A NEW AID TO THRIFT.
IT is worth the while of those who are interested in pro- moting thrift to consider the novel arrangements which have lately been made by the Post Office for facilitating the purchase of small annuities and policies of insurance. The efforts of the Government to bring this species of provision for old age and for wife and child within the reach of per- sons of small means have not hitherto met with conspicuous • success. The Post-Office Savings' Bank, started in 1861, has advanced in popular favour by leaps and bounds. In less than twenty-five years it has become the depository of about £40,000,000, and has secured as a customer one out of every 'ten persons in England and Wales. In 1861 the experiment of using the Post-Office machinery to promote saving habits was repeated with reference to annuities and insurance. The Postmaster-General was authorised to effect insurances in sums varying from £20 to £100, and to grant annuities of £50 or less. Singularly enough, this second experiment has hitherto been a comparative failure. Immediate annuities have been granted at the rate of between seven hundred and eight hundred a year, but not more than fifty deferred annuities have been purchased each year since the com- mencement of the system, and less than four hundred policies of insurance. When these figures are compared either with the millions in which the Savings' Bank records deal, or with the huge transactions of such associations as the Prudential Insurance Company, it is obvious that the Post-Office Annuity and Insurance system has, for some reason, failed to meet the public requirements. It was hardly to be expected that Mr. Fawcett would be long at the Post Office without endeavour- ing to ascertlin the cause of this comparative failure. In 1882, a Select Committee of the House of Commons was appointed at the instance of the Postmaster-General, and the suggestions embodied in their report became the subject of an Act passed in the same year. To this Act effect has now been given by the issue of new tables and regulations, and the amended system came into operation early last month.
By the new Act, the minimum limits previously existing in the case of insurances and annuities have been abolished, and the maximum for an annuity has been raised from £50 to £100. The restrictions as to age have been relaxed; an annuity may now be purchased on any life above five, and an insurance on any life above eight, the amount, however, not exceeding £5 up to the age of fourteen. But the most important change recom- mended by the Committee and adopted by the Government (a change which is due to the suggestion of Mr. Cardin, an able and energetic official of the Post Office), is the transaction of Insurance and Annuity business, not only through the Post Office, but through the Post-Office Savings' Bank. This may not at first sight strike any one as a very fruitful expedient, but a few words will make the character of the change and its importance clear. Hitherto a person wishing to insure his life or to buy an annuity has had to choose one of about 2,000 post offices at which to pay his premiums and to transact business. If he left the part of the country where this office was situated troublesome formalities had to be gone through before the account could be transferred to a more convenient place. In future there will be no such restriction. The purchaser of an annuity or policy will, from the time he makes his first payment, become a depositor in the Savings' Bank. An account will be opened in his name, and he may henceforth use any of the seven thousand post offices where savings' bank business is conducted for the payment of his instalments or premiums. Further, he will not be obliged to make his payments at any fixed time. He may pay in his spare cash when and how he likes, only taking care that at the time the payment for his annuity or insurance becomes due he has money enough stand- ing to his account to make good the requisite amount. The application of the sum to the payment of the premium will be effected by the Post Office without any trouble to him. He will, in fact, be in the position of a man who has given an order to his banker to draw on his account for an annual subscription to a club or charity, and he will have the advan- tage of a bank with branches in every village of any size throughout the country. On the other hand, the union of Insurance with Savings' Bank business will act as an advertisement of the facilities offered by the Post Office. Every Savings' Bank deposit-book will contain a notice of the leading rules as to annuities and life insurance, and thus, as new accounts are opened or new books issued on old accounts, the system will gradually be brought to the notice of the enormous clientele of the Savings' Bank,—a body of more than 3,000,000 persons.
Mr. Fawcett., in one of his recent speeches, instanced some striking examples of the extent to which very slight efforts by way of saving in youth will afford substantial assistance in old age. A lad of fifteen is commonly in the receipt of weekly wages varying from 10s. upwards. To put aside a penny a week is a quite imperceptible sacrifice. But, by such a minute act of saving, continued through life till the age of sixty, an annuity of £2 10s. will be secured at that age. Thus each penny a week saved will bring Is. a week in old age. Savings' Banks do not receive less than Is. at a time ; but the- stamp slips introduced a few years since are received as deposits, and hence all that is necessary is to put a 1d.
