What's the use case for a tontine?
83 karma · joined January 12, 2012
Perhaps it's better to say that:
"With a tontine, others of the same age and sex bet that you’ll die before them".
https://tontine.com/lifetime-income-calculator/#tontinator
I look forward to your thoughts
That said, each Last Will & Testament creates the same scenario and (unlike in a Tontine) you typically know who you are in the Will alongside but this still doesn't seem to result in a spate of murder cases either.
A good example is that the collapse of Swiss Air created am accidental Tontine among its pension beneficiaries. Rather than trying to bump each other off, they meet up every year to hear to jointly toast the good news about their rising income: https://tontine.com/news/swissair-the-accidental-tontine/
Where they work is when each member of the group is known to each other and therefore would lose social status by defaulting on their obligations.
The benefit of these arrangements when run properly is that instead of saving $10 per month and after a year having the $120 to buy a productive asset (let's say a cow), they can get the $120 up front from the Tontine and pay the money back to the community group out of the earnings from the milk etc.
The persistance of these schemes everywhere indicates that this is a valuable means for the less well off to gain access to lump sum amounts for purchases without paying interest. Not everyone will be happy about the last part of course.
The regular Tontine Trust is for parents that want to avoid the risking of running out of money in old age and becoming a financial burden on their children.
The Tontine Trust Fund is for parents that want to set aside an inheritance for their spouse or children now which they can configure to start paying the child a monthly income for the rest of their life starting at age X. This reduces the concern of parents that they will pass on a chunk of the inheritance to children that will 'blow the money' instead of making it last them for life.
Also, FYI: a) Research from the insurance industry indicates that tontiners/annuitants spend double what they would without having a lifetime income, thereby enabling a better quality of life in retirement. b) The Swiss Federal Institute of Technology, alma mater of Einstein and 28 other Nobel Prize Winners, has produced research showing that a retirees pension wealth is enhanced by 87% with zero added risk upon moving their savings into a Tontine, indicating that the gain is not 'marginal'.
All in all, the Tontine enables you to save a little less yet still spend more.
I'd call that a major difference but then again I'm biased.
Their UI is excellent and I've just noted that they have a double-sided reward for new clients such that if you register with amnis using a referral code (e.g. mine: 08e57b) and make your first transaction, they will pay you CHF 200.
You can sign up directly here https://app.amnistreasury.com/create-an-account.
Something has gone badly wrong in there and the only answer is to close the accounts and move away asap. That's what I'm almost finished doing for my 4 companies and shortly my personal account.
Don't forget to come back here to update your comment once you get a response.
https://www.oecd-ilibrary.org/sites/20c7f443-en/1/3/5/index....
The team here at Tontine Trust (https://tontine.com) are committed to adding a "Proof of Reserves" feature that will prevent the above quoted shenanigans by exposing the assumptions being relied upon to keep the auditors happy but that the pension funds may not want their members or the public at large to know.
https://www.oecd.org/pensions/oecd-pensions-outlook-23137649...
Connect with me on LinkedIN.
We could be interested to include a posterity subscription for clients when we launch the US version of https://tontine.com in the coming months.
Cheers
Dean
I'm hoping that I substitute plain english words for lengthy patent jargon so that I can actually read the things for once.
Modern tontines are structured more like the Dutch/Swedish/Danish state pensions (the safest in the world) which have the ability to adjust the ongoing payments to members based upon the investment returns and mortality experience.
Asides from saving on the cost of guarantees, the fact that the trustees of the tontine don't have to cover their liabilities by only investing in low-yield bonds means that the trustees are free to invest in a much broader set of asset classes which in the OECD's opinion will generate higher returns resulting in the tontines being able to provide meaningfully higher levels of retirement income to the members.
This means that tontine payments typically start meaningfully higher than annuities at the outset even before the faster acceleration kicks in.