The following article comes from Copartnership Journal in 1905
Please remember the monetary figures are pounds, shillings, pence. Hope I have got them all right!!
SOUTH METROPOLITAN GAS COMPANY
THE SUPERANNUATION FUND.
.
Recent questions relating to this Fund show that a statement
of its origin, object and history may be useful.
Sympathy for and a desire to help the Company's workmen in times
of difficulty from sickness or old age originated both the Sick and
Superannuation Funds. The Sick and Burial Fund was started in 1842 on the
suggestion of the Company's Secretary, the late Thomas Livesey, and its' success
led him in 1855 to advise the 'Creation of a Superannuation Fund for Workmen
and Officers; ,but the latter did not then respond, and it was nearly 40 years
later 'when their Fund came into being. On the 1st of December, 1855, the Workmen's
Superannuation Fund began, and for exactly 50 years it has continued its
beneficent work. It is therefore appropriate that this statement should appear
on .its jubilee. . I may here say that t last year when giving evidence before
a Government Committee on the Accident Fund, reference was made to our other
Funds, and the Chairman of the Committee said, 'You have followed the lead of
the' Germans,' and my reply was to give the above dates and to say we led the
Germans. I think the South Metropolitan may claim to have been amongst the,
earliest of public companies, and r believe the first amongst Gas Companies, to
found these and the Accident Fund with its Jury system, as they were the first
to grant a week s holiday with pay to their Workmen, and to introduce the
Co-Partner- ship. I must say a word for the Directors of the Company; as far
back as I can trace their history, because without their consent none of the Funds
or other benefits to Officers and Workmen could have been introduced. In all
these matters the Directors have always been unanimous' and more than willing
to do anything in their power to benefit their Employees.
After the Directors gave consent the proposal to establish
the Fund was submitted to the Workmen. I was present at the Meeting, as were
also, I believe, John Surman, our worthy Storekeeper and John Durrant, now well
over 9O years of age, our oldest pensioner, who, with one of the Keelers and
perhaps one or two other pensioners, are all, alas! that are left of our
comrades of that are left of our comrades of that day. Our old foreman (2 lines missing) will be
remembered by the Workmen as well as by my father and myself, and to whose faithfulness
1 desire here to bear testimony, was also there but all that I can renumber is
that my father; explained the proposal, that some questions were asked and
remarks made, amongst others by Gray, the Blacksmith, and the Workmen unanimously
agreed that the Superannuation Fund should be started. Behind Directors and
Workmen stand the masters of both, namely, the Shareholders, who were not only
asked to give their consent but their support also. It is true only a small annual
sum was asked, £50-which was willingly given-but this small, simple gift
committed them to the continued support of the Fund, and involved them in a continuous
and increasing annual charge to maintain the Fund and ultimately to guarantee
its financial stability in perpetuity. I repeat for the Shareholders what I
said for the Directors, that they have been always ready to show practical
sympathy for their Workmen, and have never refused any proposal for their
benefit which has ' been submitted to them.
The Fund was founded and is maintained for the sole object of
making provision for the Company's men when their working days are over to save
them from distress in their old age, or, as is stated in Rule 1, 'to provide a minimum
pension in order to save Workmen from the necessity of applying for parish
relief in the event of incapacity or old age. It was never intended to provide
them with a competency to enable them to retire while still well able to work. This
being so it was necessary to assume that at a. certain average age work should
cease and pensions begin, which was fixed at 65. This is the age almost
universally adopted by Superannuation and .Pension schemes. But our Fund goes
further. It provided, at the start, in order to take in the older men, that
subscribers of ten years might receive a pension at 65, or at 55 if through
infirmity, not being due to their own bad conduct, they were unable to continue
working, It now, in such cases, gives the pension at any age after ten years'
subscription and twenty-five years' service. In 1900 a further step was made by
giving the option to the Members to retire as early as 55 on a reduced pension.
There was to be a reduction of one-tenth for each year short of the pension age
of 65. And now I have the pleasure of announcing a further improvement.
