1.1 The actuarial profession has for decades, indeed centuries, used age-related tables, particularly (although not exclusively) of mortality, which in preparation have been subjected to the process known as graduation. Five purposes of such graduation have recently been set out by Vallin, Pollard and Heligman and these may be summarized as follows:

(1) to smooth the data, make them easier to handle, remove irregularities and inconsistencies;

(2) to make the result more precise on the reasonable assumption that the real mortality underlying the observations is a smooth curve, i.e. to remove sampling and other errors;

(3) to aid inferences from incomplete data;

(4) to facilitate comparisons of mortality;

(5) to aid forecasting.

Of these purposes, (1), (2) and (3) may all be paraphrazed as implying that the purposes are to make the table smooth, and (4) and (5) as indicating uses to which a table may better be put if smoothed. So the purposes of what the profession has come to term ‘graduation’ all boil down to the production of a smooth table, and for the rest of this paper until the last section I shall use the word ‘smoothing’ rather than ‘graduation’. But what is smooth?

The new series of Financial Times–Actuaries fixed interest indices commenced in 1977 with the first publication in the Financial Times of the British Government Securities Indices. These were described on behalf of the Joint Index and Classification Committee of the Institute and the Faculty in the paper by G. M. Dobbie and A. D. Wilkie, “The F.T.–Actuaries Fixed Interest Indices”, J.I.A. 105, 15 and T.F.A. 36, 203. Subsequent notes in J.I.A. and T.F.A. have given annual reviews, the last, for 1980, appearing in T.F.A. 37, 327. Part 1 of the present note continues the history of the B.G.S. Indices up to the end. of 1984.

From the very outset of the formation of pensions schemes in the United Kingdom, actuaries have been involved in their design, investment, valuation and solvency. A review of issues of the Journal of the Institute of Actuaries in England and the Transactions of the Faculty of Actuaries in Scotland over the last 40 years would show how schemes have become more complicated and more comprehensive, how the economic and equity problems have increased and how the actuarial profession has successfully adapted its theory and practice to accommodate change. After World War II the rapid growth in occupational pension schemes together with the post-Beveridge expansion in State social security led to concerns about the overall effect on the national economy. As a consequence, in 1954 a report on “The growth of pension rights and their impact on the national economy” was presented to both the Institute and the Faculty of Actuaries by Bernard Benjamin, Francis Bacon and Donald Elphinstone.

J.I.A. 112, Part I

P. 56: the speaker was Mr. M.J. Payne not Mr. M.G. Payne.