they would have obtained with a normal pension, and, what is more, if they had stopped in the Service they would have had to take into account that they may have died and got no pension at all. Those are āo many factors. Cannot we get that set out in some simple form that you could explain to us ? I want one particular case, one only—l do not want a lot. I agree you would have to make a thousand calculations. Ido not want that. You have used certain formulas in determining certain pensions on an actuarial basis —could we not get the reasons in connection with one particular case, with the reductions under various headings ?—You could not get the reductions under various headings. If you gave me a particular case of a man —gave me his age, service, salary, rate of contribution —I could tell you immediately what the actuarial pension would be. The Chairman.] Why not take one of the cases of those already retired on an actuarial pension ? Mr. W. Nash.] Let us have the factors that determine the actuarial reduction on account of each one factor ? —That does not give you all the factors ; it gives the final result. Supposing there are seven or eight factors. A certain proportion of the reduction is due to each factor. Cannot we get that proportion ?—No, you can only get the final result. This is obviously a case of calculation. Ido not understand why this information cannot be made available. We will have to leave it at that. lam sorry —I thought we could get it. Have you any idea how much has been paid into the funds since they started ? What is the total of the contributions to the whole of the three funds since their inception ? —ln members' normal contributions £9,321,596, to 1932. If from your calculations —you work it out in every way —they had paid a pound-for-pound subsidy, do you think the funds would be on a sound basis to-day ? —lf they had paid a pound-for-pound subsidy from the beginning I think that the funds could have been made sound. I would not like to say definitely as regards the Railway Fund, because I think that is hopeless now. It is hopeless because it is on a 3-per-cent. basis ?—No ; it is hopeless on account of the early retirements. But you think it is possible that, had the funds been subsidized on the lines that you recommend now, a pound-for-pound automatic subsidy, there would not have been any deficiency whatever ? —That is so. The Chairman.] Does that include the Railways or not ?—lt would not include the Railways, unless those early retirements are reviewed. That is the big trouble that I see about any practicable scheme of rehabilitation of the funds. Mr. W. Nash.] A pound-for-pound subsidy might give actuarial soundness ? The Chairman : Mr. Gostelow qualified that by saying if the early retirements from the Railway Department were reviewed. Mr. W. Nash.] You mention the contributions to be paid in by the Post Office and by the trading Departments, to provide £110,000 a year, as their contribution by way of subsidy for their own employees. In paragraph 1449 you have a table about the pound-for-pound subsidy, and then you say, " It will be seen from the above that the additional amount to be provided by the State as employer would be £242,000 per annum. It is important to bear in mind that this would not all fall on the Consolidated Fund, as it is estimated that the Post Office and Trading Departments of the Public Service Superannuation Fund would, in respect of their employees, provide about £110,000 per annum, leaving the Consolidated Fund to find £132,000 in addition to what is at present being paid." Then you go on to say, " It is not my function to express any opinion as to the ability of the Consolidated Fund to find this additional amount this year, but as it only represents 1 per cent, of the salary bill it is not anticipated that it will present an insuperable difficulty." What is that 1 per cent, on ? —One per cent, on the salary bill of about £10,000,000. But salary bill other than the Post Office, the Public Trust, the State Advances, and the other trading Departments. In the one case you are providing for those trading Departments to pay their £1.10,000 out of their funds ; and then you quote 1 per cent, as being the other amount required. 21*

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I have the idea that the 1 per cent, would be on the total salary bill, including the Post Office and the trading Departments. If that is so, then what is the inference to be drawn from that statement ? The trading Departments are already paying £110,000. It looks to me as if the 1 per cent, is on the total salary bill, which includes the Post Office and the Trading Departments, and that being so, it would be in twice, because they are already providing £110,000. You are of opinion, if pensions are reviewed, that they should be reviewed and reduced irrespective of percentage ? —Yes ; you would have too many anomalies otherwise. Would not you be in favour of not applying the reducing formula to bring an annuity in any case below, say, £200 a year ? —I would prefer to see them not touched at all, if financially possible. It is all a matter of the cost. But presume you have to : that some reduction in some form should be made. Would you personally be in favour of reducing pensions below £200 per annum ? Assume that a person is qualified under existing circumstances to get £200 a year —would you be in favour of reducing it ? — Ido not think that any minimum amount should be taken into account. If the principle is right, it should be applied to everybody. Here is somebody getting £281 a year, and you want to get him retired on an actuarial basis. Would yoir think it justifiable to bring that £281 down to £100 ? —But that was an extreme case, the £281 being a deferred pension commencing at age 65, while the £100 was an immediate pension commencing at age 55. But some retire ten years before their time, at 55 years of age on thirty years' service. That means that their pension was £281, with the permission of the Minister, instead of £100 ? —I do not think they could have got the permission of the Minister. You will notice in that particular example I was merely showing the different values of pensions at different ages, and the ages were ten years different. If the Minister could give a man permission to retire at age 55, he would have had the right himself to go out at 60 years of age. The Minister has not the power to let a man out ten years before his earliest retiring qualification. He has the power to let him retire after thirty-five years' service ? —After thirty-five years' service, or if he is 55 years of age with thirty years' service, or at 60 years of age. Mr. Sterling did not serve thirty-five years ? —No, he served thirty years. In his case I presume the reduction would be from £1,447 to £900. Would you say that that should take place I —l do not know about those figures. I think he is getting £1,447 per annum by way of retiring-allowance, on a thirty-five years' basis —i.e., thirty years' service worked out on a thirty-five years' basis ?—Yes. Assume it was £920 —would you say that that deduction definitely ought to be made ? —Yes, if it is in accordance with the general principle laid down for everybody. If there is a case where a man is getting £200, and he is to be brought down to £110. Would you be in favour of that, or would not you have some limit for those who have retired with the consent of the Minister, inside the legislative authority of the Government, where they would not be affected, £200, £150, or something like that ? —The point is, who is going to pay for that concession ? The only point 1 would like to make is that the superannuation fund should not have to pay. I do not particularly wish the amount to be taken from the man, but the Consolidated Fund ought to bear the cost of any concession, and not the Superannuation Fund. Presumg, then, that the Superannuation Funds are conserved for the benefit of the contributors. At that point certain pensioners having retired have a pension of £150. The liability on the Superannuation Fund which comes from the contributors' moneys would be £100. You would .still be in favour, looking at it from an ordinary equity point of view, of £50 being contributed to that man's pension from the Consolidated Fund ? —Yes, but it is really a matter for Government to decide how far the Consolidated Fund should assist. The Chairman : Do you think we should take Mr. Sterling's case as an example, seeing that he has an agreement with the State ? Mr. W. Nash: I mentioned that, not thinking of Mr. Sterling, because I knew that that was one of the cases where retirement before thirty-five years had taken place. The Chairman: But it did not apply in other cases —Mr. Sterling's case is totally different. Mr. W. Nash : He has the actuarial pension on a higher level. The Chairman : Is anybody else getting it ? Mr. W. Nash: No. The Chairman: He has it under agreement. Mr. W. Nash: By legislation. The Chairman : fie has it by agreement with the Government, because he has gone down ; he was getting £3,150, and to-day he is getting £2,400 —£1,000 from the Board and £1,400 from, the fund. That was a voluntary retirement on his part. Mr. W. Nash : I do not know whether we can put it that way. The Chairman : But that is the position. And I was wondering whether it was a fair thing to take him, because his is an exceptional case. Mr. W. Nash : I agree it is an exceptional case, but I do not know about it being a voluntary offer on his part. The Chairman: Yes, it was, absolutely. Mr. W. Nash: It might be that he agreed to retire. The Chairman : He made the offer himself. Mr. W. Nash : To retire from his position ? The Chairman : They wanted him to take the Chairmanship of the Board, and he said, " Well, if it is a case of meeting the position at the present time I am prepared to forego my position as