The Directors have lately had under consideration the Officers'
Superannuation Fund, and have introduced a simi1a.r rule to allow earlier
retirement. Calculations supported 'by professional advice, proved that a
reduction of one-twentieth part of the pension for each year short of 65 was
sufficient, and a new rule was adopted accordingly. It works thus. Supposing an
Officer, entitled to a pension of £100 a year at 65, wishes to retire earlier,
he has to give up one-twentieth ((2 lines missing) at 6O it would be £75, and
at 55 £50, or half the full pension would be received. I need hardly say that,
having done this for the Officers, the Directors at once resolved to do the
same for the "York- men, and the new rule now makes the reduction
one-twentieth instead of one-tenth. A Workman entitled to 10s. a week at 65 will
have Gd. a weak less, or 9s. 6d. at G4, and so on; at 60 he will get 7s. Gd.,
and at 55, 5s. a week. If he is entitled to 15s. a week pension at 65 he will
have one-twentieth part, or 9d. a week, less for each year, or 14s. 3d. at. 64,
13s. 6d. at 63, 11s. 3d. at 60, and 7s. 6d., or half-pension, at 55.
At the Co-Partnership Committee meeting, in October last,
the question was put whether, by paying an extra subscription, without increasing
the charge to the Company, the pension age could be reduced to 60. The reply is
that this would alter the fundamental principle of the Fund, which, as already
stated, is to provide pensions when through infirmity, or old age men must
cease working, and this principle must be maintained. Moreover, to introduce
an additional and quite different scale of payments, varying with the age of
the members, would be impracticable. I told the Committee that the [Directors
had altered Rule 10, relating to retiring before 65, as explained above, and
said that to retire at 60' there would be half a crown a week to make up, which
might perhaps be done by a Supplementary Fund worked independently. Mr. Sims
was requested to ascertain what weekly payments would be necessary at all ages
from 20 to 50 to provide 28. 6d. a week at 6O. calculated at 4 per cent,
interest, this .being the rate that may be taken as the average yielded by
investments in the Company's stock. I have made an independent calculation, and,
both agreeing, they were submitted to the Co-Partnership Committee on November
15.
We find in Whitaker's
Almanack a table giving the average expectation of life at various ages. At 60
a man may expect to live thirteen years; therefore, to provide 2s. 6d. a wee k
for life at 60, a certain sum of money is necessary. £67 invested at 4 per
cent. will give £6 10s. a year for thirteen years, when it will be used up; it
is therefore as near as may be the right amount. The other part of the question
is the weekly payment at all ages, which, invested at, 4 per cent., will amount to £67 at 60.
The following is the scale of payments:-
Age 20 to 23 0 3d a week
24-27 0 4d.
28-31 0 5d
32-24 0 6d
35-36 0 7d
37-38 0 8d
39-40 0 9d
41 10d.
43 1 0d.
44 1 1d
45 1 3d
46 1.
5d
47 1 7d
48 1 9d
49 1 11d
50 2 1d
Is there any probability that men will become subscribers in
sufficient numbers to justify the trouble and expense of starting and working a
new Fund? If so, I am sure the Directors would be willing; but all that such 11
Fund could do is already provided for in our Co-Partnership. It is simply a
method of saving, almost identical with the existing method. Any man can now
give an order to the pay-clerk to stop any amount the man chooses to name
weekly from his wages, for investment in stock, or to be saved for a definite
purpose-such as for holidays, or to provide for some expected or unexpected
expense in the future. The only difference, in the proposed Supplementary Fund
would be that, once having joined, it would be necessary to continue the
payments until 60 years of age in order to obtain the object of increasing the
pension 2s. 6d. a week at that age. Further, by a right use of the Co- Partnership,
much more than half a crown a week can be secured. One pound a year saved and
invested in stock paying, 4 per cent will amount in 40 years to £95; and as the
stock yields rather over 4 per cent., it will be fair to say that £1 a year so
invested, or &40 in all with 4 per cent. interest, will in 40 years reach
£100. If a man's total bonus amounts to say £6 10s. a year, and this is well below
the average paid last July, he will have in 40 years, not merely £67 to provide
half a crown a week, but £650, which. will yield to him 10 half-crowns, or 25s.
a week as an annuity for life, or the interest only, without touching the
capital, will give 10s. a week. If you save all the bonus you will not want the
means to retire at 60; to which, if a man begins subscribing to the Superannuation
Fund at 20, there will be added 11s. 3d. weekly by the new rule. Therefore join
the Fund as early as possible.
It only remains to give the history of the Fund for the
first 50 years of its existence.
