The object of this paper is to provide a basis for a discussion on the advisability or otherwise of life offices issuing ‘variable annuities’ in this country on a commercial basis.

As this is a relatively new subject it is, perhaps, as well to define our terms at the outset. The form of contract which has come to be referred to under the name of ‘variable annuity’ is one under which the annual amount payable is not a fixed sum in terms of money, but a fixed number of annuity units the cash equivalent of which varies from time to time in accordance with the variations in the market value of the assets in which the fund is invested.

The substance of the paper was originally written about a year ago as an internal office memorandum summarizing reports and notices appearing in the financial and insurance press both here and in the U.S.A. about this new American idea, and the authors were of the opinion that as the subject had received little other attention in this country it would form a suitable topic for discussion at one of the Students' Society meetings.