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General Manager at the £3,150, and take the £1,400 retiring-allowance on the thirty-five years' basis and the £1,000 a year. Then he no sooner got that than he got a 15-per-cent. cut on the £1,000 a year straight away. Mr. W. Nash: He gets £850 as Chairman now ? The Chairman : Yes. Mr. W. Nash : I do not like to cite this particular case of Mr. Sterling's because we have discussed it so many times before, but the only reason why I brought it in at that time was because he was one person who had retired under the thirty-five years' service and at less than 55 years of age. The cost to the fund in that case is many thousands of pounds. The Chairman : Yes. Mr. W. Nash.] There may be others like that, but not where an agreement was altering the position. You quoted, I think, in reply to Mr. McCombs, that if the basis of assessing superannuation was changed from three years to seven years or ten years there would be a saving of 6J per cent, to the fund ? —Approximately 6| per cent, on the seven-year basis. What is that 6| per cent, on —the annual outgoings? —That would be the reduction in the total liabilities. It would work out at about 6| per cent, on the annual outgoings. If it is £100,000, £6,500 a year would be saved ? —Yes. You want the future contributions to the fund to be assessed on a secure pension basis —that is future contributions to the fund, with the subsidy, to be enough coming in every year, with the interest that the funds may earn, to be sure of paying out the pensions. That is your objective m connection with these matters ? —That is so. What is your objection to the State contribution being made from year to year as required ? I do not want you to cite the effect it has had up to now. You get the contributors' moneys, you invest them, and you get the interest; then there are certain amounts to be paid out by way of annuities. What is the objection to the income of the fund being supplemented by an annual payment by the State of a sum sufficient to make the contributions plus the interest on the funds to the sum required to pay the annuities ?—That is equivalent to my suggestion of a uniform payment of £1,000,000 a year. Not only that.. You are asking, in connection with the original proposals, for £25,000,000—which you said you could not get, to maintain the original agreements. You are asking for an alteration of the agreements, and then for the State to pay in an amount ? —All we ask is for the State to pay in a subsidy sufficient to keep that deficiency of about £24,500,000 from increasing. But in addition to that you ask now that the basis of the annuities shall be altered ?—I think you will find in my evidence that I said it was not my function to say whether the State could or could not afford £1,000,000 a year, but that this scheme had been put forward by the National Expenditure Commission as the best scheme on the assumption that the State could afford and would pay £500,000 a year. Ido not know whether it is good or whether it is bad —if I were dealing with the funds I think I would like something automatic ; but I would like to get from you why the State should not be allowed to pay in year by year the deficiency between the current contributions and the income of the fund, and the amount of the annuities ? —You have only to look at it from the viewpoint that they have not paid in the statutory amount in the years of prosperity, and what chance is there of getting it under present depressed conditions . In reference to the two balance-sheets that you have sumbitted with your later evidence, !i Pensioners' Account " and " Contributors' Account," why do you credit all the assets of the funds to the pensioners' account, and leave the contributors without any assets ?—That actually what is happening, and what I want to stress, that the Government, by not paying a sufficient subsidy, is practically forcing the superannuation funds to use contributors' money, which is almost equivalent to trust funds, to pay the pensions. Would you suggest that the contributors had no interest in the existing funds ?—My object m putting it that way was to emphasize the fact that if nothing is done the pensioners will absorb all the funds, and there will be nothing left for contributors. I do not think that is a square way of putting it ?—I have explained that it is a purely hypothetical way of putting it, to bring out what the position is. I would put in another balance-sheet showing that there were none of the funds belonging to the pensioners—that they all belong to the contributors ; that would be the better picture. If you showed the amount of money paid in by existing contributors plus the interest on the money received from the existing contributors, and said that it was the contributors' balance-sheet, then you would know how much is available for the pensioners. These two balance-sheets have been submitted by you to show the precarious nature of the funds—they are in a very bad way. I would submit that the correct way to do it is to make the contributors' account in credit to the extent of the amount of money they have paid in plus the interest that their moneys have earned, and then show the pensioners' account as having so much in hand. The reason for that is that it is the pensioners account that is deficient not to the extent of £6,000,000, but probably to the extent of £20,000,000 or £22,000,000. The contributors' account in actual fact is not deficient to anything like this proportion —it is the pensioners' account wherein the trouble lies. It is because you have paid moneys to pensioners out of the contributors' funds. What we really require to give a true picture to the Committee are two balance-sheets; one showing what has been paid out to pensioners that has never been paid in, by the pensioners or by the Government, and where it has come from it has come from the contributors ; and then if in the balance-sheet were shown the amount taken out of the contributors account and transferred to the pensioners' account, we would understand how the contributors were being robbed ?—The trouble about that is that it would not get you any further.

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The total figures would be the same, but they would be in different balance-sheets. In the one case, in the contributors' account, would be shown the moneys that they have paid in by way of contributions that has been used, and is gone. I should say that a correct picture, even in a hypothetical way, as put by you, would be to show all these assets in the contributors' account. It would show that the amount due to the pensions was due to them by the Government, and not by the contributors.—Yes, that is another way of looking at it. But I think this represents the actual facts, that the money that is there is being paid out for the benefit of pensioners, and it is only a matter of time when it will all go, and the contributors will have nothing. You appreciate that contributors are passing to pensioners every year, every month. If I were a contributor to these funds, and I were paying in £25 a year for the purpose of getting a pension and that £25 a year had been used, to purchase securities so as to ensure that I got that pension, and then those securities were placed to the credit of another fund entirely —nothing to do with me —I would want to know more about it. I think existing contributors under normal circumstances would have the right to go to the Supreme Court and ask for an injunction to prevent their funds from being used for paying benefits that they are not liable for. That is what is being done to-day. The Chairman : In clause 1450 of your statement you refer to the Railways Fund, and you say, " The suggestion is to strengthen the Railways Fund by increasing by 2 per cent, the future contributions of officers joining the Service before the Ist January, 1908, at ages under 50, in order to bring them into line with similar officers in other branches of the Government Service. This suggestion had previously been made to the Government Railways Department in my actuarial report into the position of the Railways Fund as at the 31st March, 1927, and its equity is apparent. If the suggestion errs at all it errs on the side of leniency, as there are good grounds for suggesting that the proposal be made retrospective, or, alternatively, that the pensions of such officers should be proportionately reduced." That would be rather a severe blow to them, would it not ? —lt is only putting them in the same position as their fellow-servants in other branches of the Service. You still maintain the 2 per cent, should be made up ? —I am only suggesting it be done in the future. What I wanted to show there was that, even if it were made retrospective, there could not be any complaints on the grounds that it was unfair. It might impose a hardship. At the present time if an officer is transferred from the Railway Service to the Public Service —and they have equal opportunities with other members of the Public Service —he automatically goes up from 3 per cent, to 5 per cent. Of course, the hardship of the whole thing is that the railway people were induced to join the fund on the 3-per-cent. basis by the Government ? —Yes. And it is pretty hard to come to them now and say you have a right to make up that difference. It could only apply really to the future ? —Yes, that is all the Act proposes. Mr. R. Sinel (representing Service Organizations).] The organizations were concerned, Mr. Chairman, at the recommendations of the Royal Commission, and the similarity of those to the suggestions in the Actuary's report —they are practically on all fours ? —1 suppose naturally a Commission like that would consult the experts. That infers, of course, that they are your recommendations in the Economy Commission's report ? —Not necessarily. The Chairman : Might I suggest to you in asking any question that you do not go into too much detail ? Because the Bill will not be reported this session, and you would have an opportunity before next session to come up with other things. Mr. Sinel.] The Committee will not disband, you mean ? The Chairman : The Committee will disband, but I presume it will be set up again. It is of no use going into a lot of details that can be held over. Mr. Sinel.] That simply leads on to the question that there were practically no members of the Commission who had expert knowledge of superannuation ; and, further, they had not the time to go into it, ancl they had to rely on their experts' recommendations ?—But still, they could bring to bear keen business knowledge. After all, it is their report. But there is a remarkable similarity, except in one vital point, where the Commission recommends an alternative assessment —a longer period of assessment —seven or ten years—whereas the Bill proposes ten years. You, I take it, are in favour of the seven years ? —I would be in favour of the one that would the better safeguard the funds. You must have some bias or some partiality towards one or the other. There is a vital difference to the contributor ? —Not to the bulk of the contributors. The bulk of the contributors do not usually get salary increments in their last ten years of service. That is so. In your report you estimate a deficiency of £23,000,000 ?—No, that is not my report. The Commission's report —the actuarial deficiency. That was calculated I think at 4| per cent. ? —That is the Commission's estimate. Have you any idea of what the difference would be if it were 5 per cent. ?■—Yes, £3,000,000, approximately. But, of course, that liability was on the assumption that all the conditions governing retirement would remain as at present, what we call the " permissive points." You had naturally to take the thing as it stood ? —I had naturally to base my assumptions as to future retirement on past experience. But, of course, I could not possibly have foreseen that orgy of retirements from the Railways Department. Of course we know that power in the hands of the Minister to retire subject to such conditions as he might think fit implied that there should be conditions. There have in practise been no conditions. The spirit in the implication is that there should have been conditions imposed ? — There should have been conditions.

