MEMORANDUM ON THE FINANCIAL EFFECT OF THE TEACHERS (SUPERANNUATION) BILL, 1925. 1. The benefits proposed to be. provided by this Bill are generally the same as under the School Teachers (Superannuation) Act, 1918. The most important difference relates to the return of teachers' contributions which under the Acts of 1922 and 1924 are only returnable under limited conditions. The effect of clause 12 of the Bill is that a teacher or his representative will receive in any event not less than the value of his contributions with compound interest. 2. It is proposed under clause 9 that contributions towards the cost of the benefits should be payable both by the teachers and their employers. At present the salaries of pensionable teachers approximate to £50,000,000 per annum, and the teachers make contributions at 5 per cent. of their salaries under a temporary Act passed in 1922, and renewed for two years in 1924. Contributions will be payable by teachers under this Bill (clause 9 (1) (a)) at the same rate, and on the basis of present salaries would amount to £2,500,000 per annum approximately. 3. The employers have up to the present not been required to make any contribution, and will not be required to do so until 1st April, 1928; but from that date forward it is proposed (clause 9 (1) (b)) that they should be required to contribute an amount equal to the teachers' contributions, so that the contributions from teachers and employers together will then amount to ten per cent. on the salaries. 4. The Local Education Authorities are the chief employers, being directly responsible for about eleven twelfths of the salaries of pensionable teachers in grant aided schools, besides having an indirect interest in part of the remaining twelfth. The Bill provides (clause 9 (2)) that pension contributions paid by Local Education Authorities shall attract grant at the same rates as expenditure on the salaries of teachers. It is estimated that, after allowing for grants, the payment by Local Education Authorities of contributions on present numbers of teachers and rates of salaries, will result in a net annual charge of £1,100,000 on the rates as from 1st April, 1928. 5. The teachers' contributions are at present appropriated in aid of the Board's Vote; under this Bill all the contributions will be paid by the Board into the Exchequer (clause 9 (4)). 6. The benefits payable under this Bill are, as heretofore, to be payable by the Board of Education out of moneys provided by Parliament (clause 21). Inasmuch as they depend upon the average salary of the teacher for the last five years of his service, it is impossible to calculate with certainty the sums which may fall due for payment over a series of years in the future, nor is it possible to foretell how many teachers may in future years be taken into employment and in due course qualify for pension. On the basis however of the total numbers of teachers and the rates of salary existing in 1924-25, the Government Actuary has calculated the future cost as follows: 7. Contributions at ten per cent. of the salaries under the scales in force in 1924-25 would, if carried to a fund in which the balance accumulated at 3 per cent. compound interest, suffice, according to the calculations of the Government Actuary, to cover the cost of the benefits accruing from the date of commencement of such contributions. It is not proposed to set aside the contributions to form a separate fund, but to keep an account (clause 15) of all the contributions and of all benefits, distinguishing the payments according as they relate to service rendered before or after contributions began to be paid. As from 1st June, 1922, onwards (i.e., the date when contributions began to be payable) the account will furnish material for an Actuarial inquiry as to the equivalence of the benefits to the contributions of teachers and employers. The account will represent the position as it would exist if, after charging the State with full liability in respect of pre-1922 service, a fund had been set up to receive teachers' and employers' contributions amounting in all to ten per cent of salaries, and to undertake liability in respect of all benefits related to service from 1st June, 1922, onwards, the balance being invested at 3 per cent. compound interest. (17692) Wt. 28735 5601X 2000 4/25 Harrow G. 31 8. Various changes, of minor financial importance, and falling within the figures of cost given above are made in the conditions of admission to benefits. 9. A class of persons termed organisers, not included under the Act, 1918, except by virtue of rights acquired under a previous Act, will under the Bill become conditionally admissible to pension benefits (clause 14). Full details as to the numbers and salaries of the persons involved are not available, but it is estimated that the existing number does not exceed 700 and that the ultimate annual charge in respect of benefits to such persons will be about £70,000; as against which contributions of about £40,000 a year will be payable by the organisers and their employers. 10. Provisions are also contained in the Bill for extending the operation of the Act so as to include teachers in schools not grant aided (clause 20). Such extension is, however, to be subject to the payment of contributions determined on an Actuarial basis to be equal in value to the benefits. Printed by H.M.S.O. Press, Harrow. SCOTTISH EDUCATION DEPARTMENT. EDUCATION (SCOTLAND) (SUPERANNUATION) BILL, 1925. Memorandum on the Financial Effect of the Bill. Presented to Parliament by LONDON: PRINTED & PUBLISHED BY HIS MAJESTY'S STATIONERY OFFICE. To be purchased directly from H.M. STATIONERY OFFICE at the following addresses: Adastral House, Kingsway, London, W.C.2; 28, Abingdon Street, London, S.W.1; York Street, Manchester; 1, St. Andrew's Crescent, Cardiff; or 120, George Street, Edinburgh; or through any Bookseller. 1925 Price 1d. net. Cmd. 2434. EDUCATION (SCOTLAND) (SUPERANNUATION) BILL, 1925. MEMORANDUM ON THE FINANCIAL EFFECT OF THE BILL. 1. A main object of the Bill is to assimilate the conditions for the superannuation of teachers in Scotland to those which may be adopted for teachers in England and Wales. In order to admit of the new system being introduced in all three countries simultaneously, it is proposed to extend until 31st March, 1926, the operation of the Education (Scotland) (Superannuation) Act, 1922 (as continued by the Education (Scotland) (Superannuation) Act, 1924), which would otherwise expire on 31st July next. The italicized words in Clause 1 of the Bill ensure that during the period of extension there shall be no modification of the existing relations between the Exchequer and the Education (Scotland) Fund. 2. The general financial arrangement contemplated is substantially identical with that incorporated in the Education (Scotland) (Superannuation) Act, 1919. In terms of Section 6 of that Act the Education (Scotland) Fund will in each year receive from the Exchequer eleven-eightieths of the sums which are estimated to be spent in that year on the superannuation of teachers in England and Wales (subject to any adjustment which the Appropriation Accounts may show to be required), and in terms of Section 7 it will be responsible for meeting the whole cost of the superannuation benefits of Scottish teachers. 3. The Bill directs that the same principle shall now be applied to the contributions. In other words, the whole of the contributions are to be paid into the Education (Scotland) Fund, out of which there must in turn be paid into the Exchequer eleven-eightieths of the contributions which the Exchequer receives from teachers and employers in England and Wales. At the same time extended provision will be made for the return of contributions so that, as proposed in the English Bill, the teacher (or his representatives) will in any event receive, as part of the benefits of the new Scheme, not less than the value of his own contributions with compound interest. The Fund is to assume this liability, which has hitherto been borne (but under more limited conditions) by the Exchequer, and Clause 6 (2) of |