By the original rules the pensions were fixed at 10s. weekly
for subscribers of 3d. and 14s. for 6d. subscribers, whether a man had paid for
10 years or 40 or more. This was altered in 1887, and now 10s. is the minimum
or lowest pension for weekly subscribers of 3d., the scale rising from 10s.
after 25 years' subscriptions to 17s., for 43 years' membership, and the 6d.
subscribers are dealt with in the same proportion according to Rule 7.
The Company began by subscribing .£50 a year, which 'was increased
to £100 in 1862, to £150 in.;1864, to £200 in 1876, and in 1881 to 40 per Gent.
of the members' subscription, or £822. Then in 1891 it was increased to 100
per: cent. or £1,232, and in 1900 for a
time to 133 per cent. or £3,574.
In 1880 the Surrey Consumers and the Phoenix Companies were amalgamated
with the South Metropolitan, and their men were at ((2 lines missing)) increased
to 40 per cent. of that of the members. In 1891 it was further increased to 100
per cent., and in 1900, after another actuary had reported that the Fund was
not sound financially, the Company guaranteed the stability of the Fund-that
is, they undertook to pay the agreed pensions under any circumstances, and they
increased their contribution for a time to 133 per cent. ''hey also agreed to
secure 5 per cent. on the yearly balances to be invested, by adding the
necessary amount of money, which is shown in the annual accounts. And the
Company has also borne all the expense of keeping the accounts and. working the
Fund, which is considerable.
The totals received from all sources and the totals paid out
from the start to December 31st, 1904, are here given
RECEIPTS
Members' Payments . £38,031
12 8
Company's Contributions . £33,351 14 3
Ditto to make up investments to 5 per cent. 3,420 6 1
36,780
10 4
Interest received 24,259 7 2
Profit on sale of Investments 13,691
6 11
£102,763 5 8
PAYMENTS-
Superannuation allowances. 43,565
10 7
To Representatives of deceased Members and Members leaving
the Company's Service
11,1313 12 4
£54,689 2 11
Balance in hand January 1st, 1905 £48,074
2 9
Of this balance £43,798 8s. 5d. had been invested in the
Company's Stock, and there was £4,275 14s. 4d. in hand invested this year.
With so much balance why cannot the Fund deal more
liberally, some may think. Suppose it were to be wound up, the £48,000 or so in
hand would have not only to maintain the present pensions of about £3,000 a
year-£2,960 was paid last year to 112 pensioners- but it would also be called
upon to provide pensions for, or other- wise to compensate, all the present
members. The interest received last year was £1,965, or £1,000 less than the
sum paid in pensions, therefore one-third o! the pensions, or £1,000 a year,
are taken from current subscriptions, whereas those subscriptions are needed to
provide future pensions.
It was this deficiency that led the Directors to propose,
and the Shareholders to agree, to guarantee the Fund. ''hey also agreed to increase
their subscriptions for a time from 3d. to 4d. a week per member, or to 133 per
cent., and to secure 5 per cent. on the investment. It is hoped that by these
means the interest on the invested funds will in time pay the current pensions,
and then the Fund may be considered to be in a satisfactory (2 lines missing)
The remark has been made that the Company makes a good thing
out of the Fund. I think these figures show clearly that the Company has always
been giving and never receiving. It is true the Fund has been a good thing for
the Company indirectly, for the Directors and Shareholders have had the
satisfaction of knowing that hundreds of their fellow-men, their old servants,
have been provided for by the mutual help of Employers and Employed, and the Company
has also benefited by their men taking an interest in working for the Company.
Of course, no man who thinks could entertain the absurd idea that the Company
makes a monetary profit; but, unfortunately for themselves and for others,
there are some men who do not think, but they talk nevertheless.
Such is the origin, object, and history of this Fund. At
this its Jubilee it stands as a tried and faithful friend of the Company and its
Workmen, Some of the young members may live to see its Centenary 50 years
hence, and I hope and believe they will be able to bear testimony to its
continued beneficence, and to rejoice that there were those who 100 years
previously had the good sense and the kindness of heart thus to solve for the
South Metropolitan Gas Company's Employees the question of old age pensions in
a manly and independent self-help manner; vastly better and more satisfactory than
it could have been done, as the Socialists desire, by any Government or State.
GEORGE LIVESEY
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