Appendix I.

Actuary's Report.

The Committee of Management of the Shetland "Relief Fund" having requested me to estimate the sums required to meet the allowances to widows and families of fishermen lost in the gale of 20th July last, the Convener of the Committee has furnished me with a schedule of particulars of the ages of the persons to whom they have decided to give relief. These persons are (1) widows, 34 in number, who will be allowed 2s 6d per week for life, the grant to cease if they marry again; (2) certain dependents, 16 in number, whose circumstances justify the expenditure, seven of whom are to be allowed 2s 6d per week, and nine 1s 6d per week for life without any condition annexed; (3) children under 14 years of age, 42 sons and 43 daughters, who are to be pensioners at the rate of 1s 6d per week until they attain that age; two who are imbecile are to be pensioners for life. To this grant are annexed the conditions that they shall attend school regularly, and that they shall reside in family with their mothers.

The Committee desire to be informed—"(1) the total amount of the sum required to be set apart, and (2) the amount of the annual expenditure." I append a list showing in detail the annual amount and the calculated present value of the weekly allowances to each family and each member of it.

It is necessary that I explain to the Committee on what assumptions of mortality and interest the estimate of present values proceeds. First, As regards the rate of mortality—After careful consideration and comparison of various recognised mortality tables, I resolved to adopt, as most suitable in the circumstances, the tables for males and females of the Registrar General based on the national statistics (known as the English Life Tables, No. 3) as those according to which the lives will die off. I am aware that Dr Cowie, in his work on Shetland, claims for the Islands a rate of mortality lower than for other parts of the kingdom, but had he extended his observations over a series of years instead of taking the Registrar's figures for one year only, I think it probable he would have modified his views on that point. Bearing in mind the unfortunate position in which the poor widows are placed, I do not think that they can be said to have any greater expectation than the female population of the country generally; and it is very probable that the dependents are under, rather than over, the average of lives. I do not, therefore, think it necessary to use a table requiring larger sums to be set against page 10 engagements. I do not know of any table that better measures the value of life of young persons of thè class to which these, children belong than the English table. Second—As regards the rate of interest—I have assumed 3 per cent, as the rate at which the funds will be improved. I am aware that considerable sums will have to be kept in Bank on deposit, and also on current account, so as to be easily available for the purposes of the Fund, and therefore earning a small return. Keeping that in view, and looking to the present prospects of the money market, I do not think that a higher return can be safely calculated upon; but I think that that rate can be obtained. It will be understood that if any portion of the Fund is earning a lower rate other portions must be invested so as to yield a sufficient surplus above 3 per cent, to make up an average of at least 3 per cent, upon the entire funds.

I am at a loss to know what deduction to make from the value of the allowances to the widows on account of the possible forfeiture by re-marriage. It will depend on circumstances, the force of which I am not in a position to measure, how far relief to the Fund is to be looked for from that cause. As a question of mere probabilities, the likelihood of any relief is very small. Of the 34 widows, nine only can be said to be within the marrying age. I have deducted £100, which the Committee may consider sufficient. I imagine that the Committee do not contemplate continuing the allowances to the widows throughout life, should the circumstances not refluire. There may be some relief in this way.

The annual expenditure at present will be £633 2s, and I am of opinion that a capital sum of £6000, invested as stated, will suffice to provide the allowances proposed. I have included in the estimate a sum to cover possible liability on account of children yet to be born to three of the widows. I have also made allowance in the calculation for the payment of weekly instalments.

I assume that the ages have been correctly given. If the widows or dependents have overstated their ages, the amount required to meet the allowance is under estimated, but the Committee will know if care was taken to arrive at the correct ages.

In this estimate I have made no provision for the expense of managing the fund, as I have no instruction on the point. For every £10 of annual charges there would have to be added to the above £200, being the capitalised amount of 20 years' purchase which I would consider a fair valuation. The Committee, however, may be of opinion that the expenses might be left to form a charge on the page 11 surplus interest above 3 per cent, realised on the investments. If it is resolved to provide for them in that manner ½ per cent, of margin will give £30, and 1 per cent. £60 per annum on the present amount of the Fund; but of course it will be understood that the expenses must decrease concurrently with the decrease in the Fund.

I believe that the scheme will be worked to a successful termination on the basis of calculation adopted.