6 ms·
Death pools can bring financial security for the long-lived
- bandrami 9y agoThis is the fourth thinkpiece advocating tontines I've seen in the past month. WTF is up with that?
- s_kilk 9y agoPerhaps people have been rewatching S07E22 of The Simpsons. https://en.wikipedia.org/wiki/Raging_Abe_Simpson_and_His_Grumbling_Grandson_in_%22The_Curse_of_the_Flying_Hellfish%22 https://en.wikipedia.org/wiki/Raging_Abe_Simpson_and_His_Gru...
- pilsetnieks 9y agoOr Archer: http://archer.wikia.com/wiki/The_Double_Deuce http://archer.wikia.com/wiki/The_Double_Deuce
- mysterypie 9y agoOr Barney Miller: http://www.imdb.com/title/tt0519144/ http://www.imdb.com/title/tt0519144/
- bcoates 9y agoThe Baader-Meinhof effect combined with a growing awareness of your own mortality?
- dgacmu 9y agoUnlikely. These articles may be being spurred by some research from two years ago on modernizing tontine pensions: https://en.wikipedia.org/wiki/Tontine#Tontine_pensions https://en.wikipedia.org/wiki/Tontine#Tontine_pensions
- robzyb 9y agoI come from the retirement industry, and attention to tontines has been increasing at a steady rate for a number of years. Some of the drivers of this are: 1) Ageing populations. 2) The people currently pondering retirement have significant assets because they lived through a time of significant economic growth. 3) Increasingly cash-strapped governments and their social security worries
- rbcgerard 9y agoIt makes sense when you consider that for people that have been relatively diligent about saving for retirement, they still confront two big risks: longevity (outliving their assets) and long-term care (nursing homes/assisted living). This confronts one of the issues...
- monochromatic 9y agoI'm sure that's an interesting article behind the paywall.
- gruez 9y agoI'm not seeing a paywall?
- jmartinpetersen 9y agoI'm seeing a "You’ve reached your article limit" kind of paywall.
- Digit-Al 9y agoThis relies on cookies. Just open the article in a private browser session and you will be fine.
- girvo 9y agoThe paywall is purely client-side, so disable Javascript and you'll be able to read it
- dredmorbius 9y agoArchive.is or outline.com are options.
- Noxchi 9y agoIsnt this basically what pensions / social security is?
- tpeo 9y agoThe incentives involved are completely different. Pensioners don't directly benefit from the deaths of other pensioners, as their individual payments are unrelated to how many pensioners are out there. They aren't drawing from some collective pool of money that has been invested in some interest paying account, but are rather either drawing from their individual savings or are living off money raised through taxes in the case of state pensions. In both cases their own pension payments are independent of payments to others. [Which IMO makes tontines sound even more sucky, because it encourages free-riding when it comes to how much people put in.]
- FabHK 9y agoBut pensions are just the same thing as tontines on a larger scale, right? If in a pension scheme people live longer than expected, pensions will have to fall (or contributions rise). What's the difference (except scale)? The article mentions annuities, which are again, in my understanding, basically the same thing, and highlights that tontines "could be much less costly than annuities because the risks are not taken onto the balance-sheet of an insurer" - not sure I understand that. The difference alluded to might be that while both annuities and tontines insure against individual longevity risk, the case of unexpected collective longevity is borne by the insurer in the case of annuities, but the insured in the case of tontines.
- Ntrails 9y agoLet's have a quick break down. There are two core types of pension: Defined Benefit: Provider promises to pay $n per year for the duration of your retirement. Usually inflation linked etc. Defined contribution: You and your employer put money in an investment vehicle and on retirement that pot can be used in a variety of ways to fund retirement (ie annuity, drawdown etc). Both Annuites and DB pension payments are largely immutable, short of bankruptcy (of the pension fund / insurer respectively) there is usually no way to alter the benefits due to pension laws. They cannot be modified down once promised. For DB schemes the promise could have been made 30 years ago when interest rates were 10% and life expectency was 10 years on retirement, annuities are promised on retirement so have a better expected accuracy on cost. This is why DB pensions are phasing out at high rates - they're completely unsustainable. Your core point: Annuities are just risk pooling, pure ins-sewer-ants, some people die early, some late, and the insurer redistributes such that everyone gets a slice of the pie. The insurer takes on the full risk of the average life being longer. DB pensions are the same distribution/pooling principle, only it's the pension fund taking on the risk of cohort mortality. Note, there are some really cool longevity swap transactions being done so funds can better guard against this risk. I don't have any sort of understanding of tontines - limited as I am to a couple of episodes in cartoons for sources. The reason that risks are expensive on an insurers balance sheet is because of capital requirements - all risks need to be provisioned for by holding liquid short term investment grade bonds ("cash") which is a horrific vehicle to hold assets in. Even though they're only holding a % of their exposure - the tontine avoids that cost, hence the "cheaper" argument. IANAA
- taneq 9y agoThey can indeed, at the expensive of also bringing a range of perverse incentives which result in a whole bunch o' mayhem.
