D.—5A.

but also removes any grievance of members under age 20 that for the same rate of contribution and pension benefit at age 60, they are called upon to pay contributions for a longer period than those entering at age 20. (b) Increase by 2 per cent, of salary in respect of their future service the contributions of contributors who joined prior to the Ist January, 1908, at ages under 50. It may be pointed out that as compared with contributors who joined the scheme on or after the , Ist January, 1908, the class of contributors under review received a free gift of that portion of their pension based on service prior to the establishment of the Fund, and they have the further advantage, as compared with those joining the Service after 24th December, 1909, of not being subject to the arbitrary pension limitation of £300 per annum on retirement. Accordingly, it is anomalous that for a greater benefit they should be paying 2 per cent, less on salary by way of contributions. As the suggestion is to charge these contributors only the same rates of contribution as are paid by their fellow-officers and further, is not made retrospective, but only in respect of their future service, no reasonable objection could be raised by the contributors concerned. (c) Increase the present contribution scale by 1 per cent, of salary in respect of all new employees between, ages 25 and 50 joining the Service on or after, say, the Ist January, 1930. This would not only help the finances of the Fund, but would give a much better graduated scale than is now in force. General Remarks. 30. No report on the Government Railways Superannuation Fund would be complete without reference to the arbitrary pension limitation of £300 per annum imposed on contributors joining the Service after the 24th December, 1909. Arbitrary pension limitations, which to the best of my knowledge are quite unknown in the pension schemes of other Governments or of large commercial institutions, have no justification in theory, and in practice lead to many contributors being called upon to pay more in contributions than their pensions are worth. No staff pension scheme carrying an employer's subsidy can be considered a good one if every member does not get, at the very least, full value for his own payments. Of far greater importance, however, than the injustice to individual State employees is the fact that the imposition of an arbitrary limitation of £300 on pensions undermines the very purpose for which a staff pension scheme is usually established —namely, to assist in securing the highest efficiency in the Service. A good superannuation scheme not only attracts and retains the best type of officer, but also helps to keep clear the lanes of promotion by facilitating the retirement of the older officers on a pension in some way commensurate with the degree of comfort previously enjoyed by them. 31. It is quite clear that neither of these aids to efficiency is secured if able officers now joining the Service can only be offered the prospect, after attaining the highest administrative positions in the Railway Service, including that of General Manager, of being compelled to retire on an annual pension of £300, approximately equivalent to the salary paid to the average junior clerical officer after completing ten years of service. The position regarding the retirement of high officials on small pensions cannot be more forcibly stated than in the following extract from the evidence given before the Imperial Board of Trade Commission on Railway Superannuation Funds by Mr. George King, F.1.A., F.F.A., probably the greatest living authority on pension funds :— " With such a man, either the Railway Administration would be constrained to keep him in the Service when perhaps his health was such as to unfit him for duty, and they would have to pay some one else to do his work ; or they would be obliged to retire him on a small pension and supplement it from other sources ; or they would be obliged to retire him on a small pension without supplementing it, and leave a valued officer in comparative penury in his old age. A man of that calibre could do much better for himself in other walks of life and with such a poor prospect before him he would leave the Service in the early years on realizing his own powers and the Service and the public would suffer." 32. Up to the present the position has been masked by the fact that those who have already retired were not subject to any pension limitation, since it only applies to officers joining less than twenty years ago. Obviously the bulk of these are many years short of the retiring-age and of the balance joining the Service late in life, none of those who have retired on salaries up to £900 per annum could possibly have been affected by the restriction. I am strongly of opinion that the abolition of the present arbitrary pension limitation would be in the best interests of the Railway Department. 33. In conclusion, I have to acknowledge the assistance of the small but efficient staff engaged in carrying out the heavy work of the valuation. C. Gostelow, Fellow of the Institute of Actuaries (London), Government Actuary.

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