1.—15.

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.

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, , 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.