The New Zealand Times (PUBLISHED DAILY.) MONDAY, DECEMBER 9, 1878.

New Zealand Times, Volume XXXIII, Issue 5523, 9 December 1878, Page 2

The New Zealand Times (PUBLISHED DAILY.) MONDAY, DECEMBER 9, 1878.

Amongst the duties imposed upon the Registrar of Friendly Societies by the Act of 1877 are the preparation for the use of Societies of model forms of accounts, balance-sheets, and valuations, the collection and publication of statistics of life and sickness, and of information as to the application of such statistics to the business of these Societies; and lastly, but not least in importance, the construction and publication of tables for the payment of sums of money on death, sickness, old age, or other contingency which may lawfully be provided for by assurance under the Friendly Societies Act.

When the value of these Societies as provident institutions is considered, and regard is had to the very large number of persons, men, women, and children, who in this Colony have a direct interest in their stability and wellbeing, the importance of the subject can hardly bo over-estimated. It has long been known that, here as elsewhere, from one cause or another, chiefly ignorance, the financial basis of these

benefit societies was unsound, and that the causes of that unsoundness were : Ist, a general insufficiency of contributions required from members to secure the promised benefits ; 2nd, that as a rule the contributions required were the same for all ages—for the youth of eighteen, whose chance of requiring sick relief under ordinary circumstances is small, as for the man of fifty, in whose case the average of need would be necessarily higher ; and 3rdly, that what are known as the expenses of management, and in many oases also the current charges for medical attendance and medicine for the members, were thrown upon the regular benefit fund contributed for a specific and different purpose, instead of being provided for by a separate levy. It is admitted that for a long time the Colonial Government failed to discharge the duties imposed upon it by law in respect to Friendly Societies, and that the privilege of registration was obtained by many of them without such a scrutiny of their scheme of contributions as was necessary. When, however, the increasing number of the Friendly Societies, and the magnitude of the interests involved, called official attention to the question and to the need of a strict administration of the existing law, there was some resistance to what was then regarded as an impertinent interference, and there was naturally much dissatisfaction amongst the members of the Societies to whom registration was refused. Better knowledge, however —for the diffusion of which in New Zealand the Societies are indebted greatly to the labors of Mr. Leslie and Professor Black, of Dunedin—and time, have smoothed over the difficulties, and it is satisfactory to know that there is now a general disposition on the part of these associations to got themselves into better and safer ways, and to profit by tiie information placed at their disposal. Wo have now before us printed copies of papers recently prepared by the Begis-tar-General for the use of Friendly Societies: one is an introduction to “ A Table of Bates of Contrxbu- “ tions,” and the other is a “Memo-, rand urn” explanatory of certain points in the original Act of 1877, and of the operation of the amending Act of the last session. Both papers are of interest, and but for their length we should gladly have found place for them in our columns. They elucidate the fundamental detects which wo have above enumerated as existing in the constitution of so many Friendly Societies, and they point out the remedy. We give the following extract as illustrating the evil effects of defraying medical expenses from the sick and funeral fund, and the need of providing for such charges, either by placing them upon the management fund, or by making a separate and special contribution for them: —

In a certain society, registered under the Mend ? Societies Acta of tills Colony, the contributions to the sick and funeral funds of the brandies arc eucli tbat, in the present, state of our knowledge respecting sickness and mortality, it cannot bo pronounced certain that they will prove permanently sulfic ent to meet the sick and funeral bandits alone, on the as-, sumption of an average experience. The proboblllty Is that, if sufficient, they will be found hardy sumdent for that purpose. Yet the premium Income so accruing, which should accumulate to meet the and funeral liabilities alone. Is subjected to ft tax of from f»0 to 60 per cent, annually to meet the expenses connected with medical attendance. It is evident, therefore, that the funds cannot long boat the strain of this additional charge. If tUo present system WWO

continued the bankruptcy of all the branches of this society would bo inevitable. As a matter of fact, the benefit funds of some of them are at a very low ebb. This will be evMent from the following figures, which represent the condition of five of the branches as at 30fcU June, 1870

