SUPERANNUATION FUNDS.

Dominion, Volume 6, Issue 1559, 1 October 1912, Page 6

SUPERANNUATION FUNDS.

Sir,—The reports of the proceedings of the Legislative Council are so scrappy that, as an interested contributor, I wish to crave more publicity for the eminently san'o and just proposal advocated by the Hon. J. E. Jenkinson, in the second reading debate on (he Local Authorities Superannuation Bill. . Briefly, his idea (as lie outlined it to mo some time ago) is that nil contributors to these funds should bo allowed to borrow back their contributed moneys in much the same way as insurers may-bor-row the surrender value of their policy. At present these funds are handed over to the Public Trustc'e, who vays 5 pi>r cent, for the use of them, and Air. Jenkinson advocates that tho contributors should have the privilege of borrowing any sum up to the limit of their amount paid in, to bo paid back in instalments at a slightly higher rate of interest. This higher rate of interest would ensure tho fund against incapacity or death of the borrower during the currency of. the loan (an extra J per cent, would provide for this), so that, the, borrowers' family would not suffer in any way. The ppriod of repayment would bo such that the loan, under normal circumstances, would be repaid before the ago of GO, or five years before the contributor ceases his contributions; and the repayments would be stopped off the wages in l the same way as the ordinary contributions. In the ease of the contributor leaving his employment. (and automatically going off the fund) before . the loan was repaid, the amount unpaid would be stopped off the sum returnable to the.contributor in such cases. The fund is thoroughly safeguarded against less under the scheme, while the contributor would be in the happy position of being ab.: to borrow small sums (or relatively large sums) at a reasonable rate of interest, and without thoss legal or other charges that now : bear so heavily on small borrowers. The schedule of instalments suggested by the Hon. Mr. Jenkinson varies from twelve monthly payments of 12s. eaclt for a loan of £5, to sixty monthly payments of 3Gs. each for a loan of .£IOO. Since about 20,000 people would be benefited by this scheme it cannot bo deemed a small thing, and I, for one, would have derived tangible benefit had it been in vogue in the past. I hope, Sir, you will give your valuable editorial support to such a sane and just proposal. ' ■ The other nroposals in tho same -speech are, I think, even jnore important; though from me they only gain a purely platonic approval. It is obvious that tho verv life of any pension insurance rests on 'tlie law of averages workinc over a. large number of participants.. Hence _th« necessity for binding all these _ various funds, actual and prospective, into ouo national schema —preferably through the National Provident Fund already in existence. The absurdity of a body employing, say, ten men, having to guarantee its own fund is amusing to everybody but the ten men concerned. Of course the National Provident joke would require amending into a serious scheme first; but the present Minister for Finance approves of joking'with such.sarious matters, as little, Sir. as you and .1 do. The main blot on tho present schemes (of course the payment of superannuation for service prior to the establishment of the funds is in no way part of the schemes, but is merely charity; and, in the case_ of pensions of more than JEIOO a year,' objectionable charity) is the computing of superannuation on the final salary at retirement instead of on the average salary (or better still on tlie accrued payments). The wage earner pays in 5 per cent, of 10s. a day for 40 years and gets an allow-' anco of 6s. Bd. a day on retirement; the salaried official pays in 5 per cent, of his salary of, say, under ,£3OO for twenty years', under i4OO for ten years more, and of .£6OO for the last ten years, and retires with an allowance of X4OO a year. This is in no wise an extreme - ease, judging from Public Service experience; aud here tho official pays in JCBOO to the.worker's .£3OO. and gets out <£100 a year to the worker's .£IOO. If tho fund is self-support-ing, the wage-earner is robbed, and if it is not the public charity is expended in a greater ratio on tho high-salaried official than on the wage-earner.

The lender of the legislative Council poolupoobed the remarks of the Hon. Mr. Jenkinson, hut I am convinced that the Minister for Finance will ,iot do so in so far as those remarks were along the lines I have indicated (and your report seems to say they were). He appreciates the fact that ft rigidly-calculated insurance basis is the only sure 'foundation 'for a successful scheme, aud I am sorry that, he was too busy to con«id(f the latest Bill. Perhaps, Sir, you will find time to repair his omission.—l am, etc.. CONTRIBUTOR.