-8-
than the total for the first decade, if the annual increases be assumed as above. The Directors' calculations put the excess of second total over the first at R 770,000 which corresponds to an annual increase during the second decade of about R 8,273,
were
18. With respect to the proposals contained in the Minute in Executive Council by the Auditor General enclosed with the despatch from Ceylon dated 14th April last, we have to point out that if the suggestions headed "If Government takes over the Fund adopted, the Fund would not be in effect absorbed by the Government, revaluations would be periodically made, and moreover the suggested reduction in the rate of interest would necessitate the adoption of new Tables which would reduce the pensions.
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include a 19. The suggestions headed "If Fund not taken over by Government proposal for the distribution annually to the pensioners of part of the income from interest which, for the reasons given above, is inadmissible.
20. In paragraph 12 of the Directors' Report it is stated that the sole advantage hitherto claimed for the transfer of the Fund to the Government so far as the Directors are aware would be that all trouble in connection with valuations and distributions of surpluses would be avoided, This remark is obviously inaccurate. The advantages of an unconditional transfer consist essentially of (a) the substitution of a permanent and fixed Government Guarantee independent of any fluctuations in the experience of the Fund which might pro- duce a reduction of Pensions; (6) the continuance of interest at the rate of 6 per cent not only for the present Members as is already provided, but also for all future entrants and a consequent maintenance of the pensions at their present high rate which is alone secured by the adoption of 6 per cent interest; while (c) if in justice to the interests of the Colony generally, the rate of interest were reduced upon the Contracts made hereafter with new Members those Members must then submit to reduced Pensions compared with those of existing Members and the anomaly would be presented of the Fund comprising two series of Membership on different scales of Pension, which could not operate otherwise than to introduce dissatisfaction, the fresh Members resenting the higher benefits possessed by the present Members. This serious source of difficulty and dissension is avoided by the transfer.
21. Moreover if the proposed transfer be carried out and the above mentione:l Government guarantee obtained it will be possible to distribute among the Members and pensioners the whole of the surplus ascertained by the contemplated valuation, whereas if the Fund be maintained on its present basis and a valuation be made with a view to a distribution of surplus, it will be necessary to retain in hand some proportion of the surplus (such as 25 per cent) as a precautionary provision against possible adverse variations in the Fund's future experience.
22. A full reserve will also have to be provided, if the present organization be maintained, for future expenses of management (as was done in the valuation as at 31st December 1898) but we understand that if, où the other hand, the Fund be taken over by the Government no such provision need he made, so that the divisible surplus would be considerably augmented on this account also.
Pages misplaced
I now enclose copy of the report of the Committee. The figures and definite expression of opinion promised in the 7th paragraph of the report have not been received for the reason, as I understand, that as Sir M. NATHAN was opposed to the scheme of compulsory insurance, the contributors who favoured such scheme did not consider it worth while further
pursue the subject.
to
5. Upon receipt of Your Lordship's despatch under acknowledgment, it was with its enclosures printed and circulated among all the contributors to the Fund. A meeting of representatives from each Department and of the Directors of the Fund, was subsequently held and was presided over by the Treasurer who is Chairman of the Directors.
Mr. A. M. THOMSON who is an advocate of the transfer of the Fund to the Government, explained the purport of Your Lordship's despatch, and the question was fully discussed. But the great majority of the contributors and all of the Directors, except the Chairman, were opposed to the transfer of the Fund.
6. I now enclose copy of a memorandum in which the present Directors of the Fund with the exception of the Chairman (Mr. C. Mel. MESSER, Acting Treasurer) have set out the views of the contributors on the question of the taking over of the Fund by the Govern-
ment.
35
The figures therein quoted as to rates of interest prevailing in the Colony are correct. 7. 1 understand that the majority of the Directors and contributors are considering a scheme of compulsory insurance which would remove the unpopularity of the present Fund for the reason that each contributor would know that he, his heirs or assigns would even- tually get some benefit in return for his contributions: while all or very nearly all the Direct- ors and contributors feel that the Hongkong Fund has had such a specially favourable start and is accumulating so rapidly that they may confidently look forward to the possibility of an increase in pensions even on the Ceylon rates if the Fund is kept separate and fresh valuations are made from time to time.
8. In these circumstances I would recommend that the proposal to transfer the Fund to the Government be dropped, and that if necessary the actuary be consulte as to whether the tables attached to the Ordinance can with safety be adopted. If the report is favourable I would ask Your Lordship to sanction their inclusion in the Ordinance.
I take this opportunity of acknowledging the receipt of your despatch No. 25 of the 5th of February.
The Right Honourable
The EARL OF ELGIN, K.G.,
I have, &c.,
F. H. MAY.
His Majesty's Principal Secretary of State for the Colonies,
$',
Jr.
(Signed) (Signed)
T. E. Young.
G. II. RYAN,
HONGKONG, 18th November, 1905,
SIR, The Committee appointed by Ilis Excellency the Governor to put forward the views of the Civil Service on the subject of the Widows and Orphans Pension Fund have the honour to report that after consulting all contributors to the Find they find :-
That the Service is unanimously opposed to the proposal that the Fund should
be transferred to the Government.
That a majority of contributors are in favour of a compulsory insurance scheme
in place of the present Pensions Scheine.
That a minority prefer that the existing scheme should continue, but are of the opinion that the pensions are insufficient in view of the large amount of the total annual contributions. They further suggest that the daughters of deceased officers should be supported from the Fund until marriage instead of until the age of twenty-one years only.
No comments yet.
Private notes are available after approval.