Distribution of Surplus Under a With-Profit Group Bonus System

Synopsis

The paper describes a with-profit group bonus system similiar to a rebate system being operated at the present time. It is suggested that, in view of the present high level of interest rates, the premium rates for such a scheme should be based on an immunization approach, and the paper describes how these rates can be calculated using a computer. It is envisaged that capital profits for with-profit group pension business will be distributed, and a system is outlined for arriving at the distributable surplus, and for distributing it. This system is based on reserves calculated on the premium basis and on a special “market value fund”.