SOCIAL INSURANCE

Dominion, Volume 10, Issue 2916, 31 October 1916, Page 7

SOCIAL INSURANCE

A BIG PROJECT

ADDRESS TO FRIENDLY SOCIETIES

At the Oddfellows' Hall, Lambton Quay, last evening, Mr. R. E. Hayes, Registrar of Friendly Societies, and manager of thol National Provident Fund, explained in tho course of an interesting address the provisions of the Finance Act of last session, relating to .social insurance,_ to representatives or the various friendly societies in Wellington. Mr. Hayes said:—"The annuities offered to friendly societies under this Act arc tho same as in the original scheme, i.e., payable at ago sixty at the rate of 10s., 205., 305., and 40s.< per week. Any member whose income is less than £250 per annum, and who is under forty-five years of age may become a contributor. (These conditions are somewhat modifiod for a year, as I will explain later.) It is quite optional on the part of any member whother hp becomes a contributor or not, and, furthor, his annuity under this Act does not affect his right to the old-age pension. The Contribution Rate. "Now, the contribution rate which is specified in the schedule to this Act ii very different to tho rate set out in tho main Act. In fact, for the most popular annuity, i.e., 10s. a week, the rate quoted is exactly half the rate quoted in the main Act. It has to ho remembered that • the National Provident Fund, as it now stands on tho Statute Book, is sound actuarially, according to. the Actuary's report. If, therefore, wo offer a benefit out of that fund at half the rates, wo must see where tho money comes from.

"Tho best illustration I can give of the finance of tho transaction will be to take the captialised value of an annuity at age sixty based on the conditions ou which this allowance is payvalue of that .allowance at age sixty is £306, that is to say, if you desire to purchase ah annuity at that ago you will require to place that amount down in cash. Therefore the National Fund requires to have from some source or other that amount when it begins to pay out at age sixty. Now, let us take a friendly society member aged 21 who joins the fund. He is required under the Act to pay Gd. a week. The payment of that sum until 'ho reaches age sixty, '"accumulated at compound interest, amounts to £115 odd. All the time he has been paying that the State has been, paying SO per cent, of it into his account, that is, 3d. per week. This amount accumulated at compound interest comes to £57 odd. We have therefore from these two sources £172 towards the £306. Wten. the member reaches ago sixty the Act proposes that the sick fund of the lodge he belongs to shall transfer to the National Provident Fund the value of this future sickness at rates to be decided in the regulations. Those rates have been fixed at £1 first six months, 10s. second six months, and ss. after twelve monthsrate's which represent what most •sooieties pay. Tho actuarial valuation of those allowances is £55 12s. On the transfer of that amount to the National Fund the State pays in also 50 por cent., i.e., £27 odd. .From these four source now we have obtained £256. Tho remaining £50 comes from what is called the benefit of survivorship, and means the moneys left in the fund from subsidies paid in on account of members who lapse or withdraw or die and the interest on contributipns which may be drawn by persons leaving, etc. A Substantial Difference. "The ordinary sick and funeral fund contributions will still bo payable by the members after age sixty to tho end of his membership in tho society. "The Actuary has certified that tho transfer of this sum of £55 12s. is ac- - tuarially; safe for friondly societies to make without loss; and thero can bo no doubt of this fact that for a certain payment fixed by the actuary the lodges get rid of a very uncertain liability that in many cases runs into hundreds of pounds. The societies by assisting in this scheme are enabling their members on the payment of a small additional contribution to obtain a benefit worth £306 to take the place of a benefit worth £55 12s. ; This comparison gives a fair indication of the value as between sick pay and a pension for members over sixty. "The Act provides as a concession to present members of friendly societies that the income restriction as to the £250 shall not operate divring 1917, and also that the age at which present members may join is raised to age 55 on payment according to the table provided for in the regulations. Thisspecial concession is open to all persons who join societies before January 1 uoxt, and will be obtainable for twelve months thereafter only. The. tables of contributions under tho Act and tho conditions generally can apply only to members of friendly societies whoso sickness benefits aro at least of tho value of tho 6ums I havo mentioned. In any lodges whero the members have a lower sickness benefit, special provision will have to be made in the rules to meet such cases. Maternity Allowance. "The second, benefit payable under the Act is a maternity allowanco of £<t, payablo on tho birth of a child to tho wii'o of a member of a friendly society provided tho income of tho member and his wife during the twelve months' preceding the birth has not exceeded £200, and that tho member has been at the timo of the birth 52 weeks in his society and paid that number of contributions. Tho allowance is payablo to tho mother of tho child. It differs somewhat in its terms, from tho benefit paid under the main Act, where tho allowanco is subject to reduction if tho medical and other expenses do not reach the sum. In the case of friendly societies, however, in every caso tho full £4 in cash will bo payable. . It will bo necessary for tho mother of the ohikl to givo the necessary authority for tho money to bo claimed on her behalf. A medical attendant or midwife must bo in attendance at each birth, and it must bo so certified on the claim form. No member will bo entitled to tho benefit if ho has claimed under tho main Act. for tho same birth as a contributor to the fund, and ho cannot claim it from two societies. A special system of remittances and postages for tho carrying out of tho scheme will bo established For the convenience of societies. As already mentioned, it is qnito optional on the part of members whether they take up the annuity and tho maternity allowanco is payable to all members irrespective of their being annuitants or not.

"This concludes the summary of tho Act and its provisions. 'The scheme from an annuity standpoint offers to members- of friendly societies a very advantageous method of securing for themselves au independent provision in old age, and this lias only been made possible by the liberal subsidies provided under the Act."

Mr. T. Fathers occupied the chair, and in opening the proceedings gavo an outline of the events which led up to tho passing of the Act. After Mr. Hayes's nddrcs6 thoro was a free discussion, and many questions were asked and satisfactorily answered. At the conclusion a hearty vote of thanks was accorded to Mr. Hayes.