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I.—lla

MINUTES OF EVIDENCE.

PUBLIC SERVICE SUPERANNUATION BILL. Wednesday, 13th Novembkb, 1907. Morris Fox, Government Actuary, examined. 1. Right Bon. Sir J. G. Ward.] Have you a copy of the Public Service Superannuation Bill, Mr. Fox?—Yes. 2. Would you inform the Committee whether, in your opinion, after examining the Bill that is now before us, this scheme of superannuation for the Civil Service, fixing the contribution by the Government at £20,000 a year, with triennial examination, but with the guarantee of the State omitted and a provision inserted to provide for the payment of any further sums from the Consolidated Fund that may be necessary —would you inform the Committee whether, in your judgment, the scheme if so amended would be a sound one from an actuary's standpoint?—lt is absolutely sound from an actuarial standpoint. 3. It is a fact, is it not, that in the proposals contained in this Bill as against the one upon which your general report of last year was based, the responsibilities of the oountry in some respects are less, and that provision is made to ensure those responsibilities being borne by the contributors to a greater degree?—Decidedly so. 4. Then, as the actuary who has, all through the piece, examined into the various proposals for superannuation which have been submitted to you, you are satisfied with this Bill as we have it from an actuarial point of view ?—I have explained in my report that to make the scheme sound I consider a further alteration is required in the Bill. I understood your previous question to be, Would it be sound if that further provision were made? 5. What I meant was omitting the guarantee of the State and providing for a further payment triennially if the actuary so reported ?—lf that clause of mine providing for triennial readjustment is inserted, it is immaterial whether the payment by the State is set down at £20,000 or £30,000 at first. As I say in my report, the £30,000 is put in because I have reason to believe that that would be sufficient, whereas I am not sure that £20,000 would be sufficient. If the £20,000 were not sufficient, the increase required at the end of the first three years would be an abnormal one, but if £30,000 were put in it would be small. You write as follows in your report of the 12th November: "In order that effect might be given to these proposals I submitted draft clauses to the Law Office counsel. One clause, providing for actuarial investigation and report, has been embodied in the Bill—section 32, (2) — but I regret that the even more important, clause relating to the subsidy has not at present been accepted. I recommended, and still strongly advocate, that section 34, guaranteeing any future deficiency in the fund, should be omitted altogether, and that the following should take the place of the present section 33 : ' There shall be paid annually into the fund by the Colonial Treasurer out of the Consolidated Fund, without further appropriation than this Act, the sum of thirty thousand pounds, and there shall also be paid into the fund such further sums as may be voted by Parliament triennially for the purpose having regard to the report provided for in section 32 hereof.' I do not insist on the sum of £30,000 as being absolutely necessary; £20,000 will do just as well if provision is made as indicated above for the triennial readjustment of the amount should it be found to be insufficient. I inserted £30,000 because, after strict inquiry, I considered that sum would be sufficient, while I am not sure that a smaller sum would. As I have explained in paragraph 23 of my former report, there are insuperable difficulties in the way of estimating exactly the annual sums which will be required at the initiation of the fund, for until it has been started it is impossible to know, for instance, what proportion of the Service will elect to join the scheme, or how many at present under the pension-age are eligible for pensions on the ground of ill health." If the alteration which you suggest there is made, would you consider that this scheme, from an actuary's point of view, was absolutely sound? —Yes, sir. 6. Mr. W. Fraser.] I presume that in making your calculations you formed some idea as to what subsidy will be required. You say that it should be £30,000 to start with, or £20,000 so long as there are triennial investigations. How much would be required after three triennial investigations, do you suppose? Would it be £50,000? —No, not so much as that. If we start with £30,000, I think that instead of £30,000 nearly £45,000 might be necessary; whereas if £20,000 were adequate at first, £35,000 would be necessary in nine years. 7. Is it not the other way about? You say that if you start with £30,000 you will require £45,000 at, the end of nine years. If you start with £20,000 you will surely want more? —No. It is in this way: We are all in the dark, at present as to how much is necessary at first, but the increase on whatever is necessary will be about the same. I estimate that in nine years an increase of £14,000 or £15,000 will be necessary on whatever is the adequate initial sum. 8. That is, assuming the initial sum to be sufficient to meet the first or the second year's calls? —Yes; it will increase each year. I have put down £30,000 because I expect it will be a trifle under £30,000. It will perhaps be £28,000 the first year, and £31,000 the third year. I think £30,000 is somewhere about the mean of the three years. Of course, if a considerable number of those eligible for pensions elect to take compensation instead, and do not come on the pension fund, it will be less than that.