It has been the experience for many years that a purchase of ordinary shares has been the purchase of an investment portfolio with a rising income. There has also been an improvement in the status of equities as an investment, or, in other words, investors are now prepared to pay more for a given equity income. It is shown in Appendix I that from 1919 to 1962 the income of a particular portfolio was multiplied over 5 times and the market valuation over 7 times. For the years 1952 to 1962 the corresponding figures are 2·2 times and 2·7 times respectively.

The original Actuaries Index was designed in 1929 and was maintained with broadly the same format and principles for more than thirty years, changes to constituents and groups being made in 1950 and 1957. Investment Policy and Index Numbers, submitted by the authors in 1956 (J.I.A. 83, 333), discussed the original index in some detail. This index was, of course, designed for manual calculation and it is remarkable that only eight years ago electronic computation was not even contemplated. In fact the word computer was never mentioned in the paper or in the discussion. With electronic facilities now so well developed the whole approach to indices is changed. The limitations, formerly imposed by manual calculation, on the size, the scope of the averaging procedures and the weighting methods, and the frequency of computation are no longer important.

This paper is primarily concerned with investment by life offices and pension funds in British Government stocks with lives of more than 5 years, although there are important implications for all classes of investors. Investing in British Government stocks over the post-war period has become a highly technical process. The advent of the electronic computer has opened up an entirely new field of statistical data thus making some of the old methods obsolete. The paper illustrates some of the new techniques developed by the author and his colleagues. Other actuaries have also been developing new approaches and it is hoped that they will contribute to a lively and constructive discussion.

The present paper is in two main parts: (1) a general discussion of the population factors which have led to a focusing of attention upon ageing with some reference to recent advances in gerontology and (2) a consideration of the actuarial implications of current gerontological research.

This paper has its origins in the authors' thoughts on the paper presented to the Institute by G. Heywood and M. Lander in 1961 under the title Pension Fund Valuations in Modern Conditions (J.I.A. 87, 314). Little claim for originality is made for the present paper: rather is it an attempt to consider in greater detail some of the problems raised by Heywood and Lander. We would also refer to the paper by C. E. Puckridge (J.I.A. 74,1) which, although we would not agree with some of its details, set out for the first time, in our opinion, some of the basic principles.