1.—15.

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.

21