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IV.
THE FIFTH PA AGRAPH OF YOUR LETTER.
The recalculation of the pensions" as if the 8 Tables had been in operation during the whole period of the contributions on which the pensions are based "; and my views as to
THE PROPER MODE OF COMPUTING AND APPLYING THE FENIONS
REVISED ON THE BASIS OF 8%.
This question is practically the most vital element in the present consideration both in connexion with the feasibility and accuracy.of the work, and essentially) in its supreme bearing upon the financial solvency of the Schemes. In this paragraph of your letter it is stated that the original intention of the Secretary of State was that" the new rates of pension would bẹ calculated as if the 8% tables had been in operation during the whole period of the contributions on which the pensions are based; that the Trinidad and Straits Settlements have accepted the Scheme on this basis; that this will produce considerably greater pensione ( in cases where contributions have been made over a con- siderable period prior to the 1st. January 1920) than under the Ceylon arrangement."
So deeply and gravely an I impressed by this mode of applying the new pensions at 8) that I solicit your patience while I discuse it in some detail and express my judgement as an Actuary upon the correct mode.
After careful search among the Papers I have received in connexion with the change in interest from 6 to 8, 1 can discover no trace of this mode. Had I been acquainted with the proposal it would have been my duty to advert to it seriously upon technical and business grounds.
My first knowledge of the subject appears to be the refer ence in paragraph 2 of the despatch No. 165, dated 29th. In connexion April 1922 to the Government of Mauritius.
1230/2 M'has with that despatch, I wrote on the 31st. June 1912, and
31076/22
$1500 20767/20
in section 2 of that letter. I referred specifically to the preceding paragraph 2, and (besides treating of the difficulties of carrying out any actuarial process on such a mode), I added that "the financial effect would be serious". At a later stage 1 recur to this letter (section 5 infra).
Paragraph 2 of the preceding despatch No. 165 cites a Predecessor's despatch No. 127, dated 23rd. April 1920 to the effect that the Tables of pensions ( at 6) are to be recalculated on the basis of 8 being allowed on all contributions" both before and after the date of change". But in the cited despatch No. 127 ( 23rd. April 1920) to the Government of Mauritius I find no suggestion of the application of the revised Tables to pensions and pension-contracts from the original dates of entry of members.
91, G.
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