Simulation is the technique of examining a problem by playing it through like a game. Usually the problem involves probabilities and these are modelled in the game by a random element introduced by throwing a die, picking numbered counters from a bag or generating random numbers on a computer. Usually the probabilities of interest are estimated by playing through the game a large number of times. It is the speed of the modern computer which has turned the technique from an interesting toy into a powerful tool.

As an example suppose we have a problem involving a payment if a life aged x dies before age x+1 and we are given qx = ·024, say. If we have a bag with counters numbered 1, 2,… 1,000 and pick one at random then the probability that the number drawn is less than or equal to 24 is just ·024. Hence it will be convenient to invent the ‘rule’ that at that point in the game if the number drawn is less than or equal to 24 then x dies and the payment is made, otherwise he lives and no payment is made.

1. A great deal of time and energy has been spent over the last twelve months or so on the Government's proposed 1972 State scheme. And rightly so, for the financial implications are substantial while the problems of advising employers and trustees on how or to what extent to adjust their occupational schemes, and on how to operate them thereafter, are formidable.

2. As a result, however, there is perhaps a danger of not enough attention being paid to the proposed simultaneous legislation for the preservation of pension rights. The object of this paper is to air some of the problems related to pension preservation and its implications.

Some definitions

3. The Department of Health and Social Security's latest summary of the Government's three 1969 Social Security White Papers (Cmmd. 3883, 4124 and 4195) were, I suspect, prepared primarily for the benefit of members of the two Houses of Parliament. It seems that many of them have had some difficulty in understanding the complexities of the new earnings related pension proposals. Certainly the Government's spokesman in the House of Lords found quite a few difficulties in presenting the White Paper on abatement to that body.