The Pamphlet Collection of Sir Robert Stout: Volume 8
The following Report of the liability of each Lodge in the Brighton District of the Manchester Unity of Odd Fellows will explain the origin and the object of this Treatise, which is published in a separate form in the hope that it may be useful to and supply a want which has long been felt by Friendly Societies for their assistance and guidance:—
To the Valuation Committee of the Brighton District of the Manchester Unity of Odd Fellows. Sirs and Brethren,
Agreeably to your instructions, I have made a valuation of the liabilities of each Lodge in the Brighton District, as on the 31st December, 1878, from a return from each Lodge in the District, showing the name of the Lodge; the number of members at each year of age; the contributions payable at each age to the sick and funeral fund; the amount of the sick and funeral fund; and the rate of interest realised on each investment.
The oldest Lodge in the District is the Brunswick Lodge, established on the 7th December, 1822. This Lodge, originally held at the Brunswick Arms, Brighton, for many years dispensed only sick gifts and funeral donations, each brother paying one penny per week to any sick brother, and one shilling towards any brother "that it may please God to call from our earthly Lodge." These collections proving financially inconvenient, a fixed equal, or rather unequal, contribution of four pence, and ultimately five pence per week per member, and fixed sick and funeral benefits were adopted. It was under this primitive plan of the mother Lodge of the same contribution for all ages that nineteen out of the twenty-seven Lodges in the District were afterwards established—viz., two in 1842, two in 1814, six in 1845, four in 1846, three in 1847, and two in 1853. When, however, the inadequacy and injustice of a low equal contribution for all ages were manifest, there was supplemented in 1853 a plan of additional annual contributions for new members exceeding twenty two years of age. Lastly, chiefly in consequence of the publication in 1850 and 1862 of the Sickness and page iv Mortality Experience of the Order, contributions graduated according to age at entry became imperative for members admitted since the 1st August, 1866, by a General Rule, which also provided that Districts "shall have power to fix" the contributions of members admitted previous to that date. The Brighton District, and other Districts, having made this alteration in the contributions apply only to new members, the words have power to were struck out of the 38th General Rule at the Richmond A. M. C., 1874, thus making the alteration thereafter apply also to oll members.
At the present time, therefore, there are, so far as contributions are concerned, three distinct classes of members in the District: (1) members who still pay, generally, five pence per week; (2) members who pay five pence per week and additional annual contributions; (8) members who pay contributions graduated according to age at entry.
The benefits assured to members in the District are generally 12s. 6d. per week in the first twelve months' sickness, 6s. 3d. per week in a continuance of the same sickness, £12 at the death of a member, and £8 at the death of a member's wife, being the same benefits as those assured when all members paid equally only five pence per week.
Before showing the net liability in expectation of each Lodge for sick and funeral benefits, it is necessary to say a few words with reference to the funeral liabilities.
The assurance of £12 payable at the death of a member, and the assurance of £8 payable at the death of a member's wife, called the funeral money, are liabilities not undertaken by the Lodge but by the District, in the following manner :—The twenty-seven Lodges comprising the Brighton District join together in paying the funeral claims of the District, thus spreading these claims over a larger number. The amount required is charged to each Lodge according to the number of its members, regardless of their ages at entry, by an unwise rule of the District. Thus, the youngest member admitted is made to contribute as much as the oldest member, which, of course, is not equitable, nor in accordance with the improved system of contributions graduated according to age at entry, as page v a member admitted at age 18 should contribute only about one half of what should be contributed by a member admitted at age 45. But with the present practice of the District with regard to the funeral money, I have nothing more to do than to deal with the facts as I find them, and to value the liabilities of each Lodge accordingly.
The amount of the funeral claims of the District being, then, contributed by each Lodge in the District, according to the number of its members, regardless of their ages at entry, the value of £12 payable at the death of a member does not depend on the ages of the members of each Lodge, but on the average age of the members of the District. The age of the members of the District, one with another, being 34 years, the value of an assurance of £12, payable at the death of a person now aged 84, at 4 per cent., according to the Manchester Unity Table of Mortality for 1866-70, is £4.08552. Therefore, multiplying £4-08552 by 293, the number of members in the first Lodge—the Brunswick Lodge, in Class I., gives £1197.05786=£1,197 Is. 2d., the value of all the members' funeral benefits in that class; and so on for the other classes and Lodges.
