470
PUBLIC RECORD OFFICE
Referance :--
C.O.882/11
PUBLIC RECORD OFFICE, LONDON
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Enclosure in No. 4.
MEMORANDUM ON THE RECOMMENDATION OF THE DONOUGHMORE COMMISSION.
THE report of the Donoughmore Commission recommends that officers be given the unqualified right to retire on proportionate pension with compensation for loss of career, either immediately or at any time in the future, the rates of pension and the scale of compensation to be calculated on such basis as the Secretary of State may were probably borrowed from determine." The words "proportionate pension
India without appreciation of the difference between Indian and Ceylon methods of calculation of pension, but it is clear that the Commissioners intended that officers on premature retirement should be given an additional compensatory pension in respect of loss of career over and above the pension for which they would be eligible by length of service and final salary if they retired on pension under the ordinary pension regulations.
2. The Scheme proposed by the Civil Service Association:-I have already stated in 23 my opinion that the terms proposed by the Civil Service Associa- tion (stated to be an adaptation of terms given to Irish Civil Servants in circumstances which I do not regard as analogous to those with which we have to deal) are excessive. It will be noted from the statement annexed to 23 that under the Civil Service Association scheme Mr. Phillipson at the age of 38 years and 11 months would be entitled to retire with a life annuity of £612 10s, which is more than double the At the pension to which he would have been entitled if his post had been abolished. age of 40 this life annuity would cost somewhere about £10,500.
3. Mr. Stace at 44 years and 7 months would be entitled to a life annuity of £936 which is more than half as much again as he would be entitled to if retired on medical certificate and more than one third as much again as he would have been entitled to on abolition of office. The pensions are excessive right down the list, including the pension of Mr. Thaine, who would receive an increased pension in spite of the fact that he would be a year and a half over the age at which an officer can either retire or be called upon to retire in the ordinary course.
4. I shall deal later in this report with the ancillary questions regarding war service, commutation, and leave and passages dealt with by the Civil Service Association.
5. Some general considerations:-It must be recognized-and I think the Civil Service Association have entirely overlooked this point-that even an ordinary pension equivalent to that for which an officer is eligible on retirement on medical certificate becomes immensely more valuable as soon as it is converted into a pension for which the officer is eligible whenever he likes to ask for it. By giving an officer a continuing right of option to retire he is given a right to a pension which matures whenever he chooses to take it, in place of a right to a pension which matures only in certain circumstances which may never exist. The officer can hold on to his post while he looks for fresh employment, knowing that if he is unsuccessful he can stay where he is, while if he is successful he can take his pension with him. The alteration of the character of his pension represents in itself an important compensatory grant.
6. Another point to be borne in mind is that the compensatory scheme has to be applied universally to all officers within its scope. Many of these-I should say the great majority-will scarcely be affected at all by the new Constitution. If the scheme adopted is to be sufficiently liberal to satisfy the theoretical claims of those few who will be seriously affected by the change it will necessarily be much too liberal for the great majority. It is necessary, therefore, to adopt terms which will suffice for what may be regarded as the average degree of injurious affection. It is natural that the Civil Service Association should consider the matter from the point of view of their own Service, but it has to be considered from a wider point of view by those who are to decide the terms to be granted.
7. "Abolition "terms considered:-The terms on which pensions are granted on abolition of office (section 7 of the Pension Minute), provide for pensions made up of two elements, viz., a basic pension calculated as if the officer retired on a medical certificate and a compensatory pension. Prima facie these terms would seem to be the natural terms to apply to the average case of an officer who exercises his option of premature retirement. Indeed, in one respect, these terms are, prima facie. too generous because they are intended to apply to cases where the officer's retirement is compulsory, whereas in the cases under consideration there will be at least no direct compulsion.
8.
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Under section 7 of the Pension Minute the compensatory pension (that is
the amount of annual pension which they would receive in addition to a basic pension calculated in accordance with section 2 of the Pension Minute) to officers who have completed 10-years' gross service works out as follows:-
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After 12 years' service counting for pension After 14 years' service counting for pension After 16 years' service counting for pension After 18 years' service counting for pension After 20 or more years' service counting for pension (pro-
vided the age at retirement is not more than 50) After 20 or more years' service (if the officer's age at
retirement is 51)
After 20 or more years' service (if the officer's age at
retirement is 52)
After 20 or more years' service (if the officer's age at
retirement is 53)
After 20 or more years' service (if the officer's age at
retirement is 54)
After 20 or more years' service (if the officer's age at
retirement is 55)
9.
JJ
35
1/60th of final salary. 2/60ths 3/60ths 4/60ths
5/60ths
7
++
11
4/60ths
31
3/60ths
11
2/60ths
11
1/60th
Nil
Note 1.-Credit is given for complete months of service intermediate
between the shown above.
years
2.
In comparing the above with section 7 of the Pension Minute it must be borne in mind that the sixtieths in that section include, while the sixtieths in the above table exclude, the climate bonus to which the officer is entitled irrespective of abolition of oflice.
It will be seen that in the case of officers with at least 10 years' service counting for pension the fraction determining the compensatory pension tapers at both ends of the service, increasing up to the 20th year of such service, remaining fixed until the officer's age at retirement is 50, and then decreasing until the officer's age at retirement is 55, when it disappears. In the case of a group of officers (like the Ceylon Civil Service) on the same salary scale the amount of compensatory pension grantable on abolition of office naturally follows the curve of the fraction determining the pension,
10.
A possible criticism of the operation of section 7 of the Pension Minute is that, since the maximum fraction of final salary is not grantable until the officer has had 20 years' pensionable service, and then remains at that maximum unless the officer retires after the age of 50, the compensatory fraction awarded to an officer who abandons the best part of his carcer is either identical with or actually less than that awarded to an officer who abandons only a comparatively small part at the end of his
career.
11. There is something to be said for this criticism. While, of course. the younger officer may be expected to draw both his basic and compensatory pension for a longer period, the older officer will have both his basic and compensatory pension calculated on a higher salary, and it is probable that in many cases the actual com- pensation for loss of career would be rather more to an officer retiring at, say, 50 than the compensation awarded to an officer at, say, 35, assuming both officers to be in the same salary group. But it is not admissible, in my opinion, to give any officers, whatever their age, anything less than "abolition" terms. The question for decision, therefore, is not whether " abolition" terms are too generous for the older officers but whether are as generous as they ought to be for all officers. If we must equalize the position of the younger and older officers it will be necessary to give the former something more than "abolition "terms.
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"
12. Abolition terms recommended.-My own view is that "abolition " terms are as much as the Colony can afford and that they will meet the requirements of justice to any officer who decides to exercise his option of premature retirement. My own recommendation, therefore, is that Order in Council pensions, i.e.. pensions for which officers are eligible on retirement in circumstances contemplated by the Order in Council. should be equivalent to pensions grantable under section 7 of the Pension Minute. I would, however, allow an officer whose length of service has qualified him for a gratuity only (ie., an officer with less than 10 years' gross service) to be given a compensatory pension based on his actual service as well as the gratuity (the compensatory pension being in lieu of the 50 per cent. addition to the gratuity for which section 7 of the Persion Minute provides in the case of abolition of office)