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PUBLIC RECORD OFFICE

Reference:~~

C.O.882/11

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

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3. We feel that the cliange from Crown Colony Government to the Government provided for in the new Constitution effected a change in the conditions of service in Ceylon no less serious and material than that which took place in Ireland, and it was for this reason that we asked for, and felt we were entitled to, a measure of compensa- tion similar to that granted to Civil Servants in Ireland.

4. At the recent Conference, His Excellency pointed out that neither the Ceylon Government nor ourselves were in possession of detailed knowledge of the change of conditions of service caused by the change of Government in Ireland or India, whilst the Secretary of State was in a position to compare the conditions in all these cases with ours, and as he had decided that terms similar to the Irish terms could not be given to us, he must be deemed to have decided, after comparison of our circumstances with those of Ireland, that we were less prejudicially affected than Civil Servants in Ireland. Whilst we admit that the Secretary of State is in possession of more information than the Ceylon Government or ourselves, and is therefore in a better position to form a just comparison, we would venture to believe that there are very few, if any, European Government servants in Ceylon to-day who would not much prefer to complete the remainder of their service under the Government of the Irish Free State than under the Government which will be set up under the new Con- stitution in Ceylon. Our fear is that the Secretary of State may not have fully appre- ciated the nature and extent of the change of conditions of service in Ceylon to which concrete expression is given by the recent Order in Council.

5. The Secretary of State after full consideration of our representations and the proposals of the Ceylon Government has indicated his opinion that provisions for a basic pension of 1/50th for each year of service counting for pension together with an addition as compensation of 50 per cent. of such service, subject to certain maxima, would not be unreasonable. We have been informed by His Excellency that he regrets that he is not able to recommend the adoption of these terms, but we would respect- fully urge that if the Secretary of State, with his fuller knowledge of the conditions in other cases considers these terms reasonable, we may fairly ask that the Ceylon Government should accept his view in this matter.

6. Our own view of these terms is that though they fall short of what we feel is reasonably due to us in comparison with the terms granted in other cases, yet with certain modifications to which we refer later in this memorandum, they would at least afford terms of retirement which the Services would feel they could at the worst fall back upon should necessity arise.

7. The Secretary of State suggested, as a possibile alternative, the addition of 33 per cent. of the service for pension with a smaller maximum addition. His only reason for suggesting this was the possibility that the first scheme might be considered too expensive, though he did not himself consider that this was likely to be the case. We have His Excellency's assurance that he will not allow the present condition of the Colony's finances to influence his opinion as to what is fair and reasonable com- pensation, and as this alternative scheme would be only very slightly better than "abolition "terms and would be subject to the same fatal objection that it would in fact be so inadequate as to mean a denial of the right to retire, we do not propose to discuss it further.

8. His Excellency has given tentative instructions to the Treasurer to prepare a scheme providing for a basic pension equal to the pension awardable on retirement on Medical Board with a maximum addition, by way of compensation, of 74/60ths. Roughly, this scheme provides for an addition as compensation of 50 per cent. of service after the 25th birthday until the age of 40 is reached, when the maximum compensatory addition of 74/80ths is given. This maximum, it is proposed, should continue for 3 years and thereafter be graded down to nothing at age 55. The scheme as a whole, apart from questions of detail, we consider entirely inadequate. While it approximates in net result in the earlier years to the Secretary of State's scheme, it becomes most markedly inadequate in the middle and later stages. From the age of 44 onwards it would be more unfavourable than the Secretary of State's 334 per cent. scheme, whilst from age 45 onwards or for the last 3rd of an officer's service it would afford the minimum "abolition terms only. Except in its early stages, the scheme would therefore be entirely inadequate and unsuitable, and this would apply to any scheme giving a maximum addition by way of compensation as low as 74/60ths. Apart from its inadequacy, the scheme would he unsatisfactory for general application inasmuch as the basis of compensation is completed service up to age at retirement of 40, and thereafter the basis of compensation is age. Under this scheme, therefore, an officer who joined the service at the age of 29 would, if he retired at the age of 39, receive 2/60ths less compensation than an officer who retired at the same age of 39 but who joined the service at the age of 25. If each of these officers

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remained in service another year they would both receive on retiring at the age of 40 the same compensation, the officer who had entered the Service at the age of 29 receiving an additional 24/00ths as compensation in respect of this particular year's service.

