There seems to be an impression in the mind of Your Honor and of the Provincial Council that "The Civil Service Act, 1866," has increased the rate of Pensions and facilitated their acquisition. A comparison of that Act with the Civil Service Superannuation Acts of 1858 and 1861 will show that the reverse is the fact, whether as regards the rate of pension, or the period of retirement. The basis of the Act of 1866, in these respects, is that adopted in England and Victoria, namely, retirement after ten years service on medical certificate of incapacity; the pension then payable to be ten-sixteenths of the salary on an average of the last three years—and after ten years for every succeeding year of service the pension to rise by one-sixteenth until at the end of forty years service it reaches its maximum amount of two-thirds of the salary. The other provisions in respect of Pensions are, that Officers at the age of sixty can be required to retire on Pensions (the reason for such a provision is obvious,) and the recognition of previous employment in the service of the New Zealand Company (of which cases likely to occur are very rare), and of Provincial Governments. These latter provisions were introduced with the view of equally recognizing as far as practicable the claims of superannuated public servants and of effacing invidious distinctions, objects which, while Pensions are granted at all (and the Council does not condemn the principle) it is desirable to secure. The effect of the Civil Service Act of 1866 is, in fact, to repeal, except as regards equitable rights of persons previously appointed, the Superannuation Acts of 1858 and 1861, and to provide, for the future, Pensions on a less liberal scale.

There is one other provision in the Civil Service Act to which, although not alluded to by the Provincial Council, I will shortly refer, as connected with this subject. It is the one enabling a certain amount of compensation (proportionate to length of service) to be granted in case of abolition of office. The effect of this is economical, for practically it has enabled the Government, without inflicting injustice or raising pecuniary claims which, in the absence of such provision, are, at some time or other, however irregularly often recognised, to effect considerable reductions, and those reductions are of sums which annually recur, while the compensation is once for all; the payment of which moreover cancels, in case of re-employment, claims to Pension in respect of the service on account of which the compensation was given.

I have, &c.,

J. C. Richmond.

January 10th, 1869.

For the Colonial Secretary,

His Honor the Superintendent,

Auckland.

Extract from Report of Victorian Civil Service Commission, 1859, pages 17 and 18.

25. If the justice and the expediency of some kind of superannuation are admitted, the question arises respecting the manner in which that superannuation should be provided. It is doubted whether it should proceed from a fund raised by deductions from the salaries of the civil servants or whether it should be granted by the state. From what we have already said, it follows that as a matter of general principle it is both the duty and the interest of the state to provide for the Officer that has grown old in its service. But there are many positive objections to the system of deductions: In the first place, the system is a mere fiction. A nominal salary is assigned, which is neither paid nor intended to be paid, but a portion of it is taken to form a superannuation fund. As far as the state is concerned, if actually the same thing, when the amounts are equal, to pay a gross sum and to deduct from it a certain amount, or to pay a net sum, and to add to it the amount of the deduction. There is indeed the trouble of managing the separate fund and of keeping its separate account, but no advantage is gained by the arrangement.

We may say, in the words of a former Prime Minister of England, in a report on this subject to the King in Council, that it appears to us "to be much more rational to assign to officers such unincumbered salaries as it may be fit for them to receive, than to adopt the complex and illusory plan of ostensibly giving them certain sums, and at the same time depriving them of a portion of those sums for a different purpose."

26. Again under the system of deductions, many persons, either from death or from special circumstances, fail to obtain any benefit from the fund to which they have contributed. It is difficult to convince such persons, or their widows, or other representatives, that they have not a right in the fund to which they, or those through whom they claim, had made large contributions. Thus the deductions become misleading. This misapprehension arises from the different points of view in which these reductions may be regarded. They may be considered either as modes of special taxation, or as contributions to a mutual provident fund, or as a mere charge upon nominal income.

In the first case they are open to the objection that attaches to all class taxation. In the second, either personal representatives are entitled to the rights of their principal, or, if they are excluded, that principal is compelled to deal with the Government Provident Society on much less advantageous terms than he could elsewhere obtain. In the third case, the civil servant is compelled immediately to return what there was no occasion he should receive. To give a man a hundred pounds, and then to deduct ten pounds, is surely a circuitous means of paying ninety.