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546
be real effect) throughout the entire period of contribution, in reality, Kemploying 8%) granted a retrospective Government-contribution of 4%
hroughout the) during Period I mentioned supra) in spite of the fact ntire duration) that 2% per annum had been considered adequate for this f the contract) Period. Here this process correct (i.e. a contribution
of 4%) the rate at which future pensions should be calculated, in order to preserve uniformity in the concession, from Period II would be 10% (1.0. 6% the present market-rate the 4% virtually granted for Patdod i.).
19:
38 ba
RECAPITULATION: the fifth paragraph of your letter:
1. With respect to (a) the mode of applying the 8% to every
contract for pension from its origin, and (b) the mode which alone is correct in my judgment as an actuary, and from the point of view of practical business, I am induced, -regarding their importance, though at the risk of some diffuseness- to recapitulate.
I recur to my letter to you of the 21st. June 1922 (Mauritius); and I divide my remarks into (i) the pract- icability of ascertaining the facts of each contract in such a form, and with such accuracy that complete con- fidence (essential to all actuarial investigations) might be reposed in the recorded data, and (ii) the effects of that mode upon the solvency of the Schemes where the mode is pursued. Upon these two pointe I cite section II of that letter, viz- "I beg leave also to refer to the expression de novo' in paragraph 2 of the despatch to
If I the Governor, No. 165 of the 29th. April 1922.
this course rightly understand the phrase 'de novo' would involve a tracing of the history of each member (existing on the 31st. December 1920);
his 8 pension- 8% pension for his initial contribution;
and gumming increment for each additional contribution;
Duch a these elements as the complete revised pension.
the labour would be proceeding would be impracticable; interminable; and the process would be subject to a
The financial effect multitude of chances of error. would be serious. I might expand this by showing that such an analysis would also necessarily involve the wives
but this is needles8. Nor is of the various marriages;
17
1
finding the
the
it requisite at present to indicate other sources of complexity and difficulty which might occur (e.g. appli- cations for arrears of pension in respect of the addi- tional 2%). But it is well to refer briefly to the "financial effect" upon the Scheme. A Scheme, say, started on the basis of 6% compound interest; meaning of this is that at any stage the financial sufficiency of the Scheme for the discharge of its obligations is ascertained by finding the equivalence between (1) the find in hand (that fund consisting of the balance of past contributions ever past payments of every
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