I-—lla.

merit of £10,890 or £10,250 would liquidate the liability once for all, that liability does not begin to accrue until 45 years from now. In these cases, therefore, it is clearly a matter of opinion as to how much (if any) of the deferred liability should be met by present contributions from the Government and the deferred pensioners, and how much should be left to be met by the Government of 45 years hence; on the one hand, how much it is considered practicable or desirable to take in yearly contributions from the prospective pensioners to meet a portion of the liability when it accrues, and, on the other hand, what proportion (if any) of the balance of future liability should he met by the present, and what proportion should be left to the future Government. Proper Treatment of Liabilities. 15. From this point of view perhaps the question assumes a political, rather than an actuarial, aspect; but, as the outlines are not very distinct, and as I have been instructed to report thoroughly, I shall take the liberty of stating fully my opinion upon the matter in all its practical bearings. A further consideration of Nos. (4) and (5) in the foregoing schedule will show what line of action I consider to be necessary in order to place a Government scheme of deferred pensions to its employees on a sound footing. In No. (4) no contributions are exacted from the prospective pensioners, and, if the Government decides that the whole of the future liabilityshall be left to future generations to meet as they accrue, as is done by the Imperial Government in connection with Civil Service pensions, no accumulations at all are necessary to form a fund. It is, however, generally considered desirable, in such schemes as the one now under examination, that the members should themselves contribute some portion of the amount necessary, as in No. (5). Here the full contributions would be about £6 per member, whereas they are required to pay £3 each, which, if properly accumulated, should meet half the liability, the other half being left to be met when it accrues by the Government of the day. Now, it is important that these contributions should be strictly reserved and accumulated to meet their half of the liability, and not used in earlier years to pay other claims which have not been provided for by contributions. 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. If this is done the fund,'assuming that it is otherwise conducted properly, will be found at successive investigations to be sufficient to meet half the liability, which was all it was intended to meet, and it is therefore sound from any point of view. 16. In the previous paragraph I have referred to.other claims than those provided for by the contribution of members, and in order to illustrate this point I place in the margin a table (extracted from Appendix No. 4) of prospective pensions to males arising from the scheme contained in the Bill. The third column shows the pensions for back service, for which no contributions can have been made. It will be seen that if the 292 men over 60 all retired on pension immediately (all of whom have the right to do so), the sum of £28,576 would be payable during the first year on their account. (In practice we know it will not be nearly so much as this because they will not all retire immediately, but on the other hand many under the proper retiring-ages will retire at once on the ground of ill health.) The whole of this (or so much of it as may be claimed) should, I maintain, be provided for by the Government, and not taken out of the contributions of the younger members, which are required to provide in part for their own future liabilities. Of course, this outgo will diminish as the pensioners die off. If it be deliberately resolved to offer these pensions it should also be recognised that they constitute a present liability, and they should be met out of the present resources of the State. In each succeeding year it will also be necessary to similarly provide the pensions which will become due on account of back service to the survivors of the present members shown in the table as Jiving at each age under 60 down to age 22. For example, at age 50 there are now living 75 men, and if they all lived (and remained in the service) ten years, £5,649 would then be due as pensions for back service on thenaccount. It is only, however, the survivors (remaining in the service) of the 75 for whom it will be necessary to provide. To go further, and take the men now aged 30 (152), I do not consider it is necessary to provide anything now on their account, but that the liability for the survivors at 60 (so far as back service is concerned) may legitimately be left to be met when it accrues—3o years hence. Eventually this liability for back service will vanish entirely if it is met as it yearly accrues. 17. Again, referring to column (4) it will be seen that the 75 men now aged 50 would, if they survived and remained ten years, be entitled to £3,203 a year for their future ten years'

13

it 1, Prospective Pensions (Males) 8 • on Account of a — . 5 Back Future T , , Service. Service. lot!lJ " (1) 1) (2) I (3) £ 46 56 467 33 82 252 857 195 949 323 538 426 719 2,709 1,929 3,244 3,977 3,197 2,912 2,831 2,834 (41 £ (5) £ 46 56 467 33 82 252 857 195 949 323 538 426 719 2,709 1,929 3,244 3,977 3,197 2,912 2,831 2,834 81 80 79 78 77 76 75 74 73 72 71 70 69 68 67 66 65 64 63 62 61 il 1 SO 1 19 1 15 2 n 2 16 4 ra 4 14 3 13 7 12 4 fl 7 '0 9 59 10 )8 26 17 21 >6 26 .5 32 14 39 ! 13 29 12 33 il 31 ■• ' . 292 1 28,576 .1 I 28,576 " ... 60 59 58 57 56 55 54 53 52 51 50 49 48 47 46 45 44 43 42 41 40 391 381 36] 1 351 34! 1 33jl 321 311; 301, 291. 28H 271 26 11 25 i: 241! 23 i: 221' 21J2] 202S 19|a 18 If 1714 16 , 15 0 31 9 50 8 44 7 33 6 40 5 37 4 47 3 58 2 62 1 73 I 0 75 0 93 3 85 7 78 5 84 5 92 1 85 1 85 ! 2 92 | I 88 ) 92 i 1109 1101 . 'I 97 1107 [ • 105 l!l02 : 1:106 !107 139 U52 '143 • 107 119 : 136 129 132 117 171 [217 225 1247 156 140 I 74 9 I 2,583 4,731 3,404 2,918 4,058 4,064 4,361 5,052 5,350 6,654 5,649 9,175 7,200 6,294 6,699 6,884 5,426 5,568 5,662 4,786 5,500 6,156 5,575 4,611 5,345 4,676 4,149 3,879 3,605 5,072 4,961 4,264 2,612 2,438 2,576 1,941 1,577 967 735 120 426 500 536 956 971 . 1,473 1,918 2,166 3,039 3,203 5,585 4,675 4,337 5,596 6,272 5,964 6,554 7,627 7,139 8,375 10,310 9,558 9,462 11,869 10,944 11,432 12,366 12,522 17,927 20,071 20.294 14,846 16,419 20,092 19,333 20,549 19,273 29,176 37,341 38,334 38,047 24,550 23,536 14,694 1,402 2,703 5,157 3,904 3,454 5,014 5,035 5,834 6,970 7,516 9,693 8,852 14,760 11,875 10,631 12,295 13,156 11,390 12,122 13,289 11,925 13,875 16,466 15,133 14,073 17,214 15,620 15,581 16,245 16,127 22,999 25,032 24,558 17,458 18,857 22,668 21,274 22,126 20,240 29,911 37,341 38,334 38,047 24,550 23,536 14,694 1,402