SynopsisThe results of an investigation into all the valuation elements of a homogeneous group of superannuation funds relating to 75 administering Authorities and involving nearly 200 separate Local Authorities operating in Southern England are presented.The principal conclusions arrived at are:—Transferability:The element of withdrawal has been investigated in particular detail in view of the possible compulsory introduction of complete preservation of transfer rights.The true cost of introducing complete transferability (as opposed to the apparently trivial cost on any traditional valuation basis) is about 10% of the present annual outlay on superannuation, provided that transfer values are properly related to reserves.The reduction in the employee's contributions from 5% or 6% to 3% as proposed in the Labour Party's “National Superannuation” would be much more costly, the total additional burden on Local Authorities amounting to about 1½d. in the pound of rateable value.The present scale of statutory transfer values laid down by the Government Actuary is suitable in the case of bulk transfers or of transfers, at all ages, within the Local Authority field. Owing, however, to the preponderance of withdrawals at the young ages the present scale of transfer values would be unsuitable if complete transferability were introduced. It would be necessary (a) to recast the present scale of transfer values at the younger ages, or (b) to adopt the “cold storage” system, or (c) to limit the payment of transfer values in the case of transfers to employment other than Local Government employment to employees who transfer after an age not earlier than 35.Even so, Local Authorities, were they allowed to do so, could quite readily administer their own schemes side by side with a national scheme.Mortality:So far as mortality is concerned, (i) it does not appear that service mortality can be represented by any standard assured table, (ii) the mortality of age pensioners may in the particular examples be suitably represented by a select annuitants' table, (iii) the mortality of ill-health retirements may be taken as such that, as at the date of retirement, ill-health annuity values may be regarded as constant up to some given age x + n where x is normal retirement age and n is number of years by which impaired lives require to be rated up.Subject to a small ad hoc reserve, ill-health retirements may as a matter of fact be ignored in Local Authority valuations.Retirement Ages:The usual assumption that optional age retirement takes place at the earliest date at which the option is exercisable is too far removed from reality and there are grounds for suggesting that a valuation assuming all retirements to take place at one age, viz., the normal retirement age, would be preferable.Salary Scales:A warning is given as to the, usually unacknowledged, fallacies inherent in a salary scale derived from a mere consideration of average salaries at each age at a given point of time and examples are given as to the difficulty, if not the impossibility, failing the possession of powers to invest in equity shares, of providing in advance by means of a specially constructed salary scale for even a moderate annual increase in salary and wage levels.The paper closes with a description of the investment structure of 27 administering Authorities at 31st March 1955 and a discussion of some of the problems peculiar to Local Government funds—the effects of the introduction of the Local Government Superannuation Act, 1953, the various methods of modifying retirement allowances and grants, the determination of the degree of approval for income-tax purposes, the “Article 7” liability (new entrants) and apportionments of charges amongst different Authorities and amongst different departments of the one Authority.
Outsourcing or Giving all Out? Experience from Tanzania Local Government Revenue Collection
