The Rate of Interest which should be Employed in the Valuation of a Pension Fund and the Values which should be Placed on Existing Investments

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1. After the discussion on Sir George (then Mr) Epps's paper on ‘Superannuation Funds’, the President in proposing a vote of thanks said: ‘It is of the highest importance that we should exchange views with one another and try to come to a common opinion on matters of practice so that the world at large will bring against us no charge of inconsistency in the advice which we respectively give to those who consult us.’ In 1921, when Epps's paper was presented, actuaries were faced with the position that current yields on new investments were very much higher than had been anticipated in earlier valuations, while most of the older funds had suffered very heavy depreciation in values of existing investments. Today the circumstances are reversed. The rate of interest which can be earned on new investments is very low, but there has been substantial appreciation in values of existing investments. It is in the hope of provoking an exchange of views on the best method of dealing with this present situation that this paper has been written.