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Columns 11 and 12 show the children claiming, and declared off, in the years opposite.
Other information is then referred to in the instructions and explanation given, why it is not in some respects so complete as it should be. The committee, who have been at work in the matter, then proceed :-" It may be said, from the best examination that can be made, that the average age of the members, at the close of 1858, and indeed throughout the society's experience, may be assumed at 35 years-that three-fourths of the members are married-and that the ages of members and wives are about equal."
"There is no law to compel members to join this fund; but it has gained considerably by young members who have died unmarried, or have seceded. The mean rate of secession may be safely taken as at least three per cent. Another source of gain has been by members taking clearances, that is, removing from this to another district of the parent society, and after the lapse of a year ceasing to contribute or have any claim on the fund this may have happened, on the mean of the 21 years' period, to the extent of one per cent. If a member's wife has died, he has generally continued paying until his own death; in some cases marrying again, and probably a younger wife, but no new fee or increased contribution is required on these remarriages, under the present rules."
An abstract of new rules, and of proposed alterations of those now in force, as also a copy of the present rules, accompany these instructions." "It will be seen that the proposed alterations of present rules are to effect some slight changes, but that the main features of the present financial laws are to be preserved."
"The new rules are put forward with a different purpose. They are proposed to fit a new scale of payments, self-supporting, to take effect from the commencement of next year, and to be kept in a separate and distinct account from what would then be called the old fund, which would necessarily be left to work itself out, and all future proceeds of excursions and benefits, with gifts, &c., would be thrown into it as heretofore."
* 143 received £15 bonus.
Mr. Finlaison's opinion and advice were then requested upon these questions.
"1. Whether, in the present state of the society, considering the number of subscribers (5,579), the amount of surplus funds (£8,794. 7s. 44d.), the numbers now receiving benefits (299 widows and 486 children), the estimated value of assets from all sources, and the probable amount of future certain liabilities, the society can safely continue working as at present, or if an immediate change is necessary in its financial rules."
"2. Whether you recommend the proposed alterations-mentioned in the abstract-of present financial laws, or what if any amendments you consider should be made therein, to properly regulate the amount of survivorship annuity from the present fund, or the sum certain (bonus) that can be allowed, as an assurance, at death of members, to widows only, if then living."
"3. Whether you recommend, or not, the proposed annuity tables No. 1 and 2 in the abstract, sent with the new rules, and with what alterations and conditions, if any, they may in principle be adopted."
"You will be good enough to make tables, which you will be prepared to certify, under the Friendly Societies' Act, if agreed to by the general meeting."
"And you will greatly oblige by advising generally and plainly what steps the society should take, in its present state, to ensure future success and stability."
Upon these instructions Mr. Finlaison, after giving the matter full consideration, forwarded the following opinion:
1. I am of opinion that the Society cannot with safety continue on its present footing; for, on comparing the assets with the liabilities, the result is a considerable deficiency. That the real state of the case may be manifest to the members, it is placed before them in a shape with which they are no doubt familiar.
Statement of the Assets and Liabilities of the North London District Widow and Orphan Fund :
To present value of contingent Pensions to Widows
Future contingent Pensions..
"Present value of Pensions to Widows £13,880 4 7
£ S. D.
.38,626 18 7
2,921 18 0
.241,548 16 7
.£15,260 16 2
An inspection of the foregoing balance sheet will render it obvious that an immediate change in the financial rules of the Society is necessary. The nature of that change will be suggested by my answers to the other two questions and general remarks.
2. I cannot recommend the proposed alterations referred to, which I assume to mean those of the St. John's and Jolly Bucks' members. As to the St. John's, the reduction of the widow's annuity by ls. is much too small to relieve the fund. The allowance of a bonus for children, provided it does not exceed £5, and the offer of £15 bonus to each widow, are fair matters for consideration. With regard to the Jolly Bucks' propositions for entrance fees and contributions, they are too low to be safe.
On the best consideration I can give the subject, I recommend to the consideration of the general meeting the propriety of allowing a bonus not exceeding £20 to widows, and £2 for each child not exceeding 12 years of age, and to apply such an alteration of laws to all possible claimants under the present rules. This may appear to be somewhat sweeping, but on the whole I think it fair. It is necessary that the members should agree to yield somewhat of their strict right, as it is plain that unless some change is made either to increase the contributions for the present benefits, or to reduce the pension, or to commute it in the manner just suggested, the Society must unavoidably descend to a much worse position.
I think that any children who may be registered should be registered within three months after birth.
The other matters in the propositions referred to are wholly for the consideration of the meeting.
3. The proposed Tables 1 and 2 are in principle correct; but I would have the present probation of two years from the time of entry before being entitled to benefits, maintained, instead of reducing the probation to one year only as proposed.
To meet the objects held in view by the Society, I have prepared tables, into which the experience of the Society enters, to provide for the benefits proposed in Tables 1 and 2. The tables are subjoined, and if the general meeting considers it desirable to slightly reduce the benefits, for which these tables are framed, so as to lower them to the same amount as those at present guaranteed, the proportionate reduction in the contribution can soon be determined. Should the tables in question be adopted, I shall be prepared to certify them under the Friendly Societies' Act, provided the meeting takes steps to effect a revision of the rules necessary to fit the tables, which rules I must be permitted to consider and approve.