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The Chairman: You are speaking of the Public Service ? Mr. Sinel.] Of every one of them—tie three funds are 011 a similar basis ?—You realize that the Railways Fund and the Teachers' Fund have the power to let a man retire early ? Yes ; and as a matter of fact, with the Teachers' Fund there has been a loading, which will not be to the same extent as an actuarial loading ? —They have made some effort. Yes, for some years, since 1919. Those would be subject to revision again, of course, if the Bill becomes law ?—That is so, to bring them on all fours with pensioners of the other funds, and in relation to one another. . T , , It is a fact, is it not, that the basis of practically every Government Superannuation Jund has been to take into account back service, practically to make it a gift, to induce officers to join ? Have you knowledge of any fund started de novo without allowing for back service ?—I would not like to say off-hand. A common practice is to allow half service, something the same as when the Teachers' Fund started here. . Which was later modified to cover the whole service. The general practice in New Zealand with any Government fund has been to allow the whole service ' That was really to get the scheme going. Therefore the State automatically assumed the liability at the outset ?—That is so. — There are 110 means, I suppose, of assessing that, with regard to our three funds under discussion ? No. What would it be, £8,000,000—£9,000,000—£10,000,000 ?—lt is quite impossible to get at the figure now. . The particular point with regard to the permissive retirements is that the Public bervice iJoara, to your knowledge, has 110 power, once the particular Minister in charge of the particular Department has laid down a certain course of action, to refuse to grant the pension ?—No. The most it could do would be to refer it back to the Minister and suggest to him that conditions Might or might not be imposed? —Yes. _ . The Board's approval is simply automatic, once the precedent conditions have been complied with . —That is so. . . . You consider a pound-for-pound subsidy to be reasonable at the present time 5— xes, it is reasonable in any superannuation scheme. If there had been no liability for past service, would that be necessary—a pound-for-pound subsidy ? —No ; the funds could have afforded to give bigger benefits. Or, conversely, a lesser subsidy for the same benefits ?—That is so. You have no idea, I suppose, what proportion of that pound-for-pound subsidy would be allocated to current contributors as against that past service ? —No. That would be bound up in the same question ?—Yes. The Wellington Harbour Board, which you have reported upon as being an actuarially sound institution, pays roughly 12s. 6d. in the pound subsidy ? —Thirteen shillings 65 per cent. It meets its liability for past service by an annual vote as the cases crop up ? —Yes. It does not come out of the Superannuation Fund—it is from the Harbour Board's own resources. Which would be equivalent to the Consolidated Fund bearing it in the case of ours ?—That is so. If their subsidy is 13s. in the pound, it would be reasonable to assume, I suppose, for our current contributors that a somewhat similar amount would be sufficient 1— It is not possible to say that exactly, because conditions might not be the same in regard to retirement or even in regard to salaries. They happen to be ; not salaries necessarily but as regards retirement ?—The Wellington Harbour Board may have a higher proportion of what we call General Division men. I think it is more likely the other way about ?—I could not say ; but experience has shown that you cannot take one superannuation fund and apply its results to another. Not in regard to the individuals ? —They all have their own special features. But of course their conditions as laid down by statute are similar ?—That is so. The Commission remarked that they thought a full pound-for-pound subsidy would not ultimately be required ? —I do not know what the Commission had in mind in making that statement. But it will certainly be required for about seventy-five years, and the difference between that and for all time is very small. The problem is bound up, to a certain extent with the growth of the Service. If you had a pound-for-pound subsidy, which is really not a subsidy but an annual payment for past liabilities, and your Service was rapidly increasing, that pound-for-pound subsidy is more than sufficient to pay in respect of your new entrants, and it might be that in fifty years' time there would be no need for any subsidy at all; but, on the other hand, if your Service was decreasing, then the pound-for-pound would be insufficient. Of course, the main basis of any superannuation fund is efficiency—that has been emphasized by many authorities ; and, secondly, in a manner of speaking, to be a sort of social scheme, to help the employee after he has done his service ? —I do not think the social side enters into it at all. I think it is purely and simply an efficiency measure, a matter of self-interest. I think in modem Governments the social scheme aspect enters into it to a certain extent ? — Possibly with the Government, but you have to remember that almost every big corporation runs . a superannuation scheme of some sort. From an efficiency aspect I—They1—They do not pay their good money just out of charity. It is evident from the evidence given by the various Departments such as Defence, Police, Prisons, Health, and Mental Hospitals that they would not get efficiency if they kept their men on to the later periods proposed in the Bill? — That might be so, but the question is, who is going to pay for the cost ? You have two options, to my way of thinking : either to charge the men in the Defence

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Department more, or else arrange for the Defence Department Vote to provide that a special amount is paid into the Superannuation Fund. That is, the Consolidated Fund ? —Yes. In other words, let the Consolidated Fund bear it ? —I am not concerned who bears the cost so long as it is not borne by the Superannuation Fund. If they met their liabilities at the present time it would be all right. We suggested that the past debt of approximately £3,500,000 might be met by the Government issuing stock to the various funds. Would not the funds be actuarially sound now, assuming that those permissive retirements were rigidly cut out ?—lf you have a deficiency of £24,000,000A capitalized deficiency ? —A payment of £3,000,000 or £4,000,000 would only reduce it to £20,000,000, and you would still have to obtain a future subsidy of round about £1,000,000. That £23,000,000 was on the assumption that all these permissive and special retirements would continue. But assuming that the Act was rigidly adhered to, and that officers were no longer put out without conditions—make a man pay for anything short of his time—our £3,000,000 suggestion would go a long way to meeting the trouble at the present time ?—So long as a future subsidy of say £600,000 or somewhere round about that But since that suggestion was made the rate of interest has been reduced. Harking back to the Economy Commission's report, it is of course public knowledge that one member of Miat Commission, Mr. Alexander Mcintosh, dissociates himself from the recommendations to break contracts ?—I cannot very well give any information about the Economy Commission. That is public information—he issued that statement, that he was very much averse. We also have the Chairman's assurance that the Prime Minister said that this Bill follows the Economy Commission's recommendations. The Chairman : That was said publicly in the House Mr. Sinel.] But of course it is to your further knowledge that quite recently two further members of the Commission have become alarmed at the extent to which their recommendations have gone, and they have joined in a Vested Protection League—that is public knowledge also. So that three out of the five members of the Commission have withdrawn their patronage from their report ? —That may be so, but that cannot alter the position that the facts brought out by them in connection with these funds are so alarming that some action is necessary. But their later action practically vetoes their own recommendations ; and therefore there is a minority of two who have not said anything yet, though it is assumed that they mav join up. It places the Prime Minister in this position, that he has not the support of the National Economy Commission that he originally had ?—What I would like to see you suggest would be some alternative to the scheme in the Bill. Of course there are certain anomalies in the Bill that may turn out to be unfair to the individual—i.e., those who have already retired on an actuarial basis will again suffer reduction by virtue of the seven or the ten years' assessment, will they not ? The Chairman.] Assuming it is put in ?—They ma y suffer some reduction, but I think that it would be very small. Not to the individual ? —Yes, to the individual, because after all, if you base the actuarial pension on the salaries over the ten years preceding the normal date of retirement, and a man has gone out with five years of uncompleted service, you have those extra years at his final salary. I think there would be very very few cases where any adjustment would be necessary. It would be more noticeable in the General Division ranks ? —The General Division are hardly affected at all. Of course, their s is a standard rate. You also mentioned Education—those already loaded up to a fixed point, 13 per cent., I think, would get out on the actuarial basis ? —Yes, on the same level. And the medically unfit cases since 1921—will they suffer a reconstruction ? —They are not affected at all, I think. Not on the ten-year assessment ? —lt may affect the higher paid ones, those who went out medically unfit on the higher salaries. Mr. W. Wright: I would ask permission to question the Government Actuary on behalf of the superannuated men, who are in a different class from existing contributors. Ihe Chairman : Ido not think it will be necessay for us to go into it this morning ; I think we can give you that opportunity when the Committee meet again—it is not going to make much difference now. Mr. W. Wright: In the meantime we have had no opportunity of knowing what evidence the Actuary has given, or what reports he has made to this Committee —we are entirely in the dark, and we do not know, as you will appreciate, on what grounds to base our questions to him—we are placed at a disadvantage. We were not invited here when the Actuary gave his evidence ; we can only assume and guess at what he has reported to this Committee. The Chairman : I his Committee will be sitting again as soon as the session takes place, and no doubt the Committee would give you every opportunity to ask any questions that you wanted to before they came to any deliberation at all. Mr. W. Wright: Based on the Actuary's report, which we have not seen. The Chairman : I cannot help that. Mr. W. Wright. I would ask why we have not been allowed to hear the Actuary's evidence ? Ihe Chairman : We will be tabling the evidence to-day, and you will probably have every opportunity of getting hold of what you want. It will save time. Mr. W. Wright: That is quite all right. At present you can quite see that we are just groping in the dark.

