SUPERANNUATION

Evening Post, Volume CXIV, Issue 126, 24 November 1932, Page 15

SUPERANNUATION

JEACHERS* FUND

PROFESSORS' CASE

BOARD'S FINANCES

Pother evidence, on the Government Superannuation Funds Bill was given to-day to the Select Committee of the House of Representatives. The. case on,behalf of the University contributors to the Teachers' Superannuation Fund ■was presented, and a statement was also made on behalf of the Teachers' Superannuation Board. . ■ ■ : PAYMENT IN EXCESS.. Professor K. J. T. Bell said that it had been felt that the provisions'of the Teachers' superannuation scheme, designed to apply to contributors who ! mostly joined at an early age and whose i salaries increased .from a low figure,' did not apply equitably to the univer-' sity contributors, whose salaries were practically uniform throughout their 'service, "and who, in the case of prof es"sors, were generally over 30 . years of age when they first became contributors. "Under present conditions," he said, "the majority,.of the -university contributors'have to pay into the fund sums in excess of those necessary to amount to the, actuarial values of .the pensions they can obtain on retiral. Not a few ■would, by the payment of the same annual sum to an insurance company as they pay-to the-fund,: secure insurance cover for themselves during their service and a pension on retiral of over £300, .the present limit. In 1929, the position was investigated by the University'TTeaches'r s' Association, and cal.culations, based on Totui'ns made by 41 professors and.27 lecturers, showed:— Amount of contributions at 5 per cent, on retifal at age 65, professors £143,868^ ■ lecturers £.65,488';' actuarial value at 5. per cent, of the pensions obtainable, professors' £95,306, lecturers £57,045; difference, professors £48,562, lecturers £.8443. Hence, if every one of these contributors lived to.exhaust the full actuarial value of his pension, the fund would still profit b_y an average of moreHhau £1000 for each professor, arid more than £300 for each lecturer. SUGGESTED ALTERATIONS. *' There' are two obvious' ways in •which, inequalities might be avoided. The first is to alter the basis on /which each contributor pays to the fund, so that'it would not exceed that proportion of the, salary which would entitle lim to the. maximum pension of £300; the second is to amend clause 76 of the Public Service " Superannuation Act, 1927j so as to provide' that the limit for ■'pensions should be'either £300, or that pjensiqn whose' value, actuarially calculated, is equal to the amount, at 5 per ' cent, compound interest, of the contributions paid, whichever is the greater. The first of those methods has been adopted in the hospital boards scheme, which .applies' to the superintendents of hospitals, whoso conditions of appointment and service approximate' those of professors. "If tfce present rate of contribution is maintained, it is no more than justice to the University contributors that the £.300 limit should be removed. Even if that:is done, the position arises" that the University contributors generally provide the full actuarial value of the pensions they obtain, whilst tfie'contributions of others, who pay on increasing salaries, have to be subsidised to. provide/their pension's. . "In the' interest.,of .the proper jtaffingl of ,;the . .university colleges, it ;is. s imjpr,tant that-, there.should be as little difficulty'as possible in ih6 ,way of transfer to the Dominion of members of .staffs of British Universities. The present' superannuation;^ scheme is a serious obstacle to such transfers. In Home Universities the Federated Superannuation. Sheme is in operation.. In it each beneficiary pays1 5 per cent, of his salary, -and the employing institution, an additional 10 per cent. These amounts are .paid tin the form of a premium to an ' insurance company selected by the beneficiary from a list of approved companies. The benefits are chosen by the beneficiary, according'to his circumstances, from the various, options offered by the companies. A professor or lecturer appointed to a New Zealand college from a Home ' University would, in some cases, prefer ■to carry on with the , federated scheme, paying the full premium himself. In our opinion the Bill .should provide that he has the option of doing- so instead of joining the teachers' scheme. ■•'■■■ .;/ THE FUND'S POSITION. Evidence as to the position of the Teachers' Superannuation Fund was given by Mr. C. E. Crawford, who said that the present annual rate of expends ture was as follows:—Allowances. £304,203; refund 'of contributions, £30,000;. administration expenses, £4000; total .rate of expenditure, £338j203. The revenue was:—Contributions, £106,000; interest, £55,000- ---.,. Government subsidy (ordinary), • ■£43,000; Government subsidy lor increase in wido.ws' and children's allowance,,. £4000;. total rate of revenue £208,00.0. "The present • deficiency is, therefore, at the rate of £130,000 per annum," ha said.

-, /'The reduction in salaries . has . accounted for, a fall in contributions to ..the extent, of at least £23,000 per annum, and the reduction in. interest (approximately £18,000) is caused by the reduction under the National Expenditure Adjustment Act, 1932, and by the realisation of investments in order to meet expenditure. The rebate to contributors who did not elect last year to continue to contribute on the basis of the salary prior to the reductions on Ist April, 1931, amounted to £20,970. The rear 1931-32 was the first year in which the income was less than the expenditure, the deficiency being £53,983. This year investments to the extent of £70,000 have already been realised, and the money used for allowances, etc: "The investments at present amount to £1,147,000, of .which £51,800 is Government stock at 5 1-8 per cent, and 5i per cent., and £13f>,040 rural bonds, •5 per cent. The balance is nearty all on mortgage at 6 per cent, (now reduced to 5 per cent.). The amount of interest on mortgage due and unpaid is much greater than in previous years^-31st January. 1930, £1911; 1931 £3862; 1932, 5i3,315."