ance of £100 ($486.65), increasing with the salary until the age of 60 was attained, and after that age an annuity varying with the age at entry. Those who elected to pay a small extra premium could have the assurance continued beyond age 60 until death. Employees who had been appointed under the act of 1886 and had funds accumulated to their credit in the hands of the public trustee, or men of a certain age whom it would have been hard to force to insure in this way, were allowed to elect whether they would go on under the old system of 1886 or begin the new system of compulsory insurance under the act of 1893. PURPOSE OF THE ACT. The general purpose of the act was set forth by Mr. Ward, a member of the House, on moving the second reading of the bill. Said he: It Under "The Civil Service Reform Act, 1886," all persons appointed to the civil service were required to deposit with the public trustee 5 per cent of their salaries. Such amount was allowed to accumulate at interest, and remain in the Public Trust Office till the officer affected left the service. He thought it would be conceded that such an arrangement as that was a wise one, and had the effect of causing thrift to be practiced by those who joined the service. But, in the opinion of the Government, the existing measure did not go far enough. contained nothing in the nature of an insurance or a pension in old age, and the Government were of opinion that a scheme of more importance should be adopted, so that there might not only be provision for a civil servant's widow in the event of his death, but that civil servants themselves should have an assured income to look forward to after retiring from the service. The Government attach great importance to the fact that this scheme would be self-supporting. The amount necessary would be paid by the civil servants, except in one particular. In the event of incapacity, arising from no fault of the officer, then a retiring compensation of one month's salary for each year is provided for; and there could be very little likelihood of anything in the shape of a large sum of money being required in this way. He might say that those who were being provided for under the measure would be treated in all respects the same as outsiders who found it desirable to patronize the Government Insurance Office. In fact the ordinary procedure of the office would be carried out by that department in dealing with insurances under this act. The act would only deal with those appointed under the Civil Service Reform Act of 1886. Those appointed prior to that act were entitled either to a pension or to compensation for loss of office. Those appointed since the act referred to were to retire at sixty years of age; and he might say that provision was made in the bill to enable those who might receive a pension in the event of their retiring at sixty years of age to receive also the full amount of insurance payable to them even if death took place after sixty. There was no amount stated in the bill as actually payable in the event of death, but the intention was to insure one year's salary. * * (4) * a New Zealand Parliamentary Debates, vol. 79, p. 191. DEBATE ON THE BILL IN PARLIAMENT. In the debate which followed several objections to the bill were brought forward. It was asked whether those of the civil employees who had already insured their lives would have, under this bill, to effect another insurance, and it was explained by Mr. Ward that they would not be exempted if already insured in the government office or elsewhere, as the new insurance with that office was to be merely a variation of the compulsory savings arrangement under the Public Trust Office, and intended to take its place. Several members expressed alarm at the idea of civil employees being brought under the government insurance scheme, fearing that the standard of health among them might be lower than among other policy holders. Although civil employees were required to pass a medical examination before joining the service, it was feared that the health of many might have deteriorated since such examination and the interests of other policyholders would therefore be jeopardized, if such persons were accepted by the Life Insurance Department on terms other than those on which ordinary insurers were admitted. An interesting section in the act gave the government power to bring in certain classes of people under the terms granted to civil servants, provided two-thirds of their number asked for it. The classes of Government employees thus privileged were (1) All members of the police force. (2) All school-teachers under the "Education Act, 1877." (3) All women and girls employed in the telegraph or telephone service of the Government. (4) All persons permanently employed in the Government printing office. (5) All housekeepers, messengers, and gardeners in the permanent employment of the Government. (6) All wardens of prisons, lunatic asylums, or sanitarium attendants, criers of court, bailiffs, post-office distributers and telegraph messenger boys, light-house keepers, boatmen, laborers, and other persons in the permanent employment of the Government. (7) All clerks, artisans, workmen, and other persons in the temporary employment of the Government. (8) Officers, noncommissioned officers, and men of the defense force. It was feared by some that to admit such bodies of public employees en masse into the privileges of the Government Life Insurance Department was an unwise procedure. The reply to these objections made by Mr. Ward in support of the bill, which voiced the view that eventually prevailed, is recorded as follows: He might say at once that, in the event of an officer who was desirous of coming under this measure being in a very bad state of health, and shortly expected to die, he would not be allowed to transfer, because the Government Insurance Department could not be expected to have its benefits shared by persons who were really known to be in such a state of health that no office would accept them; and that was only fair and proper. Upon the whole, the Government Insurance Department would accept without fresh medical certificates the whole staff of any department that applied to come under the bill, for the simple reason that every officer