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The Chairman : We do not want to have to go over it all again—that, is what it really means. You might see something else later on that you might want to bring up, and you would want to go before' the Committee again. Probably it will be all fresh in our minds when you come back again. Mr. W. Wright: What we wanted' to do was to ask the Actuary some questions upon the report made to you and the evidence given to you. The Chairman ; The evidence is going to be printed and placed on the table of the House. Mr. W. Wright: Are we going to be shut out of it altogether ? The Chairman : I do not think there is any suggestion about shutting you out of it altogether. Mr. W. Wright: This is a very serious matter to superannuated servants —it means a great deal to them. The Chairman : Do you want to put your questions to-day or later on, which do you prefer i Mr. W. Wright: I prefer seeing the Actuary's report first. The Chairman : I cannot give you the Actuary's report. The Speaker has laid it down —it is not that this Committee will not do these things ; so that that ends that. 1 would say you would be very wise to hold over what you have got until we meet again. Mr. W. Wright : In the meantime the evidence will be tabled ? The Chairman : It will be. Mr. W. Wright: And we will have an opportunity of seeing it ? The Chairman : You would be very slow if you did not. Mr. W. Wright: We would very much prefer that, because, as I say, we do not know on what lines to base our examination; we can only ask such questions as occur to us. I would suggest, seeing the importance of this question to the superannuated men, that we should be given every opportunity of presenting our case —our objections to the Bill, before this Committee. It is so important that we do not want to do anything in a hurry. We do not want to be taking up the time of the Committee too much, but at the same time we want every opportunity to put our case before the Committee, and we can only do that by having what evidence the Actuary has given before you. As you suggest, I think it would be preferable if we waited until you meet again. The Chairman : I should think so. ; Mr. W. Wright: In the meantime we might be able to get some idea of Mr. Gostelow s report. Mr. W. Nash (to Mr. Yerschaffelt) : You are definitely of opinion that there should be no interference whatever with any annuity under £150. Mr. Yerschaffelt. —I think so. I think the Commission reported £100. I have suggested £150. Mr. W. Nash (to Mr. Gostelow) : You are keen on bargains and contracts being kept, are you not ? Mr. Gostelow : Yes. Mr. W. Nash : You think that if any one makes a bargain or a contract they ought to keep it ! Mr. Gostelow : Yes, quite so. Of course, you have the position that might arise, that there is not the power to keep it. Mr. W. Nash : You are not suggesting that expediency should justify the breaking of a contract —it is only the circumstances that prevents the keeping of a contract ? Mr. Gostelow: I would like to see the contract kept in its entirety, but it is just a question as to whether the State has the money to stand up to it ; and if it has not, it is far better to look the thing in the face and see if we cannot save something out of the wreck for the contributors.

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L—ls.

INDEX.

Abel, W. P. (See Educational Institute.) PAGE Actuary (Government) — Statement .. .. •• 9-19,25-27,295-300 Examinations .. 20-24, 27, 133, 134, 321, 329 Adams, William . . . • • • 219, 220 Aekins, Leonard .. .. ■ • 313,314 Allison, A. E. (See Life Insurance Department.) Amalgamated Society of Railway Servants — Statement .. .. .. • • 27-41 Examination .. . • • • 41-46 Andrews, Miss E. (See Women Teachers' Association.) Bagley, Amelia .. • • • • • • 220 Banner, 0. A. (See Teachers' (Men) Guild, Auckland.) Barnett, A. G. (See Harbour Board, Wellington.) Bell, Professor R. J. (See University Staffs.) Benton, Arthur .. . • • • • • 216 Binsted, H. .. .. • ■ ■ • ■ ■ 218 Cameron, G. D. .. . • Carr, J. T. (See Post and Telegraph Association.) Carver, A. C. .. • • ■ ■ 203 Caughley, John. (See Superannuated Public Servants' Association.) Cavell, A. T. .. .. ■ • ■ • 210-212 Chesson, Dr. Herbert .. .. • ■ 204-206 Christian, 0. .. . ■ • • • • • • 217 Civil Service Institute — Statement .. .. • • ■ • 170-173 Examination .. • • ■ • 1 '3-176 Coad, Miss N. E. — Statement .. .. • • • • 168, 169 Examination .. • • • • 169, 170 Coady, Miss Ellen .. . • • • • ■ 217 Connell, E. .. .. • • • • 202, 203 Cooper, William, and two others .. 209, 210 Coster, William .. • • • • 208, 209 Cox, Hugh .. .. • • • • 292, 293 Crawford, C. E. (See Teachers' Superannuation Board.) Cruickshank, Alexander — Statement .. .. • • • • " i Examination . • • • • • .. 82 Dallard, B. L. (See Prisons Staff.) Dalziel, J. • • • • • • • • - Dash, E. J. (See Amalgamated Society of Railway Servants.) Davis, A. N. .. .. • ■ • • .. 315 Dental Nurses .. • • • • • • 273 Dugleby, Miss E. G. • • • ■ • • 208 Dwyer, John .. • • • • • • 217 Educational Institute — Statement .. .. • • 121-126, 129-131 Examination .. • ■ 126-129, 131-133 Educational Institute (Auckland Branch) 223, 224 Engineers (Locomotive), Firemen, and Cleaners Association — Statement .. .. • • • • 46-5o Examination .. • • • • 5 5 ~59 Paris, Irwin .. .. • • • • 200, 201 Finlayson, Miss A. C. .. • • ■ • • • 204 Fraser, Malcolm. (See Civil Service Institute.) Gard'ner, Colonel M. M. .. • • 288, 289 Gostelow, Cecil. (See Actuary, Government.) Graham, James .. • • • ■ • • 210 Gray, Dr. T. G. (See Mental Hospital Staff.) Gray, J. D. .. 206 Greensmith, Edwin .. .. • • • ■ Greig, Miss V. M„ and four others .. . • 316 Harbour Board (Wellington)— Statement .. .... 152, 153, 105 Examination .. • • • ■ ■ ■ I°4 Harrison, S. J. (See Returned Soldiers Association.) Hastings, D. H. .. • • ■ ■ • • 213 Hunt, F. E. .. • • • • • • .. 292

