5 
MAJORITY REPORT. 
estimated to be equivalent in value to the benefits in the case 
of persons entering into insurance at the age of 16. The liabili- 
ties undertaken were, however, of such a kind (since the average 
annual duration of sickness and disablement grows with age) 
that the contributions so determined were insufficient for persons 
becoming insured at all ages between 17 and 70, such persons 
comprising, of course, the vast majority of those who became 
compulsorily insurable at the outset. To provide for the 
deficiency the State undertook to meet the charges under the 
Scheme in respect of two-ninths (the original fraction in the case 
of women was one-fourth) of the cost of benefits and administra- 
tion, leaving the Societies responsible for seven-ninths of the cost. 
The effect of this was to enable two-ninths of the whole income 
from contributions to be retained by the Central Departments 
and applied to meeting the extra liability arising from the 
element of age as explained above. It then remained necessary 
only to make such arrangements as would enable each Society 
to receive a proportion of this income commensurate with the 
ages of its own members and the consequent share of the total 
liability which it had undertaken. This was secured by granting 
for each person who entered into insurance at an age over 16 
a reserve value representing the liability arising in his particular 
case, according to his age, and by directing that, from the 
retained income, interest on these reserve values at the rate of 
3 per cent. per annum should first be provided, the balance of 
the retained income of each year being applied as far as it would 
go to redeem the reserve value credits still outstanding. 
161. It was originally estimated that the redemption would 
extend over 15} years, but as the result of alterations made in 
the Bill during its passage through the House of Commons this 
period was extended to 18} years. Further alterations were made 
in the Statute by the Acts of 1913 and 1918 and among them 
the Contingencies Funds of the Societies, and the Central Fund, 
were created by diverting to these purposes part of the moneys 
hitherto applied to the service of reserve values ; this diversion 
was made retrospective to the beginning of the Act. The effect 
was to reduce, very materially, the sums available for the 
redemption of reserve values and to extend the estimated period 
of redemption to about 35 years. 
162. Later, changes came about in the position as to reserve 
values as the result of the increase of benefits and contributions 
made by the Act of 1920, and, in minor degree, as the result of 
the revision of the financial provision made for married women 
by the Act of 1922. 
163. Lastly, by the Widows’, Orphans’ and Old Age Con- 
tributory Pensions Act, the responsibility of the Approved 
Societies to provide sickness and disablement benefits to insured 
persons of ages between 65 and 70 was removed as from J anuary, 
1928, with the effect of diminishing the aggregate amount of