who now entered the civil service had to obtain a medical certificate before he was allowed to come in, and it was within the knowledge of officers that there were candidates refused entirely on the score of weak health. That being so, he thought it might be accepted pretty generally that the bulk of the civil servants of New Zealand were in very excellent health. He could only say, speaking from a short experience of the present system, that there had not been many cases of death. However, this scheme had received the very close attention of the Government Insurance Department, and they found that, provided the scheme were made to embrace a whole department, the basis would be so broad that they would be quite justified in taking the bulk of these people in. * * * It was not desirable, if a few officers alone applied, to admit them, as the honorable gentleman had indicated. The very thing which other honorable members were so anxious to prevent might then possibly take place. Neither ought they to admit cases that would be refused by other offices on the score of health. The safety of the thing consisted in the officers of any department coming in in a body. This was a very important point, and he might say at once that the Government would not after the bill in this respect. He felt sure the officers of the departments would be very glad to take advantage of these provisions, and, by obtaining the two-thirds majority, they could, as a body, come under the act. * * *.(") It should be explained that the New Zealand Government Life Insurance Department had been established in 1869, at a time when the failures of two well-known British offices had drawn public attention to the need of greater security in life assurance. The management of the department is vested in an officer called "The Government Insurance Commissioner," who is appointed by the governor on the recommendation of the Minister of the day. The department is conducted almost exactly on the same principles as those generally adopted by private mutual life insurance offices. All the usual classes of policies are issued to those who can pass the customary physical examination, and the colony is vigorously canvassed by traveling agents in search of new business. The people of New Zealand took great interest in the department from the start. It has easily distanced all competitors. Its lifeinsurance business is almost as much as that of all of its ten competitors together. The people are said to prefer the government insurance because it has the guaranty of the Government behind it, a New Zealand Parliamentary Debates, vol. 79, pp. 194, 195. 35885-S. Doc. 290, 61-2-15* because the rates are lower than in ordinary private companies, because its policies are incontestible and nonforfeitable, and because the profits of the business go to the insured. This state life insurance was not compulsory in the beginning for any class of citizens, but the act of 1893 made it compulsory for civil employees under forty years of age in lieu of a civil pension scheme. In case of leaving the public service an employee could surrender his policy and get a surrender value. Under no condition had he to forfeit the surrender value of his policy, even if dismissed for misconduct. The insurance department has from the first made the best possible terms to members of the civil service, so that they have enjoyed an advantage, in that respect, over the outside public. The money for the premiums is collected in the cheapest and easiest manner possible. It is simply deducted from the salaries by the proper government officials in the course of keeping their routine accounts and it is then handed over in a lump sum to the Government Life Insurance Department, which can thus easily afford to make especially favorable rates to the civil employees, since it has no commissions to pay for securing the business. CRITICISM OF THE ACT. The Insurance Act of 1893 does not seem to have been sufficient, however, as a substitute for a retirement plan. It can easily be seen that the price of endowment assurance is so high as to make it of little use to the civil employee of small salary as a means of furnishing him with an adequate retirement allowance. The inadequacy of the endowment assurance as an old-age allowance made it necessary for the Government to supplement this provision, in a great many cases, with gratuities and compensations. The custom obtained of granting a gratuity to men who had been ɛ long time in the service, especially prominent and useful employees, when they went out, six months' and sometimes a year's salary. This was done by special act of legislature, but the law of 1893 provided distinctly for granting an employee who became permanently incapacitated through no fault of his own a sum equal to one month's salary for each year of service. This allowance on account of invalidity was entirely separate from the annuity which came to him on reaching the age of 60. Under these terms a civil employee who became incapacitated from further work at the age of 57, 58, or 59 was in a much better financial position than one who kept his health, as he received a large lump sum, and at the age of 60 a regular annuity also. The law was considered faulty, as it made no provision for widows and orphans except in the case of people who were killed in the service. If an employee under 60 years of age were killed at his work, his family received not merely his insurance but a gratuity also based on his length of service. In many cases also of natural death special circumstances made it seem necessary to vote the widow a compassionate" allowance. A complete summary of the compensation, gratuities, and pensions paid yearly from 1858, the date of the inauguration of the first pension system in the colony, until 1907, the year when the Public Service Superannuation Act was passed, was made by Mr. Morris Fox, the actuary of the Government Life Insurance Department, who extracted this information from the journals of the House of Representatives. It will be seen that all the payments for pensions, gratuities, and compensation totaled for the year 1906-7 the large sum of £42,157 ($205,157). The summary is as follows: SUMMARY OF COMPENSATION, GRATUITIES, AND PENSIONS, 1859 TO 1907. |