9. The taking of the "Medical Board" pension as the basic pension is also unsatisfactory as compared with the scheme proposed by the Secretary of State, and reacts unfavourably upon the older members of the Services.

10. Though there is every reason to award the full climatic bonus of 5/60ths to an officer who is compelled to retire on the grounds of ill-health, even though he may have completed only 10 years' service, the same considerations do not apply to an officer retiring in good health. An officer in good health retiring after 10 years' service cannot reasonably claim to have earned the same climatic bonus as an officer who has spent 30 years or more in the tropics. Under the proposed scheme, the allowing from 10 years' service of the full climatic bonus of 5/60ths (the greater part of which cannot in our view be considered in the earlier years to be earned), means that in the carlier years only a small proportional addition by way of compensation is needed to make a considerable proportional addition to the pension actually earned The application, by service and to bring the total pension to a reasonable amount. however, of this low proportional addition by way of compensation to the later periods of service, where the climatic bonus remains at 5/60ths but forms a very much smaller proportion of the earned pension, reacts most unfavourably upon the officers of longer service. In other words, officers in the early years after obtaining pensionable status are given under the name of climatic bonus what is really not earned pension but compensation, and the compensation awarded as such is at a very much lower rate.

11. The proposal of the Secretary of State that a pension of 1/50th for each year of service should be regarded as the earned or basic pension is, we submit, both fair and satisfactory and affords a more just distinction between what is earned pension and what is pension awarded by way of compensation.

12. With regard to the Secretary of State's scheme of 50 per cent. addition as compensation, we submit that the fixing of a maximum addition of 100/600ths or 8/50ths, which in the case of the Civil Service means that there is no increase in compensatory pension after 16 years' service (or say age 40), makes the scheme unduly and disproportionately unfavourable to officers in the middle of their service, or say from 40 to 45, the period at which it is generally agreed the compensation should be at its maximum. On the other hand, the scheme suggested by the Secretary of State would, as it stands, afford an appreciable measure of compensation to an officer retiring at the age of 55 or even at a later age. As was stated by our Chairman at the Conference with His Excellency, we admit that inasmuch as an officer may under the conditions of his service be called upon to retire at any time after attaining the age of 55, his claim to compensation, if any, after he attains that age is very much less than it is when he has a definite right to further enjoyment of his salary. We therefore agree with Government's view that the portion of pension awarded as com- pensation under this scheme might be graded down to nothing at the retirement age of 55. This would leave a very small addition to the Medical Board pension available at the age of 55 where the officer had more than 25 years' service, measured by the amount by which the difference between his pension calculated on a basis of 50ths exceeded the Medical Board pension calculated in 60ths with an addition of 5/60ths climatic bonus. This small difference would, we consider not be disproportionate to such loss as the officer suffered by reason of his inability to serve until 60 subject to the approval of Government.

13. We would urge, therefore, that the maximum addition by way of com- pensation should be raised to 10 years added to actual service, i.e., 10/50ths or 120/600ths, whilst on the other hand it should be laid down that no officer should be entitled to receive a greater number of 50ths as compensation than that number which, if added to his age, would bring that age to 55. For Civil Servants, assuming the age of joining the service as 23 years, this would mean that the maximum com- pensatory addition of 10/50ths would be received at the age of 43 years, and this addition would continue to be received until the age of 45, after which it would be diminished by 1/50th each year, and disappear at the age of 55. Owing to the reduc- tion of compensation during the concluding years of service (when each 1/50th repre- sents the greatest value), this scheme would almost certainly involve less immediate charge upon the revenue than that suggested by the Secretary of State, whilst it would It would at the same time in all probability involve less total cost in the long run. give more compensation in the middle period of service than the scheme suggested by the Secretary of State-the period at which the latter scheme is inadequate.