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MAJORITY REPOET. 
1] 
of Approved Societies should in part be pooled, and we proceed 
to detailed proposals for giving effect to our recommendation. 
256. We consider that the surplus funds which have accrued 
to any Society at the date when the changes which we recom- 
mend are brought into operation, together with any future 
Interest accruing on those funds, should remain the absolute 
Property of the Society and that the proposals for the mitigation 
of inequality which we put forward should be limited to surplus 
earned after the change of system. This would mean in practice 
that at each valuation after the third, the surplus carried forward 
from the previous valuation (including the Contingencies Fund) 
with its interest earnings would be exempt from the operation of 
the scheme we suggest. The balance of surplus would be the 
amount actually earned in the quinquennium, and this is the sum 
which we propose to treat as subject to pooling. It is difficult 
to make any precise estimate of its aggregate amount, since this 
depends partly on facts which will not be available until the 
second valuation is completed, and partly on the fluctuations 
In the claims from period to period in the future. We are 
advised, however, that for the purposes of examination of our 
Proposals a sum of about £2,000,000 a year may be assumed. 
. 257. The proportion of this surplus which should be brought 
Into the pool would clearly have to be substantial, since 
otherwise the pooling scheme would be ineffective. On the 
other hand the proportion left with the Societies would also 
have to he substantial if the incentive: to good administration is 
Dot to be weakened. Our conclusion, therefore, is that the pro- 
Portion should be one-half, a proportion which could also be 
defended on the ground that one-half of the contributions out 
of which the surplus arises is paid not by the members themselves 
but by their employers. The pooling of one-half of the surplus 
acquired would have the same effect broadly as if the employers’ 
contributions were carried to a central fund and one-half of all 
the benefits and other charges paid thereout—a plan which might 
With some measure of justification have been adopted from the 
beginning, 
258. We recommend that the amount paid into the pool should 
be distributed among all Societies at a flat rate per head of 
Membership. We think that this would be the only satisfactory 
method of distribution, since if the money were used simply to 
Subsidise the weaker Societies, it might have the effect of raising 
some of them to a better position than that of some of the 
Societies contributing to the pool. 
259. One consideration which has weighed much with us in 
arriving at our decision is that after the application of the small 
Margin in the present weekly contribution, to which reference 
's made in Chapter VII of our Report, there is no means, apart 
na 
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