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2. With regard to the question of the transfer of the Fund the Committee desire to point out that the Government has, under Section 13 of Ordinance No. 30 of 1890 and Section 5 of Ordinance No. 3 of 1900, guaranteed that all contributions shall during the con- tinuance of the Fund bear interest at the rate of 6% per annum.

3. Under present circumstances the Government employs the Fund for purposes of General Expenditure paying 6% compound interest for the use of the money. The Com- mittce understands that it is now proposed that the Government should continue to use the money but should cease to pay interest upon it, on the ground that the Government will eventually be called upon to pay in pensions and expenses of management a sum equivalent to the total present capital together with future annual contributions with 6% compound

interest added.

4. The Fund has at the present time a credit balance of $220,000, which at the rate of interest guaranteed by the Government, and with the addition of a year's contributions, estimated at $29,000, would at the close of 1906 be increased to a total of $262,200. The pensions payable in 1906 are estimated at a sum of $5,475 and the expenses of management during that period would probably not exceed the sum of $2,500; so that at the beginning of 1907 there would be a total capital sum of $254,225 which would continue to increase- at compound interest.

5. The Government is apparently of the opinion that the annual expenditure in respect of pensions and cost of management will ultimately equal if not exceed the sum of the annual contributions together with interest on the capital calculated at 6%. The Civil Service on the other hand anticipate that the capital of the Fund will increase so largely as to make it possible at some future date to revise and to increase the rates of pension ; and they are prepared to undertake for themselves the risk that the Government now proposes to undertake, namely that the expenditure may eventually exceed the income.

6. With regard to the second of the Committec's findings it is urged by a majority of the contributors that each officer is in natural justice cutitled to the eventual return with interest of that portion of his salary which he has been compelled to surrender. They sug- gest in place of the existing scheme a scheme of compulsory individual insurance based upon the present 4% reduction of salary with the stipulation that the policies shall be held by the Government or by a Board of Directors and that an officer shall have no power to alienate his policy from his wife or children or to discontinue his payments thereon.

7. The Committee have taken steps to ascertain the prospects of each individual contri- bútor under an insurance scheme based upon these principles and when definite figures have been obtained they propose to ask for a definite expression of opinion from all officers concerned.

8. In the meantime they have the honour to request that His Excellency the Governor will be good enough to move the Secretary of State to postpone for the present any action in connection with the proposed transfer of the Fund, as the Ordinance authorizing the transfer can, in the event of such proposals as may be put forward being disapproved, he mule retrospective and with effect from the date orginally intended.

The Honourable,

THE COLONIAL SECRETARY.

We have, &c.,

HENRY S. BERKELEY. FRANCIS CLARK.

L. A. M. JOHNSTON. A. G. M. FLETCHER.