Page 84 - Group Insurance and Retirement Benefit IC 83 E- Book

agreed with Mr Hickinbotham, however, that there still remained some case for a small

lump sum.

The other main point made in the discussion concerned un funding. He agreed with
everything said by the actuarial profession as to the merits of funded schemes and with

regard to the National Health Service scheme, he regarded the annexation of that
£40,000,000 as a completely inexcusable squandering of capital assets designed for the

future.

The Exchequer might hold that as they were financing it they could run it their own way,

but what about the Fire Service? That was primarily the financial responsibility of local

authorities. In the negotiations which had gone on he had not heard a single local
authority spokesman declare in favor of an unfunded scheme, and he had heard several

very strong expressions in favor of a funded scheme; yet it was understood that the
Treasury had ruled that it should be unfunded.

Mr Elphinstone later wrote: The ideas which I was trying to express at the meeting spring

from the fact that when the present generation retires, the next generation will determine

the total amount of goods and services which its pensions will buy. If the present
generation does not make capital investment as the actuarial liabilities for its pensions

grow, then it will be hard up in its old age. It will not be the servants of private industry,
members of insured and funded schemes, who will then be granted cost of living bonuses

to relieve their distress, but the members of the unfunded schemes, for there such relief
involves no immediate deficiency. In an unfunded scheme, such extravagance is

encouraged because there is no machinery to count the cost.

Members of these schemes drawing pensions based on final salaries will already hold a

disproportionate claim to the goods and services available for the old people. But though

their claims will be out of proportion and further increased by the reliefs, it will be these
same people who will have caused distress among their fellows by claiming pensions

against which there is no capital investment.