216 ON PROSPECTS OF THE CIVIL SEE VICE, &c., 



duration) a sum equivalent to the value of the annuity he will by 

 that time have received. 



In calculating the premium to be thus paid, the following 

 chances are taken into account : 



1. The probability of the purchaser of the annuity surviving 

 to receive it. 



2. The number of years he will probably live to enjoy it, 

 should he so survive. 



These probabilities are usually deduced from the Carlisle 

 tables of mortality ; and the value of a deferred annuity, cor- 

 rected by these probabilities, is that which the purchaser should pay 

 to compensate the fund out of which the annuity is to be paid. 



It is essential, however, in order that the fund may be thus 

 compensated, that the premium paid should be invested, and 

 the interest thus obtained re-invested immediately, at the current 

 rate. Neither principal nor interest can be applied to any other 

 purpose without detriment to the fund, and therefore risk to the 

 purchaser's annuity. If a portion of the premium paid by A, or 

 of the interest which has accrued from its investment, be applied 

 to paying an annuity assigned to B, it is probable that the fund 

 will be unable to meet A's claim at maturity, but it is absolutely 

 certain that an unendowed fund so managed, will ultimately 

 become insolvent. All that B is entitled to receive from the fund 

 is the equivalent of the contributions he has paid, determined in 

 the manner before explained. He may on other grounds be 

 entitled to a larger annuity, but this difference cannot be paid 

 to him out of moneys which have accrued from the subscriptions 

 of other expectants,. without injury to the latter. 



In testing the financial provisions of the Superannuation Act 

 of 1864 by these principles, it will not be necessary to examine 

 critically every condition under which an officer can retire. It 

 will be sufficient for my purpose if I can show that, even under 

 circumstances favourable to the fund, it is impossible to carry 

 out, for any lengthened period, the obvious intentions of the Act. 



Let the test be applied to the following conditions embraced 

 in the Act : 



1. A public officer of sixty years of age and thirty years 

 service may retire on a pension equal to his full pay. 