The value of all the wives' funeral benefits depends, in addition to the above, on (1) the number of wives and (2) the proportion of the age of the wife to that of the husband. With regard to the number of wives, the last reliable return to 31st December, 1871, shows that more than one-fourth of the members of the District were unmarried. Assuming, then, that three-fourths of the members are married, and that every member is of the same age with his wife, the value of an assurance of £3, payable at (he death of a person now aged 34, at 4 per cent., according to the Manchester Unity Table of Mortality for 1866-70, is £2.72368. Therefore, multiplying £2.72368 by 220, the number of wives in the Brunswick Lodge, in Class I., gives £599.2096=£599 4s. 2d., the value of all the wives' funeral benefits in that class; and so on for the other classes and Lodges.
These Values of the average funeral benefits being liabilities undertaken by the District for corresponding amounts contributed by the Lodge out of the members' contributions, the page vi actual funeral benefits of the Lodge may be greater or less, but these are the amounts expected to be charged to the Lodge by the District for paying all the funeral claims of the District.
With these explanations, I will now proceed to show the net liability and amount of the sick and funeral fund of each Lodge in the District as on the 31st December, 1873:—
This valuation, in order to determine as to the solvency of each Lodge in the District, has been made on the basis of the Sickness and Mortality Experience of the Manchester Unity for 1866-70, at the average rate of interest realised by each Lodge, up to per cent. No less than twenty-one out of the twenty-seven Lodges in the District—in fact all the older Lodges, with but one exception, a country Lodge—realise, on an average, a higher rate of interest than 3 per cent., and the investments on Mortgages, Town Debentures, &c., are such as are most likely to realise the same rates of interest in the future.page vii
The above total deficiency of £18,882 4s. 6d. in some of the Lodges in the District has arisen from the inadequacy of the weekly contributions of the members admitted previous to the 1st August, 1866, as will be seen by comparing, in the valuation, the value of each class of members' contributions to each Lodge in the District with the value of each class of members' sick and funeral benefits.
It being now compulsory, by the 88th General Rule, for the District to fix the amount of contributions to be paid by the members of each Lodge in the District, admitted previous to the 1st August, 1866, the good sense and right feelings of the District Officers and Deputies will doubtless guide this difficult affair to a satisfactory solution.
As there is no good text-book to which I could refer the District Officers and Deputies for assistance in the matter, I have drawn up a brief Treatise on Friendly Societies, explaining the modern methods of constructing tables of life and health contingencies, which I have added by way of supplement to this Report.
The Preparatory Tables, involving the rate of interest as well as the rates of sickness and mortality, were constructed by the aid of logarithms. They could have been constructed by actual multiplication, but the process would have been more laborious and the risk of error greater. For the purposes of Friendly Societies five figures of the tabular values being sufficient, I have used Bremiker's table of five figures of numbers to six of logarithms. This work, uniform with this Treatise, may be procured through Messrs. C. and E. Layton, 150 Fleet Street, at the low price of two shillings per copy in paper cover.
In the following Treatise, which is complete as far as it goes, I have endeavoured to make the language accurate and the computations free from errors, typographical or otherwise.
By means of this Treatise may be constructed tables of weekly contributions by simple multiplication and division.
Example 1. Weekly contribution, at age 18, for an assurance of 12s. 6d. per week in the first twelve months' sickness during life, 6s. 3d. per week in a continuance of th page viii same sickness, £12 at the death of a member, and £8 at the death of a member's wife.
This example shows that the early contribution of 5d. per week for an assurance of these benefits was an inadequate one, even at the youngest age at entry, under the plan of the same contribution for all ages, from age 18 to 36.
Example 2. Weekly contribution, at age 36, for an assurance of 12s. 6d. per week in the first twelve months' sickness during life, 6s. 3d. per week in a continuance of the same sickness, £12 at the death of a member, and £8 at the death of a member's wife.
This example shows that the early contribution of 5d. per week for an assurance of these benefits was exactly only half the sum which should have been paid at the oldest age, under the plan of the same contribution for all ages, from age 18 to 36.
It being then clear, both from the valuation and the supplementary Treatise, that the contributions of the old members have been long inadequate, the old members cannot object to escaping, should the District Officers and Deputies decide on their paying only for the future, what they should have paid during the whole time of their membership.
Yours truly and fraternally,
William Hatton, Actuary,80 New Road, Brighton, Brunswick Lodge, No. 118,
August 20th, 1874.