Page 71 - Group Insurance and Retirement Benefit IC 83 E- Book

the expense of somebody else, because in the unfunded scheme there was no fund to be

invested in capital investment, and there was no means of ensuring that goods and
services were available to meet those pensions when they became due.

The same considerations applied to a funded scheme, unless the amount of capital
investment was equivalent to the amount of the fund. There was a correlation between the

size of the scheme and the likelihood of its being based upon final salary. The small
schemes, underwritten by Life Offices, the bulk of whose investments were producing

capital goods (apart, unfortunately, from some 40 % in government debt), were rarely

based on final salary. Then there were the large schemes, possibly underwritten, possibly
private schemes properly funded (except for the apparently inevitable deficiency), into

that class came many local government schemes.

The large private funded scheme was sometimes based on final salary and sometimes not;
it was occasionally based prudently on the money-purchase plan. The very large schemes,

the Civil Service scheme and so on, nobody dreamed of funding and these were
invariably based on final salary.

An example of the tendency to which he objected was the F.S.S.N. scheme (with which
he had never had anything to do but which he believed to be an excellent scheme) ; that

had been abolished and a large amorphous unfunded scheme substituted, which would be

a burden to the present generation in their old age and to their successors. Of the total
amount of money available to pay pensions to non-producing old people he was afraid

that too large a share would go to the ex-civil service pensioners and others belonging to
unfunded schemes and he believed that was a serious matter. Private industry, with its

carefully fostered funded or insured schemes would not be able to afford extra payments,
and it was the pensioners of the unfunded schemes who would have cost of living

allowances added.

Mr A. E. Hickinbotham (a visitor) did not claim to be an expert in any way but said he
was merely a lay administrator; he had, however, had a little to do with the Health

Service scheme and he had to perform mental gymnastics to produce the regulations

which Mr McDougall had mentioned. He would very much like to see some uniformity
in schemes, because without it extremely complex regulations were unavoidable. Quite

apart from the fact that they were very difficult to understand, the ordinary man was