Hunter, Professor T. A. (See University Staffs.) page In camera .. .. ■ • ■ ■ • • 276 Ingram, Samuel. (See Tradesmen's (Railway) Association.) James, T. L. (See Technical School Teachers' Association.) Jerram, J. H. (See State Fire and Accident Insurance Department.) Jones, Mrs. S. J. . • • • • ■ • • 218 Kelly, M. .. • • • • • • .. 223 Leaper, H. .. . • ■ • • • 221 Lee, M. J. (See Superannuated Public, Servants and Teachers, Palmerston North.) Leitch, W. J. (See Tradesmen's (Railway) Association.) Leslie, D. E. .. .. .. • • • • 293 Life Insurance Department .. . . .. 291 Lundius, Harry .. •• •• 312,313 McCartney, Leslie .. .. .. 218, 219 McDermot, James. (See Post and Telegraph Officers' Guild.) McDonald, Colonel T. W.— Statement .. . • .. 301-307 Examination .. .. .. 307-312 McGregor, A. E. .. .. .. . • 207 Mcllvride, Lewis. (See Amalgamated Society of Railway Servants.) MeKenzie, C. J. (See Civil Service Institute.) Macdonald J. W. .. • • • ■ ■ • 320 Mackay, May.. .. .. • • • • 215 Mair, John .. . . • • • • • • 224 Martin, Robert — Statement .. .. • • • • • ■ 103 Examination .. .. • ■ 103 Martin-Smith, Percival. (See Secondary Schools Association.) Mental Hospitals Staff — Statement .. .. • • • • • ■ 102 Examination .. - • • • • • 102 Menzies, A. L. .. . • ■ ■ 201, 202 Military Eorces — Statement .. .. ■ ■ 280-284, 288, 289 Examination .. .. .. 285-288 Millar, P. W. (See Public Service Association.) Mitchell, B. • • • ■ • • • ■ 221 Moore, C. H. .. .. •. • • 221-223 Nathan, W. .. .. .. • • ■ • 216 Nurses employed in the Service of the Government — Statement .. .. • ■ • • 270-273 Examination .. . • • ■ • • 273 O'Reilly, James .. .. ■ • • • 215 Oswin, T. L. .. . . .. • • • • 215 Parkinson, S. A. (See Educational Institute.) Parsonson, W. E. .. . • . • ■ • 312 Police Force Staff — Statement .. .. . • • ■ 176-181 Examination .. • • • • 181-185 Poison, J. G. (See Teachers of All Branches, Christchurch.) Post and Telegraph Employees' Association — Statement .. .. . ■ • • 103-105 Examination .. •• 105-110 Resolutions of Dunedm Branch .. . • 204 Post and Telegraph Officers' Guild — Statement .. .. • • • • 188-195 Examination .. . • • • 195-200 Prisons Staff — Statement .. .. . • • • 120, 121 Examination .. • ■ • • .. 121 Public Service Association — Statement .. . ■ • • • • 82-92 Examination .. • • ■ ■ 92-102 Public Service CommissionerStatement .. .■ • • • • • • 1~9 Examination .. • ■ 20-24, 321-329

331

1.—15.

Public Service Superannuation Board— page Statement.. .. .. 110-116,185-187 Examination .. .. 116-120,187,188,320 Public Trust Office Staff .. .. 290, 291 Railway Officers' Institute— Statement .. .. .. .. 59-66 Examination .. .. .. 66-69 Railway Superannuation Board— Statement .. .. .. .. 76-79 Examination .. .. .. 79-81 Reece, A. G. .. .. .. .. .. 207 Reid, L. G. .. .. .. .. .. 314 Returned Soldiers' Association — Statement .. .. .. .. 273-275 Examination .. .. .. 275, 276 Robinson, T. C. .. .. .. .. 294 Ryan, C. P. (See Superannuated Public Servants' Association.) Ryan, Miss E. M. .. .. .. .. 293 Ryder, R. B. (See Superannuated Public Servants and Teachers, Palmerston North.) Secondary Schools' Association— Statement .. .. .. .. 141-148 Examination .. .. .. 148-152 Sim, J. H. (See Engineers (Locomotive), Firemen, and Cleaners' Association.) Sinclair, G. K. .. .. .. .. 202 Sinclair - Burgess, Major - General. (See Military Forces.) Smith, G. H. .. .. .. .. .. 293 Smythe, Lieut.-Colonel R. D. .. .. 214 State Fire and Accident Insurance Department .. 292 Stephenson, J. H. (See Engineers (Locomotive), Firemen, and Cleaners' Association.) Stevenson, J. F. B. (See Harbour Board, Wellington.) Stanley, V. R. J. (See Railway Officers' Institute.) Strong, T. B. .. .. .. .. 220 Superannuated Public Servants' Association of New ZealandStatements. . .. 235, 236-243, 249-254, 260-263 Examinations .. 243-248, 254-260, 263-265

Superannuated Public Servants and Teachers, Palmerston North— paqjs Statement .. .. .. 224-228, 233-235 Examination .. .. .. 228-233, 235 Taylor, J. .. .. .. .. 218 Teachers' (Men) Guild, Auckland— Statement .. .. .. .. 268, 269 Examination .. .. .. .. 269 Teachers of All Branches (Christchurch) — Statement .. .. .. .. 265-268 Examination .. .. ~ .. 268 Teachers' Superannuation Board — Statement .. .. .. .. 1.59-163 Examination .. .. .. 163-168, 317 Technical-school Teachers' Association— Statement .. .. .. .. 276-278 Examination .. .. .. 278-280 Tradesmen's (Railway) Association— Statement .. .. .. ~ 69-74 Examination .. .. .. 74-76 Turner, E. Phillips .. .. .. .. 317 University Staffs— Statement .. .. .. .. 155, 156-158 Examination .. .. .. 155,158,159 Valentine, Henry. (See Railway Superannuation Board.) Verschaffelt, P. D. N. (See Public Service Commissioner. ) Watson, Lancelot .. .. .. .. 215 Watt, Dr. M. H. (See Nurses employed in the Service of the Government.) Wilkie, Margaret .. .. .. .. 320 Williams, W. H. .. .. .. .. 28U Wilson, A. L. .. .. .. 314,315 Withers, P. G. .. .. .. 206, 207 Wogan, R. S. (See Public Service Superannuation Board.) Wohlmann, W. G. (See Police Force Staff.) Women Teachers' Association— Statement .. .. .. .. 134-138 Examination .. .. .. 138-141 Wright, W. M. (See Superannuated Public Servants' i Association.)

332

1.—15.

SUBJECT INDEX.

