Page 58 - Group Insurance and Retirement Benefit IC 83 E- Book

members were covered by schemes which had either no funds or merely notional funds,

and were, in effect, financed on an emerging cost basis. Although he would like to see the
schemes for all those members funded, he could understand the historical development of

the Civil Service scheme on a non-funded basis. When the size of the Civil Service was
small, relative to the general population, the future commitment of a scheme on an

emerging cost basis was bearable, but with the increase in the size and scope of the Civil
Service, the problem required reconsideration. He would regard the trading and general

service departments—Post Office, Supply, Health Service, teaching, National Insurance,

etc.—as sections where it was essential that the superannuation liabilities, as they
accrued, should be covered by interest-earning assets. The true cost of such services

would then be disclosed, and might be better understood by politicians and the general

public.
Incidentally the National Health Service was an example, on a grand scale, of a non

funded scheme taking over the accumulated assets of funded schemes. When local health
service staffs were taken over, the superannuation funds of the local authorities paid to

the Central Government sums in cash of about forty million pounds. He understood that
the Central Government had used that large capital sum as a credit to revenue in the

national accounts. The nationalized industries were required by statute to balance their

revenue and expenditure, taking one year with another. Since the cost of superannuation
was such an important factor, he would consider it essential that those industries should

make provision each year to cover all superannuation liabilities incurred during the year.
Only thus could the true cost of the products of the nationalized industries be measured.

Members of superannuation funds frequently asked for additional or revised benefits. He
thought that it was important to assess the additional cost before an executive decision

was taken.

He had heard the argument of some economists that, whether a superannuation scheme

was funded or not, the chance of receiving a pension years ahead depended on the share

of the national income available for pensions and the proportion of the population
pensioned at that time. He submitted that if a superannuation scheme were funded, the

productive investment of the fund would tend to produce, by the time of retirement, a