Catherine Donnelly, associate professor at Heriot-Watt University and a fellow at the Institute and Faculty of Actuaries, is a proponent of the vehicles. “Anyone who works on them says, ‘Why wouldn’t you be offering them?’” she says. Tontines address the issue of people not knowing when they will die whilst also not being interested in buying annuities – something referred to as the ‘annuity puzzle’, says Donnelly.
Pensions just went Back to the Future
The OECD now advises its 37 member countries to make risk-sharing tontine (🔈 tonn-teen) pensions mandatory by default for the following reasons:
Tontines enable higher incomes in retirement, and
Tontines solve a retiree's risk of running out of money in old age.
In addition, Tontines have proven immensely popular since 1653 because members can also expect their income to rise faster than inflation.
We are the world's first modern tontine pensions institution & our fully digital tontine platform now helps savers, employers & governments to upgrade their pensions to the OECD recommended level.
We are the world's 1st RetireTech
Since 2017 we have been researching how to use technology to solve what Nobel Prize Winner Bill Sharpe described as "the nastiest hardest problem in finance" which is:
How quickly can I spend my savings in retirement without ever facing the risk of running out of money in old age?
After 3 years of research & development, TontineTrust has solved the problem & is now bringing the solution to savers & partners through our award-winning platform which issues & operates tontine pensions.
We are a pensions firm & a tech platform
Based primarily in Ireland, our firm now employs 20 people & is setting a new benchmark for trust in pensions by using state-of-the art technology to enable simple, safe, low-fee lifetime income pensions.
Following the initial launch of the MyTontine Pension, our PEPPs-as-a-Service platform will enable Tontine Pensions to be offered by governments & other organisations.
Why we did this
When you reach retirement, you go from saving to spending.
About 38% of retirees will live into their 90s and then face a very high risk that their money will run out.
This is why 'running out' is now the #1 fear in retirement & 84% of savers would prefer to swap their savings for a lifetime income.
In recent years, some savers bought annuities but with falling interest rates the OECD has now advises that they are no longer the best option and that savers should automatically join tontines where they solve their risk of living longer by sharing that risk with others.
Better yet, not only do tontines offer a simpler & more affordable monthly income for life that rises over time but members can also expect their income to rise faster than inflation.
The simple answer
A retiree would never risk their whole retirement portfolio on the performance of a single investment yet they currently risk their whole retirement plan on predicting how long they will live.
In both cases, the retiree dramatically lowers their risk through diversification, i.e. spreading their investment risk and their longevity risk.
For 400 years, savers have loved how Tontines solve their risk of living longer and eliminate the nagging daily fear that their money will eventually run out.
Joining a tontine pension means hat you get to relax & enjoy your hard earned retirement.
What do the experts say?
Tontine Trust & Tontines are receiving more & more endorsements from Financial Scholars, Institutions & the Financial Media
A tontine resembles a simple low-fee annuity with lifetime payments. Yet unlike an annuity….a tontine can pay a higher yield because of its relative simplicity of structure.
Love the idea of tontines. They solve so many problems for retirees. These guys are bringing them back... super interesting.
Mortality credits enable investors to earn a type of guaranteed “alpha” not available in any other asset class. As you age and your mortality (risk) increases (e.g. 10% at age 80) then you are effectively earning this as a rate of return.
Tontines pose less risk to members than conventional annuities since there is no contractual obligation on payout, no counter-party risk and no need for insurance-company reserves.
Considered as a life-cycle asset, [a tontine] proved to be an excellent investment, earning a rate of return substantially in excess of that generally available on other assets.
(Annuities) are relatively expensive because their issuers must hold a large capital buffer. Retired people tend not to like them as they pay a low rate. Tontines are simple to understand and could be much less costly than annuities because the risks are not taken onto the balance-sheet of an insurer.
You get thrown 30-, 40-, 50-page documents explaining some kind of annuity using this particular background, and 12 different kinds of investments that feed into it, and your eyes gloss. By comparison…the tontine is unbelievably simple — you can explain it in two pages.
The Tontine: A 17th Century Solution to a 21st Century Problem...What is insurance except a pool of people coming together to share risks? What better product for our era than a crowd-sourced, peer-to-peer, sharing economy life insurance solution.
TontineTrust in the News
Why accept a drawdown account when you can create your own tailor-made pension?
Our Digital Pension Platform enables regular consumers to create their own bespoke 'DIY' pensions and to know with extremely high precision what their level of lifetime income in retirement will be.
Our soon to be launched Pension Calculator will enable you to understand & compare your various retirement savings options.
Sunlight is the best disinfectant
We are active advocates for absolute transparency in financial services & pensions.
When you trust your life savings to a financial institution, you are entitled to know exactly where and how the monies are invested and what fees are being charged.
Our aim is to become the safest & most trusted pension firm in the world and a key part of our strategy is to ensure that our members have absolute transparency over the inner workings of our pension products.
As a consumer, this is the least you should expect in the 21st Century.