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Some experiments with salary scales
Published online by Cambridge University Press: 20 April 2012
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1. Salary scales have been widely used in actuarial literature about pension schemes, but they do not seem to have been developed beyond the idea first introduced by Manly (1901) and used in a series of papers following this, including McGowan (1901), Manly (1902, 1903 and 1911), and M'Lauchlan (1908). King (1905), Bacon (1907) and M'Lauchlan (1914) discuss the construction of a salary scale from records of individual employees. King made some valuable observations on how a salary scale may change with time if the observed population is not a stationary one, for example, because the firm is growing or declining, which Bacon also commented on, and M'Lauchlan went into considerable detail about the separation of different grades. Thomas (1913) gave an example of an organization with six ranks, within each of which there was a salary scale, and showed explicit probabilities of promotion in each year of age. His development comes closest to what I shall discuss below. Text books on Life Contingencies, such as Jordan (1952), Hooker & Longley-Cook (1957) and most recently Neill (1977), have followed essentially the definition introduced by Manly, as also have papers and text books on pension funds, such as Porteous (1936), Marples (1948), Heywood & Marples (1950), Crabbe & Poyser (1953) and Lee (1973). Curiously Spurgeon (1922) does not mention salary scales, although his book was written after they had come into use.
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- Copyright © Institute and Faculty of Actuaries 1985
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