A UNIVERSITY PENSION SYSTEM 505 



In other words, the total expense on account of old age pensions in 

 Germany for that year amounted approximately to $57,000,000, of 

 which the state paid something over $12,000,000 — an interesting con- 

 trast to the enormous expenditure of the United States upon war pen- 

 sions in the same year, the difference arising in the main from the fact 

 that one expenditure was made under a carefully thought-out and care- 

 fully planned system, the other under an arrangement largely the result 

 of accident modified by political considerations. 



The relative wisdom of these different forms of pension systems has 

 been the subject of sharp discussion during the past fifteen years. Out 

 of this discussion one or two general principles appear to have been 

 settled. The investigators of pension systems agree that the pension 

 should be paid under definite and specific conditions, not as a matter 

 of chance or of preference. A second conclusion to which practically 

 all publicists have come is that the system under which a part of the 

 pension is paid by the employing agency, but in which entrance to the 

 pension system is a voluntary act, is a failure. Not that such a pension 

 system will not accomplish good for many of those who enter it, but the 

 very person it is instituted to relieve will not be affected by it. Such a 

 system will, as a rule, fail either to relieve or to educate those lacking 

 thrift, the very class most likely to need aid in old age. The experience 

 of the past seems to show that one might as well expect all government 

 civil servants to take out life insurance policies as to enter into such a 

 plan for the relief of old age. 



The discusion of pension systems at the present date, therefore, has 

 practically settled down to the consideration of two systems : either one 

 in which the contribution is compulsory upon all the prospective pen- 

 sioners, or one in which the entire cost is borne by the regulating 

 authority. It seems likely that in the future the development of pen- 

 sion systems by corporations or by governments will be along one of 

 these lines, and this notwithstanding the fact that serious objections 

 have been made and continue to be made to both plans. 



If contributions are exacted from all, the contributors acquire rights 

 which in some cases prove embarrassing to the administrators of the 

 fund, if that administration be a government or a corporation. For 

 example, great difficulty was found in dismissing certain dishonest 

 police officers in New York City, because by their contributions to the 

 pension fund of the force they claimed a vested right in their office. 

 This, of course, is an extreme case. 



It has also been shown by experience that in a contributory pension 

 system the emploj'ees will sooner or later make the following demands, 

 which it is difficult for the employer to resist, and yet which greatly in- 

 crease the cost of the pension system : ( 1 ) that if the employee resigns 

 or is discharged his contributions shall be returned to him, with interest ; 



