301
of error when actuaries of high standing like Messrs. Young and RYAN are employed. For practical purposes therefore, the accuracy of the pension tables depends on how closely the mortality experienced by the Fund approximates to that embodied in the table of mortality.
8. When the Hongkong Widows' and Orphans' Pension Fund was founded, there were hardly any precise data of the mortality experienced by Government officers and their wives in tropical colonies, and the Northampton Table of Mortality was accordingly used. as the most satisfactory basis then available. Similar funds have however been established in several other colonies as mentioned above, and during the last twenty years statistics of the mortality experience of those funds have become available and a table of mortality has recently been framed after an examination of the data furnished by Ceylon, Jamaica, Trinidad and the Straits Settlements. The actuaries' report on the subject was enclosed in Mr. CHAMBERLAIN's despatch No. 447 of the 17th of December, 1903; you will observe from it that the actual number of deaths was compared with the number allowed for by the Barbados Mutual Table, which was considered to afford a good standard for the measurement of the rate of mortality prevailing among a body of persons residing in a tropical climate but otherwise favourably situated, and the result was that the ratio of the actual number of deaths to the number allowed for, was 69 among Asiatics and Eurasians, and 79 among Europeans in Ceylon, .66 in Jamaica, .90 in the Straits Settlements; and 1.06 in Trinidad. The actuaries accordingly framed a table on the combined Ceylon and Jamaica experience and recommended the adoption for the Straits Settlements and Trinidad of the Barbados Mutual Mortality Table and of Pension Tables framed on it.
9. In this investigation the statistics of the Hongkong Fund were after careful consi- deration rejected as being too scanty to furnish any indication of the probable future ex- perience of that Fund, and the great difficulty of dealing satisfactorily with so small an institution had previously been emphasized in Mr. Youxe's Report on the Valuation of the Fund as it existed on the 31st of December, 1900.
•
10. That valuation, which was of course based on the old Pension Tables, after making allowance as far as possible for the peculiar character of the experience of the Fund, showed that the gross liabilities of the Fund then amounted to $232,337 and the surplus to $10,275.54 or that the surplus was between 4 and 5 per cent of the liabilities. In the case of the valuation of the Straits Settlements Fund (also as on the 31st of December 1900) the surplus disclosed was a little under 10 per cent of the gross liabilities (the same pension Tables being used) so that the Straits Fund was found to be in a rather better position than the Hongkong Fund. But as I have stated in paragraph 8 above, the mortality experience of the Straits Settlements was 90 as compared with .66 in Jamaica and .69 and 79 in Ceylon. In the adoption of the pension tables framed upon the more favourable mortality experience of Jamaica and Ceylon, the service of the Straits Settlements has, as you will see, been treated liberally; and, as far as the small size of the Hongkong Fund allows a definite opinion to be expressed, the position of that Fund is such that the adoption of the Ceylon Pension Tables for use in Hongkong would also be quite as liberal a measure as in the Straits Settlements.
It is however very desirable that the pension rates in Hongkong, the Straits Settlements, and the Federated Malay States should be the same, especially as for some purposes the three administrations are manned by a joint service; and, after a somewhat rough actuarial examination of the effect on the reserve of the Fund of adopting the Ceylon Tables, my predecessor came to the conclusion that, while not completely clearing up the question, this examination was sufficient to justify their adoption in the event of the Hongkong Government taking over the Fund. But the actuary has never committed himself to recommending the adoption of of the Ceylon Tables in the case of the Hongkong Fund not being taken over, and the same applies to the concessions to bachelors and widowers without pensionable children. It must be borne in mind, that if the Fund is not taken over by the Government, it would only be possible to sanction the adoption of such revised tables as the actuary might definite- ly recommend as suitable for the circumstances of Hongkong.
11. I will now proceed to explain the reasons for the abolition of the Fund. By this course the interests of members of the Fund are in no way injured. The Government binds itself to pay pensions according to Pension Tables mentioned in the Ordinance, and the rates contained in those Tables are based on the assumption that compound interest at 6 per cent is, and will continue in effect to be, paid by the Government. The only advantage which Government obtains is that it is relieved from the necessity (inherent in the old system of these Funds) of contributing 6 per cent compound interest on surpluses, should such exist,