Accumulated Funds— Administration of— By Commissioners, 194 (P. and T. Guild). By contributors, 42 (Amalgamated Society), 56 (Engineers), 126 and 127 (Educat. Inst.). Cost of, 23 (Actuary), 101 (Pub. Serv. Assn.), 173 and 174 (Civil Serv. Inst.). Stability of, 173 (Civil Serv. Inst.). Burden on, 46 (Amalgamated Society), 87 and 93 (Pub. Serv. Assn.), 118 (Pub. Serv. Sup. Brd.). Interest on, 67 (Rly. Officers), 76 (Rly. Brd.), 97 (Pub. Serv. Assn.), 108 and 109 (P. and T. Assn.), 116 (Pub. Serv. Sup. Brd.), 119 (Pub. Serv. Sup. Brd.). Investment of, 67 (Rly. Officers), 76 and 81 (Rly. Brd.), 98 (Pub. Serv. Assn.), 117, 118, and 119 (Pub. Serv. Sup. Brd.), 127 (Educat. Inst.), 161, 163, 164, 166, and 167 (Teach. Sup. Brd.), 185 (Pub. Serv. Sup. Brd.), 229 and 232 (Superannuitants, Palm. N.), 248 and 258 (Superannuitants, N.Z.), 298 (Actuary). Liquidation of, 25 (Actuary), 100 (Pub. Serv. Assn.), 168 (Teach. Sup. Brd.), 233 (Superannuitants, Palm. N.), 299 (Actuary), 311 (McDonald). Misuse of, 109 and 110 (P. and T. Assn.). Reduction of, 80 (Rly. Brd.). Securities, 299 (Actuary). Table of, 76 and 78 (Rly. Brd.), 298, 300 (Actuary). Total of, 25 (Actuary), 60 (Rly. Officers), 67 (Rly. Officers), 81 (Cruickshank), 90 (Pub. Serv. Assn.), 114 and 115 (Pub. Serv. Sup. Brd.), 163 (Teach. Sup. Brd.), 185 (Pub. Serv. Sup. Brd.), 258 (Superannuitants, N.Z.). Actuarially Sound —Definition of, 109 (P. and T. Assn.). Actuary's Reports—Statements on, 10, 11, and 12 (Actuary), 52 (Engineers), 69 (Tradesmen), 142 (Sec. Schls. Assn.), 250 (Superannuitants, N.Z.), 268 (Teachers, Chch.), 269 (Teachers' Guild, Ak.). Administration of Funds. See Accumulated Funds. Allowances —Widows and Children: 113 (Pub. Serv. Sup. Brd.), 161 (Teach. Sup. Brd.), 194 and 200 (P. and T. Guild), 278 (Tech. Teachers), 290 (Public Trust), 300 (Actuary). Annuitants — Age of, 101 (Pub. Serv. Assn.). Number of, 101 (Pub. Serv. Assn.), 128 (Educat. Inst.). Annuities. See Retiring-allowances. Back Service (Payment for). See Retiring-allowances. Break in Service, 313 (Aekins), 320 (Wilkie). Constitution of Boards, 57 (Engineers), 75 (Tradesmen, 95 (Pub. Serv. Assn.). Contract (between State and Contributors), 10 (Actuary), 37 and 39 (Amalgamated Society), 48 and 54 (Engineers), 60 and 66 (Rly. Officers), 72, 74, and 76 (Tradesmen), 80 (Rly. Brd.), 82, 84, 88, 95, 97, and 101 (Pub. Serv. Assn.), 103 (Martin), 105 and 107 (P. and T. Assn.), 126 (Educat. Inst.), 148 (Sec. Schls. Assn.), 189, 192, and 199 (P. and T. Guild), 206 (Gray), 224 (Educat. Tnst., Ak.), 224, 228, 234, and 235 (Superannuitants, Palm. N.), 236, 249, 252, 253, 254, 257, 259, 260, and 265 (Superannuitants, N.Z.), 268 (Teachers' Guild, Ak.), 303-305, 307-311 (McDonald), 314 (Reid). Contributions — Amount of, 156 and 157 (University), 297 (Actuary). Basis of, 182 (Police). Income, 89 and 98 (Pub. Serv. Assn.), 108 (P. and T. Assn.), 113, 114, 117, 119, and 201 (Pub. Serv. Sup. Brd.),- 163 (Teach. Sup. Brd.), 182 (Police). Limitation of, 290 (Public Trust), 292 and 293 (Cox). Loading of, 18, 23, and 24 (Actuary), 36, 41, and 46 (Amalgamated Society), 50, 53,54, and 56 (Engineers), 60, 61, and 65 (Rly. Officers), 70 and 71 (Tradesmen), 102 (Pub. Serv. Assn.), 129 (Educat. Inst.), 146, 147, 148,149, and 152 (Sec. Schls. Assn.), 165 (Teach. Sup. Brd.), 169 (Coad), 173 and 175 (Civil Serv. Inst.), 237 252, 257, 259, and 260 (Superannuitants, N.Z.), 269 (Teachers' Guild, Ak.), 277, 278, 279, and 280 (Tech. Teachers). On Higher Salaries, 118 and 119 (Pub. Serv. Sup. Brd.), 128, 131, and 132 (Educat. Inst.), 147, 148, 149, and 151 (Sec. Schls. Assn.), 164, 166, and 167 (Teach. Sup. Brd.), 168 and 169 (Coad), 205 (Chesson), 220 (Bagley), 221, 222, and 223 (Moore), 265 (Super, annuitants, N.Z.), 314 (Wilson), 316 (Greig), 317 (Teach. Super. Brd.),

Contributions —continued. Other Pension Funds, 57 (Engineers), 195 (P. and T, Guild). Public Service Funds, 114 (Pub. Serv. Sup. Brd.), 299 (Actuary). Railway Fund, 30, 43, and 46 (Amalgamated Society), 58 (Engineers), 68 (Ely. Officers), 72 (Tradesmen), 79 (Rly. Brd.), 299 (Actuary). Rate of, 111 (Pub. Serv. Sup. Brd.). Refund of, 54 and 55 (Engineers), 94 (Pub. Serv. Assn.), 108 (P. and T. Assn.), 146 (Sec. Schls. Assn.), 187 (Pub. Serv. Sup. Brd.), 204 (Resolutions, P. and T. Assn.), 216 (Benton), 217 (Christian), 221 (Leaper), 235 (Superannuitants, Palm. N.), 256 and 261 (Superannuitants, N.Z.), 299 (Actuary). Subsidy for, 198 (P. and T. Guild). Teachers' Fund, 299 (Actuary). Total of, 8 (P.S.C.), 25 (Actuary's Tables), 30 and 32 (Amalgamated Society), 49 and 50 (Engineers), 69 (Tradesmen), 77 (Rly. Brd.), 127 (Educat. Inst.), 164 and 168 (Teach. Sup. Brd.), .188 (Pub. Serv. Sup. Brd.), 299 (Actuary). Contributors' Account — Table of, 298 (Actuary). Deficiency in Funds — Actuarial situation, 33 (Amalgamated Society), 40 and 44 (Amalgamated Society), 49, 51, and 52 (Engineers), 65 and 67 (Rly. Officers), 70, 75, and 76 (Tradesmen), 78 and 81 (Rly. Brd.), 94, 96, and 100 (Pub. Serv. Assn.), 104, 107; 108, and 110 (P. and T. Assn.), 126, 128, 129, and 132 (Educat. Inst.), 164 and 166 (Teach. Sup. Brd.), 174 (Civil Serv. Inst.), 184 (Police), 189, .190, 191, 196, and 198 (P. and T. Guild), 204 (Resolutions, P. and T. Assn.), 225, 230, and 233 (Superannuitants, Palm. N.), 237, 241, 244, 246, 250, 251, 264, and 265 (Superannuitants, N.Z.), 266 (Teachers, Chch.), 295, 300 (Actuary). Amount of, 298 (Actuary). Causes of, 6 and 7 (P.S.C.), 9 (Actuary). Public Service Fund, ] 1 and 24 (Actuary)'. Railways, 14 and 24 (Actuary), 66 (Rly. Officers), 80 (Rly. Brd.), 109 (P. and T. Assn.), 255 (Superannuitants, N.Z.). Table of, 300 (Actuary). Teachers', 13 and 24 (Actuary), 32 (Amalgamated Society), 147 (Sec. Schls. Assn.), 163 (Teach. Sup. Brd.), 232 (Superannuitants, Palm. N.). Total of, 14, 20, 22, 24, and 27 (Actuary), 25 (Actuary's Tables), 32 (Amalgamated Society), 89, 94, 95, and 100 (Pub. Serv. Assn.) 109 (P. and T. Assn.), 141 (Sec. Schls. Assn.), 26.1 Superannuitants, N.Z.), 295 (Actuary). Early Retirements. See Retirements, Premature. Funds, Accumulated. See Accumulated Funds. Gold standard, 315 (Davis). Government Insurance Department—Guarantee for, 99 (Pub. Serv. Assn.). Government Subsidy— Amount of, 3 (P.S.C.), 17 and 18 (Actuary), 26 (Actuary's Table), 30 and 32 (Amalgamated Society), 231 (Superannuitants, Palm. N.), 248 (Superannuitants, N.Z.). Annual amount required, 299 (Actuary). Back-service, Payment for, 120 and 188 (Pub. Serv. Sup. Brd.), 127 (Educat. Inst.), 133 and 134 (Actuary), 167 (Teach. Sup. Brd.). Default of, 306 (McDonald). Fixing of, 172 (Civil Serv. Inst.). Guarantee of, 110 (P. and T. Assn.), 122, 126, 127, and 133 (Educat. Inst.), 149 (Sec. Schls. Assn.). Interest on, 150 (Sec. Schls. Assn.). Liability for, 54 (Engineers), 141 (Sec. Schls. Assn.), 303, 305, 309 (McDonald). Public Service Fund, 11 and 12 (Actuary), 86 (Pub. Serv. Assn.), 184 (Police). Railway Fund, 14 (Actuary), 30 and 45 (Amalgamated Society), 50 (Engineers), 60, 67, and 68 (Rly. Officers), 70 and 76 (Tradesmen), 78, 79, 80, and 81 (Rly. Brd.). Ratio of, 90 (Pub. Serv. Assn.), 142 and 143 (Sec. Schls. Assn.), 106 (P. and T. Assn.), 126 (Educat. Inst.), 171 (Civil Serv. Inst.), 190, 193, 194, and 195 (P. and T. Guild), 247, 252, 256, and 265 (Superannuitants, N.Z.), 268 (Teachers, Chch.), 273 (Nurses), 276 and 279 (Tech. Teachers), 295 (Actuary), 305 (McDonald),

333

1.—15.

