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MINUTES OF EVIDENCE. PUBLIC SERVICE CLASSIFICATION AND SUPERANNUATION AMENDMENT. Friday, 2nd October, 1908. Moreis Fox, Esq., examined. 1. Right Hon. Sir J . G. Ward.] I wish to ask you this question, Mr. Fox: In the Superannuation Bill now before the Committee there is an amount of .£7,000 set down to be paid by the Government out of the Consolidated Fund for the Teachers' Superannuation Fund and £3,000 to be paid by the Government for the Police Superannuation Fund: will you inform the Committee whether these amounts will make the same provision as the sum of £20,000 in the Public Service Superannuation Act of last year? —Yes, Sir. The £7,000 in the Teachers' Fund and the £3,000 in the Police Fund are on exactly the same footing as the £20,000 in last year's Superannuation Act. I have given a certificate to that effect in connection with the present amending Bill. £7,000 will be the annual subsidy required by the Teachers' Fund and £3,000 by the Police Fund. This will enable the police and teachers to participate in the higher benefits provided by the Public Service Superannuation Fund, and will place the former funds in a similarly sound position. 1 explained this matter in my report last year in the following short paragraph: " The essence of these proposals is that the portion of the liabilities which will be met by the members' contributions shall be dealt with strictly in an actuarial manner, while no actuarial accumulations shall be made on account of the remainder of the liabilities not so provided for, which shall be met, as they actually fall in from year to year, by the Government of the day. I am satisfied that a scheme so managed, while giving the minimum of assistance that can safely be given, and in an automatic manner, will be on a sound financial basis, and at all times satisfy actuarial scrutiny." Let me give the Committee an illustration: A public servant may be paying 5 per cent, of his salary as a contribution to the fund, whereas it may be estimated actuarially that the necessary contribution should be 9 per cent, of his salary. The difference of 4 per cent, has to be made up in some way by the country. At the time of the passing of the Teachers' Superannuation Act in 1906 it was reported that £17,000 per annum was necessary to make the fund sound. This was practically estimated on the assumption that the contributor would be paying the 5 per oent. himself, while the Government would pay the additional 4 per cent, (or whatever it might be) year by year. Under the present proposals and those which were adopted in the Act of last year, nothing would be required each year from the Government in respect of the above-mentioned 4 per cent, until the pension emerged in thirty years' time. Then, if the pension were, we will say, £90, the man would have purchased £50 of it by his own contributions of 5 per cent., and the Government of the day would have to find the balance of £40 per annum, in lieu of having paid the 4 per cent, each year. If the matter were treated in the same way as was estimated in I!)()() in the case of the Teachers' Act, the £20,000 under the Public Service Superannuation Act of last year and this proposed £7,000 and £3,000 would be very much larger. My personal opinion, after very careful consideration, is that the proposed arrangement is actuarially absolutely correct. I may point out to the Committee that during the year that has elapsed since the passing of the Public Service Superannuation Act it has been before the leading actuarial authorities all over the world, and I have heard nothing whatever said against it. 2. In your opinion then, Mr. Fox, these sums of £7,000 and £3,000 are sufficient contributions from the Government towards Teachers' and Police Funds respectively to make the funds actuarially sound?— Yes, Sir; they are sufficient theoretically, and probably more than sufficient practically. The £20,000 provided for in last year's Public Service Act will not be required the first year. It was not possible for me to know then how many would retire immediately. I knew then that it was possible for public servants to go on to the fund within three months of its commencement and draw pensions to the amount of £22,800; but they have not nearly all retired, and the sum at present being paid in pensions is, I believe, not more than one-third of that amount. I originally estimated £30,000, but you put £20,000 in the Act, and the age of retirement being changed from sixty to sixty-five made the smaller sum sufficient. 3. Mr. Laurenson.] Then, only about one-third of those who were entitled to retire went on to the fund ?—Yes, I believe that is so, up to now. 4. Mr. ./. Allen.] Since you made tKe estimate for the Teachers' Fund you have adopted a different principle?— Yes. 5. Am I correct in stating it when I say that your principle is to make provision only for the present, and no provision is made by the State for future services ?—Yes, that is right, if I understand the question. 6. Are you making any provision now for the responsibilities of the State in regard to future benefits? —If I understand the honourable gentleman aright, the answer is no, as was shown by the illustration I quoted. £50 qf the £90 pension is purchased by the man's own contribution, but there is no provision being made by the Government at present for the remaining £40. 7. In what way is the Government to provide in the future for these responsibilities—the payment of the 4 per cent, in your illustration?—By the amounts of £20,000, £7,000, and £3,000, which will be increased, probably each year, automatically as the necessity is shown by actuarial valuations. In all probability they will increase from sto 10 per cent, yearly for some time.