Having thus succinctly answered in a direct manner the questions put to me, I may state that the following considerations have entered into the construction of the tables which I have prepared.
A suitable law of mortality. A rate of interest such as the fund has been accustomed to realise. The law of secession as obtained from the experience of members of Friendly Societies. The per centage of claims relinquished by the re-marriage of widows, and other causes. The proportion of claims commuted by the acceptance of a bonus in lieu of the annuity, and the charge entailed on the fund by the payment of that bonus. The probable gain by members taking clearances, and ceasing to contribute after the lapse of a year; and, on the other hand, the probability of a mem ber re-marrying after the death of his first wife, and entailing additional and heavier charges on the fund by union with a younger wife. The proportion into which the aggregate body of members was found on actual observation to divide itself at each quinquennial group of ages between 18 and 62. The proportion of unmarried but contributing members, to the married contributors. The parity of age between husband and wife; and
the probable age of the widows in receipt of the pension. The amount of contributions paid, and the extent of benefit guaranteed to the widow. The probable yearly income derived from gifts and other sources. The capital in hand. And in respect of the children's branch of the fund, the numbers and ages of children registered during the last twelve years. The numbers which have gone off by over age, the probable number of deaths, and, consequently, the balance which remains chargeable. The number of members yearly on the books of the fund during the last twelve years. The number of members re-marrying during the same period. The probable proportion of children in a situation to become chargeable, to the number of members contributing to the fund. Finally, the temporary nature of the benefit and of the period during which the contribution for the same is payable.
Tables proposed for adoption by the members of the North London District Widow and Orphan's Fund :
(Intermediate ages in proportion.)
As the committee desires me to render general advice on the affairs of the Society, I have to express, in the first place, my extreme regret to learn that the members are unwilling to give necessary particulars of their own ages, and those of their wives and children, and other useful and proper information to the management of the Society. The members will on due reflection be aware that the facts alluded to, are absolutely necessary for the desirable object of reducing the contributions required for provision of the benefits to the lowest amount. It is the province of the Actuary to work up the materials thus obtained, in such a manner as to ascertain with precision the prime cost of the benefit in view; and I may state, after some experience in the matter, that much has yet to be done before data completely satisfactory can be obtained for the purpose of establishing Widow and Orphan Funds among the members of Friendly Societies. I therefore strongly advise the managing committee to agree upon a form of particulars to be required from every member on enrolling himself, his wife, or children; and I sincerely trust that the members will cheerfully assist in contributing their small share towards the elucidation of most important points, directly affecting their own interests. It is superfluous, perhaps, to add that on such information being obtained, it should be carefully registered in a way capable of rendering the completest summary at any moment at which it may, in future, be required. Any return which would accurately show the mortality occurring among the members' children under 14 years of age would be almost invaluable. This ought not to be a matter of very
great difficulty, seeing that registration of their children at the earliest age is always a matter of the highest expediency to the members.
There is another matter to which I cannot forbear calling attention, and that is the interest realised on the capital laid up for accumulation. It must be obvious to any one who will give the subject a moment's thought, that it must in the course of years make a great difference to the fund, whether it annually receives but £30 in each £1000 invested instead of £50, or, in other words, three per cent. per annum, instead of five per cent. But this is a point which seems to me not to have been sufficiently adverted to, as I perceive that the bulk of the Society's capital remains in the three per cents, while there are far more profitable securities open to the selection of the management, under the provisions of the XXXII. Section of the Act 18 and 19 Vic., cap. 63, regulating the affairs of Friendly Societies.
One other point, and I conclude. Some notice should be taken of the effect on the fund caused by a disparity of age between husband and wife. Practically speaking, so far as the information available on this point gives any light, there exists no great disparity between the ages of the present members of this Society and the ages of their wives. But to show that the question may not be unimportant in the case of re-marriages, I subjoin the quarterly premium which should be paid in cach of three instances when the member himself is aged 35 years, but where the wife may be 15 years younger, or of equal age, or 10 years older. For example
As regards the disparity of age between mother and child, the question is scarcely of practical moment, because the benefit to the child is merely a temporary contingent life annuity closing at a very youthful age, and therefore likely to be outlived in the father's lifetime.
ALEXANDER GLEN FINLAISON,
National Debt Office, 15th August, 1859.
On Monday, September 5, an important meeting of the members of the Widow and Orphan Fund took place at St. Martin's Hall. Owing to the laws of this particular fund being enrolled under the now obsolete Act of 1829, all the members subscribing-about 5,600-had been specially summoned, and nearly 600 attended. It appeared that the fund was established 20 years since, and its surplus capital at the close of 1858 was £8,800, but some members not considering the contribution sufficient, it was determined to consult Mr. Finlaison, the Government Actuary, with what result we have already seen. A lengthy discussion was entered into, and eventually a resolution was carried to adjourn the further consideration of the matter for 12 months. We understood this was defeated by a requisition calling another meeting, which will be probably held in March.
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