Government Subsidy—-continued. Regular payment of, 190 (P. and T. Guild), 196 (P. and T. Guild). Shortage Table, 143 (See. Schls. Assn.). Special retirements, 287 (Defence), 289 (Smythe). Trading Departments, 291 (Allison). Teachers' Fund, 13 (Actuary), 164 and 165 (Teach. Sup. Brd.), 238 (Superannuitants, N.Z.). Total of, 8 (P.S.C.), 58 and 59 (Engineers), 87, 98, and 100 (Pub. Serv. Assn.), 113 (Pub. Serv. Sup. Brd.), 127 (Educat. Inst-.), 162 and 168 (Teach. Sup. Brd.), 295, 299 (Actuary). History of Pension Schemes, 1-3, 4, and 5 (P.S.C.), 10 (Actuary), 27-30 (Amalgamated Society), 47 (Engineers, &c.), 59, 60, and 62 (Rly. Officers), 69 and 70 (Tradesmen), 76 (Rly. Brd.), 82, 85, and 88 (Pub. Serv. Assn.), 110 and 111 (Pub. Serv. Sup. Brd.), 122 and 131 (Educat. Inst.), 159 and 160 (Teach. Sup. Brd.), 170 and 171 (Civil Serv. Inst.), 177 (Police), 189 and 195 (P. and T. Guild), 265 and 266 (Teachers, Chch.). Investments. See Accumulated Funds. Life Expectancy, 80 (Rly. Brd.), 290 (Public Trust). Liquidation of Funds. See Deficiency in Funds. National Expenditure Commission— Comments on report, 317-319 (Turner). Pension Schemes— Advantages of, 312 (Lundius). Comparison of, 51 and 58 (Engineers), 70, 72, 73, and 75 (Tradesman), 83, 90, 91, 94, 97, 99 (Pub. Serv. Assn.) 105 (P. and T. Assn.), 111, 116, and 117 (Pub. Serv, Sup. Brd.), 139 (Women Teach.), 142, 146, and 147 (Sec. Schls. Assn.), 165 (Teach. Sup. Brd.), 174 and 175 (Civil Serv. Inst.), 177, 178, 182, 183, and 184 (Police), 185, 186, and 187 (Pub. Serv. Sup. Brd.), 204 (Resolutions, P. and T. Assn.), 246, 251, 258, 259, 260. and 262 (Superannuitants, N.Z.), 271 and 272 (Nurses), 305 (McDonald). History of. See History of Pension Schemes. Pensioner's Account— Table of, 298 (Actuary). Political Control, 95 (Pub. Serv. Assn.), 123 and 126 (Educat. Inst.), 197, 198, and 199 (P. and T. Guild), 255 (Superannuitants, N.Z.). Price Level, 256 (Superannuitants, N.Z.). Promotion retarded, 104 (P. and T. Assn.), 125 (Educat. Inst.), 134 (Women Teach.), 193 and 195 (P. and T. Guild). Public Service Fund—• Assets, 300 (Actuary). Condition of, 10 (Actuary). Liabilities, 300 (Actuary). Railways Fund—■ Assets, 300 (Actuary). Condition of, 13 and 14 (Actuary), 44 (Amalgamated Society), 68 and 69 (Rly. Officers). Liabilities, 300 (Actuary). Retirements— Actuarial calculation, 322 (Actuary). Age Limit, 33, 34, 38, and 45 (Amalgamated Society), 53, 56, 57, and 58 (Engineers), 61, 64, and 66 (Rly. Officers), 69, 71, 73, 74, and 76 (Tradesmen), 79 and 80 (Rly. Brd.), 81 (Cruickshank), 91, 92, 99, 100, and 101 (Pub. Serv. Assn.), 102 (Ment. Hptls.), 104, 105, and 108 (P. and T. Assn.), 120 and 121 (Prisons), 126 128, 129, and 133 (Educat. Inst.), 134, 135, 139, and 140 (Women Teach.), 144 and 145 (Sec. Schls. Assn.), 157 (University), 171, 175, and 176 (Civil. Ser. Inst.). 178, 179, 180, 181, and 183 (Police), 192, 196, 197, 198, and 199 (P. and T. Guild), 202 (Sinclair), 204 (Finlayson), 215 (Mackay), 218 (Jones), 228, 229, and 232 (Superannuitants, Palm. N.), 241, 248, and 264 (Superannuitants, N.Z.), 267 and 268 (Teachers, Chch.), 270-273 (Nurses), 274, 275, and 276 (R. Soldiers), 280 and 281 (Military Forces), 286-288 (Defence), 289 (Smythe), 290 and 291 (Public Trust). Compulsory, 15 (Actuary), 56 (Engineers), 68 (Rly. Officers), 79 (Rly. Brd.), 95 and 97 (Pub. Serv. Assn.), 112 (Pub. Serv. Sup. Brd.), 152 (Sec. Schls. Assn.), 184 (Police), 187 (Pub. Serv. Sup. Brd.), 191 and 199 (P. and T. Guild), 220 (Bagley), 235 (Superannuitants, Palm. N.), 241, 247, 250, and 259 (Superannuitants, N.Z.), 274 (R. Soldiers), 285 (Defence), 289 (Smythe), 302 (McDonald). Limitation of, 98 and 99 (Pub. Serv. Assn.). Medically unfit, 116 and 117 (Pub. Serv. Sup. Brd.), 178, 183, and 184 (Police), 201 (Menzies), 216