The average amount of funds per member shown in tho above table is exceptionally low as compared with the generality of societies established at about the same date, and granting similar benefits. The average amount of the benefit funds per member at tho end of the year 1876 was as follows In 75 lodges of tho Manchester Unity Odd Fellows £0 8 4} In 42 courts of tho Ancient Order of Foresters .. .. • • • • 417 4J In 140 societies, chiefly branches of . the two above-mentioned orders 7 5 5

As those are not, on an average, much older than the five branches enumerated in tho former table, and as the sick and funeral benefits granted by them are in the majority of cases nearly alike, while the total liability of tho benefit fund would be very much greater in tho five branches (owing to the extra charge for medical expenses) should the present system be continued, tho perilous position of these five branches is at once apparent. Two other branches of tho same society have recently broken up, and tho Registrar has been informed that the dissolution was owing to lack of fund.

With reference to the practice of requiring a uniform contribution from members of unequal ages tho table is very suggestive. If we take a particular item of benefit, viz., “ allowance of £1 “ per week during the whole period of “ sickness,” we see that to secure it for a, member of eighteen years of age the annual payment would be £1 11s. Id., whilst for the same benefit a member forty-six years of ago ought to pay annually £4 Bs. sd. A young man of twenty, for the same benefit, ought to pay £1- 13s. annually, whilst the man of 40 ought to pay £3 7s. 7d. If the smaller of these latter sums were fixed as the general contribution of members, the Registrar-General shows that it would require an initiation fee of £26105. from the older man in order to make their respective contributions just and equal. Wherever this want of equity iii apportioning payments to benefits has existed, the experience in England is that by degrees the younger men leave the Society, arid in time, when the claims of the older members become more numerous and pressing, the means of meeting them are found to have been steadily, even if slowly, withdrawn. Thus urges the Registrar;—“Societies charging a uniform “ contribution, or a contribution which, “ although graduated according to age, is “at a lower rate than that set forth in “ the subjoined table, are earnestly ad- “ vised to reconsider their position, and “to reflect on the disastrous oonsa- “ quences which are almost certain to “ result from the perpetuation of a scale “ of charges much lower than the scale “ which actuaries are unanimous in re- “ garding as the lowest which can be “ adopted with safety. The fact that “ the funds of a Society have been “ steadily accumulating since the time of “its establishment is no guarantee “ against tho approach of bankruptcy at “ no distant date, since, from the nature “ of the risks undertaken, it is evident “ that the heaviest liabilities must “ usually be long deferred.” A caution is given also against the practice, we are afraid but too common, of multiplying Societies or branches, and thus necessarily reducing the number of members in each. The Registrar thinks that calculations based upon the law of averages of sickness and mortality cannot safely be applied to Societies with less than one hundred members, and he offers in conclusion a suggestion well worthy of serious consideration, which we quote : —“lt is “ to be hoped that the allowances in old “ age will be made no longer contingent “ on sickness, but that they will assume “ the form of a certain and permanent “ annuity. A superannuation of this “ kind would be a benefit of a much “ more satisfactory nature than an allow- “ ance contingent on sickness at an age “ when the line of demarcation between “ health and disease is rarely very dis- “ tinct. Moreover, since tho data as to “ sickness in extreme old age are too “ scanty and divergent to merit much “ reliance, and since the value of a oer- “ tain annuity depends only on the rate “ of mortality (the rate of interest being “ given), the liabilities of a society would “ be rendered capable of very much more “precise computation by the introduo- “ tion of the annuity system. Should “ any society show signs of desiring to “ effect a reform in this direction a “ series of tables will be issued from “ this office suited to the class of benefits “ in question.” We have not, and it is to be hoped that we may never need, a poor-law in'this Colony. Self-reliance and the exercise ef a very moderate self-denial during the season of youth and health, would provide an annuity for the time when, as the Registrar says, “ the line of demarcation “ between health and disease is rarely “ very distinct,” and would save men from the sorrows of a refuge, the charity of an hospital, or the tender mercies which the law and the police bestow upon the unhappy “ vagrant.”

EstabNo. of Benefit Funds, £ S- d. Benefit Funds per lished. Members Member. £ s. d. Branch No. X 1864 181 30 1 0 0 4 7 Branch No. 2 1804 28 28 1 7 1 0 Of Branch No. 3 1805 87 115 15 10J 1 6 H Branch No. 4 1808 41 16 8 7i 0 8 0* Branch No. 5 1809 32 31 O 52 0 10 5