H.—26A.

APPENDIX.

TABLE 1. ul estimate oi the various factors on which the payment of the benefits and contributions is dependent. These factors may be briefly summarized as follows:— (a) Rate of interest; (b) Mortality-rates of pensioners; (c) Average salary scales; (d) Mortality-rates of contributors; (e) Voluntary-withdrawal rates of contributors; (/) Retirement-rates of contributors; (g) Marriage-rates of contributors; (h) Probability of a member leaving children under fourteen years of age, and the average number of such children; (i) Remarriage-rates of members' widows. 14. The rate of interest used in valuing benefits and contributions was 44 per cent., as the Fund is State-guaranteed. 15. The mortality-rates adopted for pensioners were those used in the previous valuation, and were based on an investigation of the combined experience of the three Government Superannuation Funds (Public Service, Railways, and Teachers) for the period 1919—1927. 16. Average salary scales in respect of males and females separately had to be constructed for the year immediately following the valuation date. This presented considerable difficulty, as it was complicated by the salary cuts and the fact that there were two classes of officers, one contributing on hypothetical salaries—i.e., pre-cut salaries as far back in some cases as 1921—and the other on actual salaries. To have constructed average salary scales based on the heterogeneous contributory salaries, and applied the resulting ratios of increase from age to age to the contributory salary of each contributor as at the Ist April, 1934, would have considerably overestimated the pension liabilities, as, under normal circumstances, the average officer contributing on actual salary would not rise to the hypothetical salary scales, and pensions are based on final salaries. Even if actual salaries were used to obtain the ratios of increase from age to age, the prospective salaries would have been divorced from realities in view of the fact that a large number of officers would never by normal promotions bridge the gap between their actual salaries and the hypothetical salaries on which they were contributing. The problem would have been simplified had the options to pay on higher salary been exercised, as one would have expected, only by the older officers, or by those who had been at the top of the grade so long that they took a very conservative estimate of the possibilities of future promotion. In actual fact, out of the total of 17,369 contributors, no less than 3,239 elected to pay on the pre-cut salaries, and this included contributors from age twenty-four upwards, many of whom must, except under very exceptional circumstances, have recovered the amount of the salary " cuts " by promotion during the remainder of service. The tacit assumption made by each officer electing to contribute on his salary prior to the cuts was that his actual salary would not rise to the higher figure prior to retirement (normal or medically unfit), but even a brief glance at the two sets of salaries showed that at the younger ages the disparity between actual and hypothetical salaries was not wide enough to justify the assumption of valuing on the basis that future salary increases would not bridge the gap. If therefore became necessary not only to separate those contributing on actual and on hypothetical salaries, but also to make two valuations of those contributing on hypothetical salary to make the .necessary allowance for the fact that males under age forty-seven and females under age forty-four would, on the average, rise to a higher actual salary than the hypothetical salary on which they were contributing. In making these several valuations, it was essential to make some assumption as to an early restoration of portion of the remainder of the salary " cuts," and for this purpose I assumed that an immediate allround increase of 5 per cent, would be forthcoming as at Ist April, 1935. Actually a 7-jrper-cent. increase was subsequently granted in August, 1935, and all salary cuts were fully restored as from Ist July, 1936. 17. The actual deaths among male members during the quadrennium were 225, as against 251 expected by the tables used in the previous valuation, and this lighter mortality was in evidence for all age-groups. 18. The male withdrawals were 859, as against 1,530 expected. This appears to have been directly due to the economic depression, the difficulty of finding remunerative employment checking the former tendency of officers to leave the Service for private employment. 19. The number of male officers retiring was 790, as against 506 expected, and the excess was reflected in all age-groups from thirty-five onwards. In the last three actuarial reports stress has been laid on the serious financial consequences to the Fund of retiring, irrespective

TABLE II. Statement of Progress of Active Membership.*

13

New Members. Increase by Promotion. Discontinued. Total in Force at End of Year. Year. Annual Annual Annual Annual Number. Salaries. Contribu- Salaries. Contribu- Number. Salaries, Contribu- Number. Salaries. Contributions. tions. tions. tions. £ £ £ £ £ £ ££ 1908-11 11,036 1,529,468106,826 251,404 15,141 1,896 276,431 21,297 9,1401,504,441 100,670 1912-16 8,185 732,323 42,597 574,648 33,369 4,012 523,821 34,792 13,313 2,287,591 141,844 1917-21 9,401 1,181,356 68,762 1,906,126108,419 6,932 1,131,248 71,005 15,782 4,243,825 248,020 1922-23t 1,200 152,922 8,362 43,092 2,298 1,993 658,874 41,271 14,989 3,780,965 217,409 1923-24 1,219 159,496 8,917 139,589 7,369 1,187 257,682 16,003 15,0213,822,368 217,692 1924-25 1,921 278,898 16,035 228,471 12,140 1,160 248,856 15,264 15,782 4,080,881 230,603 1925-26 ],682 231,794 12,870 204,658 11,035 1,136 254,497 15,512 16,328 4,262,836 238,996 1926-27 1,518 193,451 10,487 157,749 8,328 932 204,675 12,176 16,9144,409,361 245,635 1927-28 1,000 150,212 8,298 146,611 7,585 912 207,138 12,496 17,002 4,499,046 249,022 1928-29 1,046 164,175 8,931 162,631 8,427 871 204,057 12,048 17,177 4,621,795 254,332 1929-30 1,665 215,032 11,737 174,518 9,031 866 203,199 11,716 17,976 4,808,146 263,384 1930-31 930 146,336 8,158 185,675 9,514 709 179,970 10,740 18,197 4,960,187 270,316 1931-32 317 35,677 1,856 51,217 2,588 998 561,630 32,794 17,516 4,485,451 241,966 1932-33 384 40,772 2,138 56,115 2,815 681 392,712 21,618 17,2194,189,626 225,301 1933-34.. 693 75,861 3,922 94,527 4,786 543 121,597 6,994 17,3694,238,417 227,015 Totals.. 42,197 5,287,773 319,896 4,377,031242,845 24,828 5,426,387 335,726 * Compiled from Annual Reports. t Fifteen months.