X.—9 a.

The number of contributors, their salaries, and the annual pensions payable at the 31st December, 1916, and the 31st December, 1913, respectively were as follows:— 1910. 1913. Number of contributors .. .. .. .. .. .. 4,653 4,0.17 £ £ Animal salaries .. .. .. .. .. .. ..926,706 708,589 Average salary per contributor .. .. . . . . .. 199 176 Annual pensions payable .. .. .. .. .. .. 44,660 29,898 The addition to the liability is therefore fully accounted for by the general increase in the number of contributors, and the factors un which their prospective pensions are based —viz., age, length of service, and amount of salary. 1(>. Section 38 (2) of the Act requires the report to be so prepared as to show " the probable annual sums required by the fund to provide the retiring and other allowances falling due within the ensuing three years without affecting or having recourse to the actuarial reserve appertaining to the contributors' contributions." As the contributions are insufficient to provide the full benefits for new entrants, the whole of the pensions for service prior to joining the scheme, and a certain portion of the pension due to service while contributing, should be provided by the subsidy. The sum payable for pensions, and the respective amounts purchased by contributions and payable by way of subsidy during Ilie ensuing three years — 1917, 1918, 1919 —are estimated as follows: —

1 have therefore to report that, in addition to the annual subsidy of £17,000 now being paid, further subsidies of £23,000, £26,000, and £30,000 will be required for the years 1917, 1918, and 1919 respectively, or an average of about £26,000 per annum. In my report for the • triennium ending the 31st December, 1913, an additional subsidy of £16,000 per annum was stated to be necessary, but owing to the exigencies arising out of the war the recommendation has net yet been given effect to. Of the additional subsidy, £26,000, now required, only £10,000 is therefore due to the present triennium. 1.7. As already shown, the basis of the scheme is that the pensions should be divided into two parts, viz. ; (a) the part purchased by the contributions, and (b) the remainder, which includes the pensions for service prior to joining the scheme, to be paid by way of a subsidy to the fund. The scheme has only been in force for eleven years, and the service is a growing one, consequently the outgo for pensions and the subsidy required will show an annual increase for many years. At present every increase in the subsidy appears to involve an amending Act, and this, with its consequent delay, should be avoided. The method employed to meet the deficiency, so long as it is met, is not so very material, but one basing the subsidy on the payments made by the contributors would throw the strain more on the early years of the scheme than the present method, and could be calculated without reference to the Actuary. A subsidy equivalent to 45 per cent, of the contributions of males and 85 per cent, of the contributions of females would provide for the pensions of new entrants, and so prevent the deficiency from this source accumulating. It would also reduce the deficiency in the case of those already in the service by £359,806, leaving £1,442,010 to be provided for by an additional annual subsidy to cover interest on the amount and make good the principal. The total payments required if this basis were adopted would be approximately as follows, taking the contributions and deficiency as they stood a! the 31st December last: — £ Males —45 per cent, of annual contributions ... ... ... 14,751 Females —85 per cent, of annual contributions ... ... ... 19,794 Sinking fund for seventy-five years to repay deficiency with interest... 60,896 £95,441 and the only increases required in the future would be those resulting from a growing population, with the corresponding increase in the teaching staff, or other changes in the data. 18. An alternative method on the same lines, but requiring a smaller payment at the outset, would be to pay a subsidy equivalent to 100 per cent,, of the contributions oi' males and 140 per cent, of the contributions of females. These percentages would require an annual payment commencing at £65,382, and increasing slowly with the growth of the staff and the corresponding increase in the annual payments made by the contributors. The deficiency would be reduced to £1,110,141, and it is estimated that this would disappear through the excess payments in about seventy-five years, as in the previous calculation, enabling the subsidy to be reduced to 45 per cent, for males and 85 per cent, for females.

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7 Required for 1917. 1918. 1919. . I Current ordinary pensions .. pensions and family pensions £ 40,486 6,743 £ 38,797 13,358 £ 37,116 I!), 950 Total pensions 'Jeducl amount of pension provided by contributions . . 47,229 7,275 52,155 8,732 67,066 10,229 Subsidy required 39,954 43,423 46,837