1. In the past, concepts of funding and methods of costing have frequently been discussed in papers submitted to the Institute and the Students' Society usually with particular emphasis on selfadministered funds. There is still scope for further thought on the subject of funding methods and it is hoped that this paper will provide an opportunity for further discussion with particular reference to insured schemes. Life offices are not in the same position as consulting actuaries since their basic function is to insure the benefits required rather than to give professional advice. At the same time they have a responsibility to ensure that their costing methods are basically sound and that the issues involved are not misrepresented to their prospective and current policyholders. In recent years there has been a tremendous demand for final salary arrangements using the controlled funding system of administration but little attempt has been made to codify the principles which ought to be followed in making cost estimates.