19
the teachers’ contributions are placed in
individual accounts, while the state’s
contributions are available to meet cur­
rent pension payments, with any bal­
ance being available as a general re­
serve. The maintenance of modified
rather than full reserves permits lower
initial contributions by the governing
body, does not require as large a pen­
sion reserve fund as would be necessary
under the full reserve plan, and if pro­
perly developed and supervised may be
financially sound while still avoiding
the necessity of greatly increased con­
tributions by the governing body in
later years.
In the second place, criticisms are
sometimes directed at provisions com­
monly found in allocation reserve plans,
but not essential characteristics of such
plans. For example, allocation reserve
plans do not normally definitely state
the sum which will be paid as an an­
nuity, that being made to depend on
the contributions and rate of interest
received. This indefiniteness, if consid­
ered serious, could be met by varying
the rate of contribution according to
such factors as the age and sex of the
employee, so that a definite sum could
be promised as a pension.
The specific advantages of the ac­
tuarial reserve plan are: (1) lower
costs because accumulated interest com­
pounded annually bears a part of the
cost, (2) costs are known w ith suffi­
cient accuracy so th at benefits are lim ­
ited to the financial abilities of the par­
ticipants, (3) the plan is in accord w ith
the policy of “pay as you go,” since it
distributes the financing burdens equit-
(Continued on page 28)
inquire About Low Cost Loans
Through the
State Em ployees
Credit Union
w here all dealings are strictly confidential. In th e past
eight years we have loaned m ore th a n $26 1 ,0 0 0 .0 0 to
state em ployees in Salem and M arion C ounty.
If y o u w ish to borrow m oney, w e will b e g la d to furnish full infor­
m ation w ithout obligation or e m b arrassm en t to you.
See W. J. P . FA R R ELL , T r e a s u re r
518 S tate O ffice B uilding, Salem ,
o r call 4171 E x ten sio n 303