ing the year amounted to £7,232 3s. 4d. ($35,195.34), fines to £46 12s. 6d. ($226.90), and interest to £1,509 16s. 9d. ($7,347.62), whereas, on the other hand, life allowances amounted to £6,327 19s. 3d. ($30,795.03), and numerous other grants were paid, leaving to the credit of the fund of £30,537 5s. 7d. ($148,609.67), an increase over the amount on hand at the corresponding date of the preceding year of £1,411 4s. 4d. ($6,867.69). REPORT ON THE GOVERNMENT RAILWAYS FUND. The report of the Board on the Government Railways Superannuation Fund for the year ending March 31, 1908, shows that members contributed £45,669 Os. 9d. ($223,248.37) to the fund during the year; fines amounted to £239 5s. ($1,164.31), and interest to £5,352 3s. ($26,046.24), while on the other hand, superannuation allowances to the amount of £26,758 16s. 7d. ($13,279.85) were paid during the year to 484 members of the railway service who had either voluntarily resigned or been retired as medically unfit, allowances amounting to £3,799 12s. 9d. ($18,490.94) were paid to 105 widows and 173 children, the dependents of deceased members of the service who had not retired on superannuation at the time of their death, refunds amounting to £342 9s. 1d. ($1,666.55) were paid to the legal representatives of deceased members, a sum of £3,610 19s. 7d. ($17,572.83), representing contributions of members of the service who voluntarily retired or whose services were otherwise dispensed with during the year was refunded to members concerned and other small disbursements were made, leaving a balance to the credit of the fund of £126,642 18s. 11d. ($616,307.90). The total amount of annual allowances granted by the Board from the beginning of the fund until the end of March, 1908, was distributed as follows:(") Life allowances on account of voluntary retirements (449 persons).. Allowances to 109 widows and 211 children.. Total annual allowances granted..... $140, 766. 74 24, 193. 13 22, 935. 39 187, 895. 26 Seventy beneficiaries have died since the inauguration of the fund, including nineteen during the year under review, and seven members who had been placed on the fund as "medically unfit" resumed duty. The fund was relieved of an annual liability of £4,621 18s. ($22,492.48) in respect to these seventy-seven members. Forty-four children have reached the age of fourteen years (eight during the past year), two children have died, six widows remarried, and three widows died, lessening the liability of the fund by an additional £761 13s. ($3,706.57) per annum. a Report of Board on Government Railways Superannuation Fund, 1908, p. 2. The number of persons actually on the fund at March 31st, 1908, was 724, involving an annual liability of £33,226 7s. 9d. ($161,696.21) as shown by the following statement of annual balances and annual allowances actually granted by the board:(") The experience of New Zealand in retiring its civil employees is particularly instructive to the student of superannuation schemes. Hampered by few theories or precedents, but mindful of the experience of the mother country and of other British colonies, the citizens of New Zealand have proceeded to try several schemes, discarding a scheme as soon as its inadequacy or unsuitability was demonstrated and substituting another which was free from the features found objectionable in previous ones. The result has been a gradual development of ideas along rational lines, until it would seem that there has been evolved a plan that is actuarially sound, one that meets the requirements of the service, and one that fits in with the ideas. of the people generally as to what is fair and suitable. After thirteen years of experience in granting straight pensions that plan was abandoned because of the fear that it meant eventually a too heavy charge on the public treasury. Abandoning the pension system, therefore, New Zealand contented itself for a period of thirteen years with making gifts of lump sums to each employee retiring from the service, basing the amount of the gift on the length of service. This was, however, merely a makeshift in recognition of the fact that old people could not be dismissed from office without great hardship unless some kind of provision was made for them. Even this was felt to be too heavy a burden on the Treasury, however, and there followed the Act of 1886, which authorized deductions from salaries, and was simply a scheme of compulsory savings established with the idea that the superannuated employee must be taken care of, but at his own and not at the public expense. It should be noted that the change made in 1886 was practically the withdrawal of a privilege which existed before, the compensation of a month's salary for every year's service, and was in harmony with the spirit of a Report of Board on Government Railways Superannuation Fund, 1908, p. 1. retrenchment which flourished in New Zealand in the last half of the eighties, when there was a considerable cutting down of salaries and dispensing with employees. While this arrangement promised relief to the Treasury, it was not satisfactory to the employees of the Government as a retirement measure, because they saw that the sum to the credit of the individual on retirement would be inadequate in case the officer lived many years after retirement. The actions taken in 1871 of abolishing the pension system, and in 1886 of abolishing the compensation plan and requiring deductions from salaries were taken purely in the interest of the treasury. In 1893, for the first time since the pension system was established in 1858, action was taken which was designed purely and simply in the interest of the service. Good as far as it went, the provision for compulsory insurance proved, however, like the provision for compulsory savings, inadequate as a substitute for a retirement measure. Finally, in 1907, a contributory retirement plan with a subsidy from the Government was adopted. This plan, by permitting continuance of insurance in the Government Life Insurance Department if the employee so desires, affords adequate provision for every possible contingency in the life of the civil employee. The situation in New Zealand, therefore, at present is this: The Government has come to realize, on the one side, and the civil service, on the other, that it is impossible to get something for nothing. The Government has ceased to attempt the abolition of pensions and compensations and the compulsion of deductions from salary without making a corresponding contribution, and has become willing not merely to retire those who are already superannuated, but to contribute a certain permanent annual subsidy toward the support of a superannuation measure for the benefit of the civil service. At the same time, the members of the civil service have come to see that a system of free gifts from the Government, whether it be in the nature of pensions, compensations, or gratuities, is not the most desirable plan that could be devised, and they are almost unanimously willing to contribute from their salaries to the support of a retirement plan which meets their approval. The plan is