APPENDIX A.

34.3

values and about £7,000,000 by cash.* The application of these sums
in the manner required by the regulations will reduce the reserve values
from £52,000,000, as above stated, to about £35,000,000, and this is the
sum for the service of which (interest and redemption) the new Sinking
Fund ”’ contribution must provide. As we have already indicated, we
see no reason to increase the rate of interest credited on Reserve Values
or to arrange for a shortening of the redemption period, which is
estimated to extend to about 30 years (apart from any shortening
attributable to the transfer of future balances from the Reserve Suspense
Fund), and we find, therefore, that the part of the weekly contribution
retained for the service of reserve values may be reduced from 1d. to
"65d. in the case of men and from ‘9d. to ‘58d. in the case of women.
These reduced amounts are related to the reserves required for the present
benefits. As we shall show later, certain additions will have to be made
to them should any charges be introduced of a kind which requires. the
creation of further reserve values.
27. We referred in para. 3 to the possibility of revising the contributions
 payable to the Contingencies Funds of the Approved Societies.
These contributions are at the rate of five-ninths of a penny per week
in the case of men and two-fifths of a penny in the case of women,
and their annual produce is about £1,400,000. The Contingencies Funds
were established in 1918, with retrospective effect, under a recommendation
 of the Departmental Committee on Approved Society Finance and
Administration, and their primary purpose was to provide the societies
with the means. whence valuation deficiencies of moderate amount might
be met from their own resources, thus obviating the necessity for appeal
to the Central Fund save in cases of serious insolvency. This purpose
has not only been fully served ; the cases of deficiency have been relatively
few and the bulk of the sums becoming available through the Contingencies
 Funds has been applied to augment the surpluses distributable
under schemes for additional benefits. We regard a marginal provision
of the kind made by the Contingencies Funds as of great value,
especially in the case of small societies and branches, but its extent
must be a matter of judgment and the experience gained by the operation
 of the system since 1918 leads us to think that the present contribution
 to these funds may safely be reduced without imposing a serious
strain—from either the financial or the administrative point of view—
upon the Central Fund. In advancing this view we are influenced to a
considerable extent by the fact that as regards the small societies and
the branch type of organisations the Act provides for pooling the
Contingencies Funds either partly or wholly, thus providing these
units with a measure of protection against financial strain far
exceeding that afforded by their own individual resources. On the
other hand we are compelled to recognise that the imposition of the
contemplated new charges on existing resources will, unless other provision
15 made, entail a considerably greater charge on Contingencies Funds
to meet deficiencies in the future than that experienced in the past, but
we propose to deal with this important point as a separate question.
Assuming that the recommendation which we shall make under this head
is accepted, we consider that the weekly contribution to the Convingencies
Funds may properly be reduced to one farthing, both for men and for
Women. Incidentally, we thus advise the abrogation of the present
difference between the contributions of men and of women to the Contingencies
 Funds. In a large number of cages men and women are insured

* "hese figures must not be taken as an index of the amounts of surplus likely to accrue
to the Reserve Suspense Fund in future. The income of this Fund is derived chiefly from
transfer values and as the result of (i) the limitation of sickness and disablement benefits
to the age of 65 instead of 70 and (ii) the substitution of 4 per cent. for 3 per cent. as the
basic rate of interest, transfer values will be materially reduced. Further, a considerable
part of the present balance of the Fund is due to the abnormal industrial conditions set
up by the War which brought a large number of perso. s temporarily into employment.

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