I move amendment No. 20b:—
Before Section 16 to insert the following new section:—
Section 8 of the Superannuation Act of 1942 is hereby amended by the deletion in sub-section (3) (c) of the words "or by the board to such trustees".
The purpose of the amendment is to deal with the situation which has arisen in regard to the superannuation scheme. I do not know what attitude the Parliamentary Secretary will take towards this amendment and, therefore, I will briefly indicate the grounds on which it is being put forward. The House will have noted that in the Bill the Minister is amending Section 8 of the Superannuation Act of 1942 to the extent of leaving it at the discretion of the board to pay a rate of interest of 4 per cent. on moneys invested with them by trustees of the superannuation fund.
That amendment has been the outcome of a situation which arose in connection with the scheme. When the scheme was drafted in 1942, the board were informed by the Department of Finance that they could proceed to draft the scheme on the basis that 4 per cent. could be paid by them in respect of any moneys invested with them by the trustees of the superannuation fund. On that basis the actuarial aspect of the scheme was worked out and, more important still, when the scheme was put before the employees of the board, it was done through a high pressure selling campaign by the board. The employees were advised—as a matter of fact, induced—to become members of that scheme on the understanding that the rates of contribution and benefits indicated in the draft scheme would be enjoyed by them so long as they were members of the scheme. But the enjoyment of those rates of contribution and benefits was dependent, so far as the actuarial basis of the scheme was concerned, on the continuation of the payment of that rate of interest of 4 per cent.
In 1943 the view was conveyed to the board that the undertaking to pay the 4 per cent. should be reviewed in view of the fact that there was a fall in the yield of gilt-edged securities. The matter was considered and in deference to the views of the board and the trustees, as well as the pension committee representing the employees, the board was given permission to continue to pay the 4 per cent. In 1946, the actuary made a valuation of the fund and he pointed out that it would be impossible to value the fund and advise the board and the members of the scheme as to the actuarial soundness of the fund unless he could have definite knowledge of the rate of interest which would be payable on the moneys invested by the trustees of the fund with the board. He pointed out that in connection with funds of this character, short-term loans were highly unsuitable and it was essential that there should be something in the way of a guarantee of the rate of interest over a long period. He also indicated that his original calculation in respect of the fund had been at the rate of 4 per cent.
The Minister has tried to meet that situation in the Bill by leaving it at the discretion of the board to pay 4 per cent., but the difficulty is that in the 1942 Act there is a clause which makes it impossible for the board to give the type of guarantee indicated by the actuary and which is fundamental to the proper continuance of the fund. In Section 8 (3) (c), it is laid down:—
"such moneys shall be repayable on such notice by such trustees to the board or by the board to such trustees, as shall be prescribed by regulations made by the Minister under this section";
so that, even though the board might undertake to pay 4 per cent., they can give no guarantee that at any date in the future they will not have recourse to the power given to them in that sub-section and, after giving due notice, repay the moneys to the trustees and require them, if they wish to take them on any further investments, to accept them at a lower rate of interest.
The purpose of the amendment is to take away that discretionary power of the board to give notice to the trustees that they desire repayment of the invested moneys. It has been argued that there is the same power with the trustees, but there is this difference, that the trustees would be anxious to maintain the invested funds at a rate of interest which is continuous and has some form of guarantee behind it. The only purpose in leaving with the trustees the power to give notice for the repayment of the moneys is that at certain periods during the life of the scheme it will be necessary for the trustees to withdraw certain of their capital in order to pay back and, therefore, they must be left with that power. That was accepted by the board. I do not know what the attitude of the Parliamentary Secretary will be to the amendment, but I am speaking, not with authority, but with a certain knowledge, when I say that the board itself has definitely indicated to the Minister its agreement with the principle embodied in the amendment and its willingness to undertake the commitments which, if the amendment is accepted, will be imposed upon it to the extent that any investments of funds that the trustees may make with the board would be on a long-term basis—a basis of 4 per cent.—and would be repayable only on notice from the trustees and not from the board.
The important thing to bear in mind is that we are dealing here with a semi-State body. Many of these employees are closely associated in their work with the employees of local authorities. It has been accepted as a principle by employees of local authorities generally throughout the country that employees of this nature have got certain recognised rights in regard to superannuation; and that principle is being more and more widely extended. In so far as this board is concerned, we have tried to provide a superannuation scheme. Quite frankly, I do not think it is as good as should have been provided, but it is there now. Even that limited scheme, limited to a payment of 50 per cent. of the retiring salary and on which there is a very heavy payment as regards contribution by certain of the employees, and many other limiting factors—even that scheme in its present unsatisfactory form will be completely disrupted unless there is some guaranteed basis in respect of the investment of the funds provided for the scheme. If for the sake of argument, the rate of interest were to drop from 4 per cent. to 2½ per cent. it would mean in the case of members of 20 years of age an increase in their contribution by approximately 50 per cent. for superannuation purposes in respect of their future service and an increase of 14 per cent. in respect of the payment of the lump sum under the insurance section of the scheme. In respect of members of the scheme at 60 years of age there would have to be an increase of 12 per cent. in contributions in respect of their future service. Quite clearly if that situation arose the scheme would collapse because even the present rate of contributions is beyond the payment of many of the members. A member of my union is paying £2 4s. 0d. per week towards his pension. I agree he has only got a year or two to go before he retires. That situation does arise under the scheme. Quite clearly, as the board and the trustees have been advised, it is essential to the welfare and continuance of the scheme that the board should be put in the position of continuing to pay 4 per cent. That has been dealt with by the Minister.
Secondly, the board should be put in the position of being able to enter into some form of guarantee over a reasonably long period. These two conditions are essential to the scheme. I think, then, the responsibility devolves upon the Minister to consider that matter very seriously. I understand he has been advised that the only practicable way to do that is along the lines of the amendment I have put down—namely, to take from the board the option of repaying these moneys to the trustees as and when the latter desire to submit a certain notice. There is no objection on the part of the board to that. That suggestion has the support of the board, the trustees, the representatives of the employees and the actuaries. It is merely a question then of convincing the Minister that this is essential to the preservation of the scheme, for which he must now accept responsibility. It would be wrong for a scheme which has been subjected to so much criticism to be placed in jeopardy, and I would be glad if the Parliamentary Secretary would consider this amendment sympathetically. It is essential from an actuarial point of view apart from any other consideration.