based on two fundamental principles not observed in the contributory plans whose funds have become insolvent: (1) The rates of contribution are fixed by the age of entrance into the service and not by any arbitrary percentage of assessment. This means that the amount of the annuity is determined in each case by the length of service and amount of salary, and that each employee contributes only to his own retirement, so that the plan is equitable as between different classes of employees. (2) A sharp line of demarcation is drawn in this plan between accrued and future liabilities. The Government agrees to pay all annuities on services rendered up to the time of the adoption of the plan. Since the contributions of the civil servants are not sufficient to provide all the generous benefits-including those to invalids and widows and orphans-the Government agrees to make up whatever deficit there is on this score also. There is no expectation of making the plan self-supporting. The calculations as to the cost to the Government of establishing and carrying on this plan were carried only through the first year, but since the law makes provision for triennial valuations of the fund, this is of little practical importance if the people of New Zealand are willing to accept the plan on a mere estimate as to its cost. Even if the possible maximum cost had been computed out to the last year of life of the last member of the present service, the necessity for frequent valuations of the fund would be imperative on other grounds. The benefits provided under the plan are very liberal, including as they do allowances for the disabled and for the widows and orphans as well as for the superannuated. The sufficiency of the fund to meet these benefits can be ascertained only by periodical valuations, in view of the uncertainty, owing to the lack of statistics, as to the strain on the fund from invalidity allowances on the one hand, and the relief on the other from the forfeiture of interest by those resigning from the service before reaching the retirement age. It is apparent, however, that the fundamental principles underlying this plan might have been applied to a plan designed to be entirely self-supporting, but the people of New Zealand have been willing to increase the benefits under the plan beyond what the contributions of the employees could support and to make the contributions necessary for that purpose. With the liberal benefits provided under the Superannuation Act of 1907, requiring permanent help from the Government, it is plain that the actuary was right in insisting that a provision for frequent valuations of the fund is necessary to insure its actuarial soundness. Certain details of the plan are worthy of note by the student. There is no compulsory age of retirement, notwithstanding England's experience that the absence of such provision is inadvisable. Provision is made for the cash refund of contributions on separation from the service, but interest on them is forfeited-an offset to the liberality of the benefits provided for those who remain in the service. The retiring allowance is based on the salary during the last three years of service rather than on the average salary. These are features the wisdom of which can be determined only by experience. New Zealand's experience in retiring its civil employees is especially instructive for two reasons, first, because of the variety of experiments made, and, second, because the final conclusion rests on theoretical principles generally acknowledged to be sound and yet in actual practice "more honored in the breach than in the observance." APPENDIX. PUBLIC SERVICE SUPERANNUATION ACT. [1907, No. 63.] AN ACT to provide a Superannuation Fund for the Public Service (November 25, 1907). Be it enacted by the General Assembly of New Zealand in Parliament assembled, and by the authority of the same, as follows: 1. This Act may be cited as the Public Service Superannuation Act, 1907, and shall come into operation on the first day of January, nineteen hundred and eight. 2. In this Act, if not inconsistent with the context, "Board" means the Public Service Superannuation Board established under this Act. "Public Service" includes the High Commissioner's Office, the Legislative Branch, and every Department of the Government service except the Government Railways Department, so much of the Police Department as is included in the Police Provident Fund Act, 1899, and so much of the Education Department as is included in the Teachers' Superannuation Act, 1905. "Contributor" means a contributor to the fund. "Department" means every branch of the Public Service which is administered separately. "Fund" means the Public Service Superannuation Fund. "Regulations" means regulations made by the Governor by Order in Council gazetted. "Salary" of a contributor means the rate of salary or wages paid in respect of his service, but does not include allowances or payment for overtime. PUBLIC SERVICE SUPERANNUATION FUND. 3. There is hereby established in connection with the Public Service a fund to be called the Public Service Superannuation Fund, which shall be administered by the Board. 4. The fund shall consist of (a) the contributions from contributors as hereinafter provided; (b) moneys at any time paid into the fund under sections thirty-two and thirty-three hereof; and (c) interest from time to time accruing from investment of the fund as hereinafter provided. 5. All moneys belonging to the fund shall be paid to the Public Trustee, who shall from time to time invest the same in such manner as is prescribed by regulations. 6. The fund shall be administered by a Board called the Public Service Superannuation Board, consisting of ten members, namely: A Minister of the Crown; four persons to be appointed and removable by the Governor in Council; two persons to be elected by and from the contributors who belong to the Post and Telegraph Department; and three persons to be elected by and from the contributors who belong to other Departments of the Public Service. 7. (1) With respect to the elective members of the Board the following provisions shall apply: (a) A ballot of the members of the Post and Telegraph Department, and a separate ballot of the members of the other Departments, shall be taken on the first Monday in July, nineteen hundred and eight, and on the first Monday in March in every third year thereafter. (b) Every ballot shall be taken in manner prescribed by regulations; and if any question arises as to the regularity or validity of any ballot, or the voting thereat, such question shall be determined by the Minister of Internal Affairs, whose decision shall be final. (c) If any such member of the Board dies, or by notice in writing addressed to the permanent head of the Department of Internal Affairs resigns his office, or ceases to be a member of the Public Service, then and in any such case his seat shall become vacant. (d) Such vacancy shall be filled by election by a ballot of the members of the Department or Departments represented by the vacating member; but the person so 257 35885-S. Doc. 290, 61-2-17* |