1.1. In text-books concerned with the study of pension funds the space devoted to the calculation of emerging costs is usually small and this is probably in keeping with the number of occasions when such estimates are necessary.

If, however, it is accepted that the purpose is to produce the best estimate of the emerging costs, the calculations become interesting and consideration of the appropriate bases provides a useful background to the selection of a suitable basis for valuing the capital liabilities of the fund.

1.2. This paper develops some ideas generated while preparing detailed estimates of the emerging costs of several immature pension schemes with high rates of turnover of staff. A computer model is described which at the moment is in the early stage of development. Having outlined the pattern of costs derived from the model, the paper considers the effects of simplifying the original assumptions and in particular compares the results of using a traditional valuation basis.

When I realized that this was a jubilee lecture my mind flew to our 21st supper and celebration. The guest of honour was Sir Andrew, then Mr. Rowell. When the waitresses had cleared the tables he rose to propose our health and said he was glad to be able to welcome us among the grown-ups; that we were grown-up he knew because he had just seen the women take our napkins away.

No-one can emulate Sir Andrew but I share his pleasure. One of the sweetest fruits of autumn is a smile of welcome from the young. So, thank you. Another reason is that I've loved many things in life from Lancashire hot-pot to Shirley MacLaine, but most of all I love a captive audience. So thank you twice.

To have leisure is to have time to stand and stare. It is a hill with a perspective. When I look around from the hill of leisure which I now enjoy–and enjoy is the word–I sometimes catch a glimpse of that other hill, 45 years down the road, from which I peered forward in my student days. Much has happened since then which seemed important at the time to that little figure scurrying along the road, but surveying the whole scene there has been an unbelievable change.

The first four sections of this note discuss loan plans and bonus funding generally, and some simple examples are shown. Section V and the appendix describe a more powerful method of solution using linear programming techniques, and the final section draws some practical conclusions.

No attempt has been made to describe the basic theories of linear programming. I am indebted for the slight knowledge of the subject I possess to the text-book mentioned in Section V; the object of this note is to demonstrate that linear programming methods can be applied in a somewhat unusual context to solve loan plan and bonus funding problems. Any errors in the technical content of this note are due to my misapplication of the text-book methods rather than to the methods themselves.

This article discusses the random walk hypothesis, examines some of the evidence that has been put forward to support it, and draws some implications for the theory of investment analysis. There seem to be only three references to the random walk hypothesis in U.K. actuarial literature—Weaver and Hall (1967), Hemstead (1969) and Moore (1972), all of whom discuss it very briefly. The vast majority of the research in share prices, portfolio analysis, etc. has been performed in the U.S.A., but this article will attempt to discuss this problem in the light of current U.K. research, as well as its application to maturity guarantees for equity-linked policies.

An investor who put £1,000 into 2½% Consols at the end of 1947 and reinvested all his gross income in the same stock at the end of each year would at the end of 1970 have stock valued at £921. Adjusted to take account of inflation, in 1947 £'s his investment with all income reinvested is worth £365. Why bother to revisit the gilt-edged market?

An investor who put £1,000 into 2½% Consols at the beginning of January 1971 and reinvested the gross dividends as they were received in the same stock would, by the middle of September 1971, hold stock worth £1,194. He is showing a 19% return on his investment after under ten months. I do not wish to draw the conclusion that we have reached a new dawn in the gilt-edged market. I draw the conclusion that money can still be made in gilts. It is a market worth revisiting.