H.—26a

of interest could be obtained at the present time by direct investment, a higher average rate than 4 per cent, could not be assumed with safety for the long period involved in a pension scheme. 7. The Experience Table (Table VII) contains the rates per cent, per annum of withdrawal, mortality, retirement on pension, and increase of salary assumed in arriving at the liability. These have as far as possible been calculated from the experience of the fund itself, but owing to the limited time the scheme has been in operation —six years —the data are not always sufficient, consequently the death-rates amongst males have been arrived at by including the experience of the salaried division of the Government Railways (1903-1912), and the death-rate and rate of retirement on pension amongst females by including the experience of the female teachers. The Life and Service Table deduced from these rates is given in Table VIII of the appendix. In valuing the benefits to widows and children the statistics of the fund itself have been made use of as far as possible, but the rate of remarriage of widows has been taken from the statistics of ihe general population (widows and spinsters), and the death-rates of widows and children from Dr. Farr's Healthy English Mortality Tables. it has been assumed that all male and female contributors will retire at the ages of sixty-five and sixty respectively if they have not retired before reaching these ages. 8. The valuation balance-sheet is given in detail in Table IX, a summary being as follows :— Liabilities. £ Value of contributors' pensions already granted for £56,744 per annum ... ... 464,919 Value of widows' and children's pensions already granted for £4,226 per annum ... 37,384 Value of prospective pensions (to present contributors) for back service ... ... 1,692,148 Value of prospective pensions (to present contributors) for future service ... .. -1,323,625 Value of prospective pensions to widows and children of present contributors .. 375,842 Value of return of contributions on death or withdrawal ... ... ... ... 352,464 £4,246,382 Assets. £ Accumulated funds ... ... ... ... ... ... ... .. 537,914 Value of contributors' future contributions ... ... ... ... ... 1,327,002 Value of present and future Government subsidies ... ... ... ... 2,381,466 .£4,246,382 9. Compared with the previous valuation, the liabilities show an increase of £1,287,266, and the funds and value of future contributions an increase of £637,908, making a net increase in the Government's liability of £649,358. This is chiefly accounted for by increases in the number of contributors and in the salaries on which future pensions are to be based. The pensions have increased from £39,944 per annum to £60,970; the number of contributors from 8,371 to 10,809; and the salaries from £1,358,119 lo £1,820,379. The average salary per contributor has increased from £162 to £168, and the additions being greater at the older ages have had a greater effect on the liability. 10. The Act (section 48 (2)) requires the report to be so prepared "as to show the state of the fund at the close of the period, having regard to the prospective liabilities and assets and the probable annual sums required by the fund to provide the retiring and other allowances falling due in the ensuing three years without affecting or having recourse to the actuarial reserve appertaining to the contributors' contributions." This has been taken to mean that the estimated pensions falling due during the three years following the valuation are to be divided into two parts—viz., (a) containing that part of the pensions provided for by the contributions, and (b) the remainder, which includes the pensions for service prior to joining the fund, and (as the contributions are insufficient to purchase full benefits for even future service) such part of the pensions for years of contribution as the contributions are not sufficient to provide for. The first is clearly a liability which should be borne by the fund, but the second is not, and it is assumed that the intention of section 49 is that it should be paid for by a subsidy, to be increased from time to time if necessary according to the Actuary's report. As the contributions at most can only have been paid fpr six years, while many of the pensions granted are for forty years' service, the amount to be paid by subsidy at present is much the larger, but the portion provided out of the contributions shows a steady increase. The estimated pensions falling due during 191.4, 1915, and 1.916, and the parts provided by the contributions and to be paid by subsidy respectively, are as follows : — . , , 1914. 19if>. 1918. Required for £ £ £ Current ordinary pensions ... ... ... ... 53,437 50,225 47,095 New pensions and family pensions ... ... ... 13,227 24,440 35,963 66,664 74,665 83,058 Deduct amount of pensions provided by contributions ... 6,501 8,379 10,542 Subsidies required for ensuing three years... ... ... 60,163 66,286 72,516

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