Experiments in Connexion with Returnable Premiums in Group Pension Schemes

Extract

In contributory group pension schemes it has become customary to arrange for the employee's premiums to be returned, without interest, on the death of the employee, or on his withdrawal before reaching his pension date. It will be agreed that this is of secondary importance in the composition of the scheme; nevertheless its presence does introduce complications to the conduct of the business which are possibly out of proportion to its significance. It is with this aspect that this paper is concerned; it represents an attempt to give the death return a simplified place in the administration of the business which is more in keeping with its importance. The complications mentioned arise from the strict adherence to formulas which make theoretically correct allowance for the death return. The simplifications in administration follow from a simple and natural approximation to the death return, and the extent and practical consequences of the approximation are examined in the paper.