Retirements —continued. (Benton), 223 (Ivelly), 247, 262, and 263 (Superannuitants, N.Z.), 276 (R. Soldiers), 279 (Tech. Teachers). Minister's Consent, 3 (P.S.C.), 66 and 67 (Rly. Officers), 85, 91, 93, and 95 (Pub. Serv. Assn.), 182 (Police), 188 (Pub. Serv. Sup. Brd.), 192 and 194 (P. and T. Guild), 320 (Macdonald). Premature, 16 (Actuary), 87, 90, 94, 95, and 101 (Pub. Serv. Assn.), 105 (P. and T. Assn.), 111, 112, 116, and 118 (Pub. Serv. Sup. Brd.), 121 (Prisons), 126 and 129 (Educat. Inst.), 239, 241, 247, 250, 253, 255, 259, 260, 261, 262, 263, and 264 (Superannuitants, N.Z.), 135 (Women Teach.). 144 and 148 (Sec. Schls. Assn.), 160 and 165 (Teaeh. Sup. Brd.), 173 and 174 (Civil Serv. Inst.), 182 and 184 (Police), 188 (Pub. Serv. Sup. Brd.), 191, 192, 193, 194, 195, 196, 197, 198, and 199 (P. and T. Guild), 205 (Chesson), 215 (Oswin), 216 (Benton), 218 (Taylor), 230, 233, and 235 (Superannuitants, Palm. N.), 295, 296 (Actuary), 301, 302, 311 (McDonald), 312 (Parsonson), 316 (Kerr), 320 (Macdonald). Returned Soldiers, 73 (Tradesmen), 105 (P. and T. Assn.), 192, 196, 197, and 198 (P. and T. Guild), 125 (Educat. Inst.), 239 (Superannuitants, N.Z.), 269 (Teachers' Guild, Ak.), 273-276 (R. Soldiers), Special Retirements Fund, 198 (P. and T. Guild), 230 (Superannuitants, Palm. N.), 257 (Superannuitants, N.Z.). Voluntary, 3 (P.S.C.), 58 (Engineers), 68 (Rly. Officers), 85 (Pub. Serv. Assn.), 105 (P. and T. Assn.), 187 (Pub. Serv. Sup. Brd.), 191, 195, and 197 (P. and T. Guild), 241 (Superannuitants, N.Z.), 274 (R. Soldiers), 313 (Aekins). Without Pension, 161 (Teach. Sup. Brd.). Retiring-allowances— Actuarial, 61 (Rly. Officers), 102 (Pub. Serv. Assn.), 102 (Ment. Hptls.), 104, 105, and 106 (P. and T. Assn.), 196 and 200 (P. and T. Guild), 215 (Oswin), 228 (Superannuitants, Palm. N.), 241 and 242 (Superannuitants, N.Z.), 273 (Nurses), 274 and 275 (R. Soldiers), 280 (Tech. Teachers), 287 and 288 (Defence), 290 (Public Trust), 294 (Robinson), 311 (McDonald), 320 (Macdonald). Advantages of, 48 (Engineers), 75 (Tradesmen), 82, 96, and 99 (Pub. Serv. Assn.), 160 (Teach. Sup. Brd.), 297 (Actuary), 302 (McDonald). Amount of. 8 (P.S.C.), 68 (Rly. Officers), 77 (Rly. Brd.), 89, 93, 94, 98, and 100 (Pub. Serv. Assn.), 108 (P. and T. Assn.), 113, 114, 119, and 120 (Pub. Serv. Sup. Brd.), 161 (Teach. Sup. Brd.), 173 (Civil Serv. Inst.), 255 (Superannuitants, N.Z.), 298 (Actuary). Average of, 61 (Rly. Officers), 69 and 75 (Tradesmen), 144 and 151 (Sec. Schls. Assn.), 184 (Police). Back service, 23 (Actuary), 138 (Women Teach.), 147, 148, and 150 (Sec. Schls. Assn.), 292 (Jerram), 165 (Teach. Sup. Brd.), 175 (Civil Serv. Inst.), 195 (P. and T. Guild), 203 (Connell), 204 (Einlayson), 206 (Withers), 207 (Reece), 213 (Hastings), 229 (Superannuitants; Palm. N.), 240, 256, 260, and 264 (Superannuitants, N.Z.), 267 and 268 (Teachers, Chch.), 310 (McDonald), 314 (Reid). Basis of Calculation, 3 (P.S.C.), 16 and 21 (Actuary), 42 (Amalgamated Society), 54 and 57 (Engineers), 61 and 63 (Rly. Officers), 82 (Cruickshank), 103 (Martin), 104, 107, and 108 (P. and T. Assn.), 111, 112, and 116 (Pub. Serv. Sup. Brd.), 125 and 133 (Educat. Inst.), 145, 146, 148, 150, and 152 (Sec. Schls. Assn.), 162, 163, and 165 (Teach. Sup. Brd.), 168 and 170 (Coad), 172, 175, and 176 (Civil Serv. Inst.), 182 (Police), 192 and 199 (P. and T. Guild), 200 (Paris), 201 (Menzies), 202 (Sinclair), 203 (Carver), 205 (Chesson), 206 (Gray), 207 (McGregor), 208 (Dugleby), 208 and 209 (Coster), 210 .(Graham), 211 (Cavell), 213 (Cameron), 214 (Smythe), 215 (Watson), 215 (Oswin), 216 (Nathan), 217 (Dwyer), 218 (Binsted), 218 (McCartney), 219 (Adams), 226, 228, 229, 231, 232, and 233 (Superannuitants) Palm. N.), 238, 239, and 248 (Superannuitants, N.Z., 267 (Teachers, Chch.), 269 (Teachers' Guild, Ak.), 273-276 (R. Soldiers), 277 (Tech. Teachers), 289 (Smythe), 292 (Hunt), 293 (Leslie), 297 and 298 (Actuary), 307, 308, and 310 (McDonald), 314 (Wilson). Cash value of, 130 (Educat. Inst.). Comparison of, 297 (Actuary). Expenditure, 299 (Actuary). Growth of, 163 (Teach. Sup. Brd.).

334

Retiring-allowances—continued. Limitation of, 19 and 23 (Actuary), 32, 36, 37, 42, and 45 (Amalgamated Society), 54, 55, and 57 (Engineers), 60, 61, 64, and 65 (Rly. Officers), 71, 74, and 75 (Tradesmen), 94, 96, 97, and 101 (Pub. Serv. Assn.), 102 (Ment. Hptls.), 105,106, and 107 (P. and T. Assn.), 112 and 113 (Pub. Serv. Sup. Brd.), 129 (Educat. Inst.), 138,139, and 140 (Women Teach.), 146 and 150 (Sec. Schls. Assn.), 152-155 (W'ton Hbr. Brd.), 155, and 156-159 (University), 160,165, and 166 (Teach. Sup. Brd.), 172, 173, 174, 175, and 176 (Civil Serv. Inst.), 179 and 183 (Police), 187 and 188 (Pub. Serv. Sup. Brd.), 193. 194, and 197 (P. a.nd T. Guild), 202 (Menzies), 205 (Chesson), 208 (Dalziel), 209 (Cooper), 212 (Cavell), 224 (Mair), 226, 229, 231, 232, 234, and 235 (Superannuitants, Palm. N.), 241, 242, 247, 248, 254, and 257 (Superannuitants, N.Z.), 267 (Teachers, Chch.), 27, 276, 278, 279, and 280 (Tech. Teachers), 296 and 297 (Actuary), 301, 306, 308, 309, and 310 (McDonald). Number of, 60 (Rly. Officers), 77 (Rly. Brd.), 161 (Teach. Sup. Brd.), 298 and 300 (Actuary). Pensioners Account, Table of, 298 (Actuary). Reduction of, 4 (P.S.C.), 18 (Actuary), 37 (Amalgamated Society). 167 (Teach. Sup. Brd.), 172 and 173 (Civil Serv. Inst.), 246 and 247 (Superannuitants, N.Z.). Review of existing, 116 (Pub. Serv. Sup. Brd.), 198 (P. and T. Guild), 206 (Gray), 209 (Cooper), 214 (Smythe), 215 (O'Reilly), 219 (McCartney), 219 (Adams), 226, 227, and 229 (Superannuitants, Palm. N.), 251 and 252 (Superannuitants, N.Z.), 309 and 310 (McDonald).

1.—15.

Retiring-allowances—continued. Special Consideration, 285 (Defence). Special Fund, 184 and 185 (Police), 188 (Pub. Serv. Sup. Brd.), 197 (P. and T. Guild), 308 and 311 (McDonald). Subsidy for, 289 (Williams), 290 (Public Trust). Total of, 300 (Actuary). Salaries of Contributors, Table of, 296 (Actuary). Subsidies, Government. See Government Subsidies. Suggestions, 7 (P.S.C.), 15 (Actuary), 41 (Amalgamated Society), 91, 92, 93, 95, and 101 (Pub. Serv. Assn.), 110 (P. and T. Assn.), 116 (Pub. Serv. Sup. Brd.), 121 (Prisons), 132 (Educat. Inst), 139 Women Teach), 145 and 150 (Sec. Schls. Assn.). 162 and 163 (Teach. Sup. Brd.), 171 (Civil Serv. Inst.), 192, 195, 196, and 197 (P. and T. Guild), 210 (Cooper), 221 (Mitchell), 224 (Educat. Inst., Ak.), 224 (Mair), 229 and 234 (Superannuitants, Palm. N.), 243, 247, 261, and 263 (Superannuitants, N.Z.), 266 and 267 (Teachers, Chch.), 270 and 271 (Nurses), 277 and 278 (Tech. Teachers), 290 and 291 (Public Trust), 293 (Ryan), 307 and 308 (McDonald). Teachers' Fund — Assets, 300 (Actuary). Deficiency in, 13 (Actuary). Liabilities, 300 (Actuary). Valuation of Funds, 14 and 17 (Actuary), 290 (Public Trust). Widows and Orphans. See Allowances.

Approximate Cost of Paper.—Preparation, not given ; printing (750 copies), £370.

Authority : W. A. G. Skinnek, Government Printer, Wellington.—l 933.

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GOVERNMENT SUPERANNUATION FUNDS BILL COMMITTEE (REPORT OF THE). (Mr. J. A. NASH, Chairman.), Appendix to the Journals of the House of Representatives, 1932 Session I-II, I-15

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GOVERNMENT SUPERANNUATION FUNDS BILL COMMITTEE (REPORT OF THE). (Mr. J. A. NASH, Chairman.) Appendix to the Journals of the House of Representatives, 1932 Session I-II, I-15

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GOVERNMENT SUPERANNUATION FUNDS BILL COMMITTEE (REPORT OF THE). (Mr. J. A. NASH, Chairman.) Appendix to the Journals of the House of Representatives, 1932 Session I-II, I-15

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GOVERNMENT SUPERANNUATION FUNDS BILL COMMITTEE (REPORT OF THE). (Mr. J. A. NASH, Chairman.) Appendix to the Journals of the House of Representatives, 1932 Session I-II, I-15

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