stamp on the slip each week, and to take the slip to the Bank when full. Saving habits could hardly
be made more easy. Of course, a more considerable
act of saving will receive a proportionately greater reward. If is. a week is saved from fifteen to sixty, instead of id., the annuity payable will be £30—a very solid support in declining years. Take another class of cases. A governess can obtain employment much more easily between twenty and fifty than after fifty. If, during her best years, she puts by 2s. a week, she will secure at fifty an annuity of £18 a year. The annuity of a man making the same saving will be £21; the average longevity being not quite so great, and the tables, therefore, more favourable. And it will not be necessary, it is to be remembered, under the new scheme, to put the 2e. into a stocking every week. until the full amount of the annual in- stahuent is made up. The amount can be paid into the Savings' Bank at the nearest money-order office weekly, or at any times most convenient. It is something, in such cases, to have the act of self-denial performed once for all, and the money put out of reach, instead of lying before its owner always temptingly offering itself to be spent. The act of saving may, indeed, be made almost automatic. If a man or woman of twenty has £20 deposited in the Savings' Bank, the interest of this sum (10s. a year) may, by an order given once for all, be devoted to the purchase of an annuity or insurance ; and thus, without any further action on the part of the saver, and without touching the capital, an annuity of £5, or an assured sum of about £25, may be secured at sixty. If the £20 is invested in Government Stock through the Savings' Bank, the interest will be 12s. instead of 10s. annually, and the annuity or insurance will be proportionately larger ; and if further sums are added to the £20 from time to time, the interest of these may be similarly devoted, and the result still further improved.
On the whole, one would have thought that the system of insurance would not be quite so attractive as that of deferred annuities, the sums insured by small savings being themselves too small to afford much in the way of capital to those for whom the insurant desires to provide. The figures we gave at the commencement of this article show, however, that this is not the popular view ; and the great success of the Prudential and other popular insurance companies places it beyond doubt that, to secure even so small a sum as £5 on death, is a desideratum with the wage-earning class, the payment of funeral expenses being a burden which it is thought well to meet by such means. The new Government tables give the person wishing to insure, a choice between various methods. He may adopt the ordinary plan of securing a sum at death by a payment throughout life, or he may arrange that his premiums shall cease at sixty. He may, on the other hand, secure payment at sixty or sooner in case of death ; or, if he likes to make his purchase by a single, instead of an annual premium, he may secure a sum at death, at sixty, or at the end of various fixed periods from ten to forty years, or sooner in each case in the event of death. To revert to the example we first gave, if the youth of fifteen devoted his penny a week to the purchase of an insurance, he might secure about £12 payable at death, or a slightly less sum payable at sixty or sooner in the event of death. Even the maximum sum insurable, 1100, might be secured at death, or at sixty or sooner in the event of death, by the saving of so small a sum as 8d. a week in the first case, and 9d. in the second.
It is not only by means of convenient tables and of rare banking facilities that provision for old age and death is now made easy to persons of small means. Many incidental aids have recently been extended to the thrifty. Thus, by an Act of last year a depositor in a savings' bank has been enabled to nomi- nate a person to receive the deposits at the death of the depositor, all formalities in the shape of Probate or Letters of Administra- tion being dispensed with. The same advantages are now extended to persons insuring through a savings' bank. At the same time, in cases where it is still necessary to obtain Pro- bate or Letters of Administration, the expense has been reduced to a minimum in the case of small amounts by Mr. Gladstone's Act of 1881. But perhaps the greatest aid to thrift has been supplied by the Married Women's Property Acts. It is notorious that women of the working-
classes are more prone to save than men. The clear and decisive provisions of the Lord Chancellor's Act of 1882, place savings made by married women completely out of their
husbands' power. In the case of insurance, in particular, a married woman is empowered to effect a policy upon her own life or her husband's for her separate use, that is, so that the policy is freed from the claims of her husband's creditors ; and any husband or wife in solvent circumstances may, by a simple declaration, settle a policy on his or her own life for the benefit of the family, with all the results flowing from the ordinary marriage settlement. Such aids to thrift will not, of course, make themselves felt immediately ; Englishmen are proverbially slow to enter upon new ways. But in time the conjoint effect of such legislation must be felt ; and one may hope that more and more money will gradually be abstracted from the pockets of the brewer and the distiller, to the temporary embarrassment perhaps of the Chancellor of the Exchequer, but to the lasting profit of the nation.
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