Kail ways, 1912. j

5

D.—sa.

It will be. seen from the above that 23,138 servants of the State paid in to the Superannuation Funds last year as deductions from their salaries the sum of £218,121, which is equivalent to 5-6 per cent, of their total salaries, amounting to £3,877,985. It will also be seen that the total subsidy required for the year was £112,797, which is equivalent to 2-9 per cent, of the total salaries. Thus the State's subsidy is a fraction more than one-half of the members' own contributions. 18. The second statutory triennial valuations of the Public Service and Teachers' Funds fall to be made as at the end of this year, the results of which I hope will be available fairly early next session, and subject to their not disclosing any unexpected difficulty I can recommend that a regular annual subsidy of 3 per cent, of the total salaries of contributors be paid into the combined funds. I shall also be able to say that it may be looked upon with a degree of confidence approaching to certainty that the rate will not be raised in future. One great advantage, of the method, indeed, in addition to its simplicity, is that for a very long time 3 per cent, of total salaries, though providing a regular and reasonable increase in the yearly subsidy in strict accordance with the actual increase in salaries, will remain a fixed percentage, and any change which may arise in the future will be in the direction of a lower percentage. 19. At the present time the financial years of the three funds do not coincide, the Railways closing on the 31st March and the other two running with the calendar year. When making the proposed financial amalgamation it would be very desirable that they should be on the same footing in this respect. I understand from the Chief Accountant of the Railways that there would be great practical difficulty in the way of changing the Railway Fund's year to end with the calendar year, and he suggests that the Public Service and Teachers' Funds should close their accounts on 31st March each year. It seems a good suggestion and one that will meet the difficulty. It appears to me, indeed, that there might even be some advantage in the accounts of such Government funds coinciding with the account:; of the General Government in this respect. 20. In order to carry out what I have in view I propose that a Government Superannuation Fund Bill be prepared during the recess. The first part of the Bill should deal with the finances of the combined funds, constituting a Government Superannuation Fund Board, of somewhat similar composition to the Government Insurance Board, under the chairmanship of the Minister of Finance. This part of the Bill should provide, inter alia, (a) that all moneys of the Railways Superannuation Fund, the Teachers' Superannuation Fund, and the Public Service Superannuation Fund should be handed over to the Government Superannuation Fund Board for investment ; (6) that an actuarial examination of the Government Superannuation Fund should be made by the Actuary as at the 31st March, 1915, and for each triennial period thereafter ; (c) that in the month of April in each year the Minister of Finance should pay into the Government Superannuation Fund and out of the Consolidated Fund, without further appropriation than this Act, a sum of money equal to 3 per cent, of the total salaries of the contributors to the funds on the last previous 31st March. (In this connection most of section 85 of the Government Railways Act, 1908, sections 48 and 49 of the Public Service Classification and Superannuation Act, 1908, and sections 38 and 39 of the Public Service Classification and Superannuation Amendment Act, 1908, should be repealed.) The other three parts of the Bill should consolidate and simplify the existing legislation regarding Railways, teachers', and Public Service superannuation, which is at present inconveniently involved. 21. I would also suggest that the opportunity should be taken to include in the Bill any amending legislation which may be decided upon as being desirable in reference to the benefits and conditions of these funds, so that after the passing of this consolidating Bill none but purely machinery amendments will be likely to need attention in the future. It would be a relief to every one to get a long respite from matters concerning the superannuation of the Service, and an opportunity would then be available to give more attention to the superannuation needs of others who are outside the Service. 22. This finishes my report on the actuarial examination of the Railways Superannuation Fund, including some results of that examination in the form of recommendations for improving the conditions of the funds generally. It would not have been possible to have produced so full and comprehensive a report unless I had received most willing and able assistance, and my sincere thanks are due to Mr. P. Muter, F.1.A., Assistant Actuary, for the exercise of his great actuarial skill and experience, and in a scarcely less degree to Mr. C. B. Galwey, A.1.A., Chief Computer, for much freely given and useful help of a professional nature. 23. In conclusion, I very earnestly hope that what I have said will prove convincing as to the necessity for financially amalgamating these funds. The amount of subsidy represented by 3 per cent, of the salaries is heavy, yet not heavier than is necessary in order to achieve the desired object— viz., to leave to posterity only its fair share of the burden. I feel that any opposition to the scheme which may have existed hitherto has been principally due to an uncomfortable feeling that the past indefiniteness and irregularity of the subsidies asked for was because the matter was not properly understood. That was not the cause, which was entirely owing to the inevitable lack of the necessary data to work upon during the early years of a scheme of this kind. Now that I have shown how the subsidy may be placed on a simpler and more permanent basis, I believe that any slight opposition there may have been will vanish entirely. Speaking generally, it is the rule rather than the exception throughout the British Empire for Governments, railway companies, police, and educational bodies, as well as private institutions such as banks, insurance offices, and large manufacturers, to establish pension or superannuation schemes for the benefit of themselves as well as their employees ; these schemes being liberally subsidized by Government, municipal, or corporate funds, often to the extent of pound for pound of the employees' contributions, and sometimes even going beyond that limit. The burden on the contributor of providing the whole of his pension is recognized as too heavy.