- robzyb 9y agoCare to expand on the potential perverse incentives? Like everything, there are downsides, but there's nothing terribly crazy-bad about tontines.
- jacquesm 9y agoMurder, for one.
- GenericsMotors 9y agoI imagine he means that participants might want kill one another when the pool of cash becomes large enough.
- jlebrech 9y agorandom acts of mass murder?
- taneq 9y agoNot sure if I'd describe them as random, but yeah.
- robzyb 9y agoI don't think this is a realistic concern. There are many things in life which technically give a perversive incentive to murder or commit other crimes, yet the perverse incentives aren't a show stopper. One example of this is "I want your Mercedes, I will murder you and steal it." Another example is a will and testament. Sure, sometimes people murder because of these contracts, but as a society we've done a good job of mitigating this problem.
- dcw303 9y ago> and the blockchain, a type of decentralised ledger, could anonymise it How would "the blockchain" anonymise anything? Isn't it the opposite, if all transactions are transparent?
- NDT 9y agoAnonymity comes from not knowing someone's bitcoin address which in many cases is safe to assume.
- beagle3 9y agoIt is never safe to assume, because it could be (retroactively) revealed at any point in the future. The right term for this is pseudonymity[0], not anonymity. [0] https://en.wikipedia.org/wiki/Pseudonymity https://en.wikipedia.org/wiki/Pseudonymity
- devdoomari 9y agobut... how? suppose money went from A-->B-->C-->D-->E, and B,C,D never uses an bitcoin exchange / other 'offline' purchase / etc. (Also, B could send to C1, C2, C3 and then so on to hide the track.) then, how can anyone be sure that A,B,C,D are the same person/different person? Or... by "retroactively" - do you mean sometime in the future (hopefully far far away) where bitcoin's hash algo. is broken?
- georgyo 9y agoOr the simpler answers, something on your computer reveals it, like malware. Or the person who sent/received money to/from you revels who you are, or information which helps identify who you are. Or there are warents authorizing authorities to take your devices and then they have all your identies. Also when you send Bitcoin from a wallet that has received money to multiple addresses, you can't be sure which coins are being sent. As such they can also associate multiple addresses together by which coins they sent.
- qiqitori 9y ago
- deleted 9y ago[deleted]
- fivestar 9y agoTontine? Not a new concept.
- rbcgerard 9y agoI'd encourage anyone interested in the subject to read this paper doesn't cover tontine's directly... https://www.aeaweb.org/articles?id=10.1257/jep.25.4.143 https://www.aeaweb.org/articles?id=10.1257/jep.25.4.143
- gwbas1c 9y agoMy grandfather just turned 100, and we have no idea how long he'll live. He could die tomorrow, or he could live another few years. Most likely, I won't live to his age, but if I do, I don't want the money to run out. I don't believe in leaving a large inheritance for my children. (They need to work for the position in society.) Some kind of "outlive my savings" insurance is quite appealing because then I don't have to leave someone or something an inheritance. Perhaps at a certain age, maybe 80, I could just turn over my retirement for a guaranteed payment until I die?
- michaelt 9y agoPerhaps at a certain age, maybe 80, I could just turn over my retirement for a guaranteed payment until I die? Here in the UK, you can buy something called an 'annuity' - in exchange for a lump sum, a company offers you a fixed monthly payment until you die. Some have extra features - like paying out for your spouse's life after your death; increasing the payment annually based on inflation; and even partial refunds if you die in the first five years.
- deadbunny 9y ago> Perhaps at a certain age, maybe 80, I could just turn over my retirement for a guaranteed payment until I die? That's exactly what an annuity is.
- Chris2048 9y ago> They need to work for the position in society And lose out to children whose parents don't believe this?
- mysterypie 9y ago> The eventual disruption will come not from a traditional asset manager, but from a 22-year-old kid in Silicon Valley Someone please prove me wrong, but I don't think this is a start-up idea. The big problem is how would you sell this? It's going to be very difficult. I have several comments: (1) The idea is sufficiently complicated that average people won't understand it. And with retirement money, if they've managed to save some, the average Joe will be fearful about switching it to something new and different. (Bitcoin is complicated too, but the average Joe--not the techie Joe--is driven by greed if he gets into Bitcoin. There's a huge possible upside to Bitcoin, mining stocks, options and commodities trading, etc. No get-rich-quick option exists for a tontine.) (2) The name tontine has to change. There are too many murder mystery and ghastly "death pool" associations. Beside changing the name, you need to tweak the concept just enough to deny that the new thing you're selling is a tontine. "No, ours is not a tontine because ours maximizes payout when it reaches 100 long-life members, not the last survivor as in a tontine." (3) The only way I see tontines coming about is by edict. The teachers' pension fund or the government employee pension proclaims that they are switching, and that's that. Or they give employees a harsh choice: pay a huge fee to continue with the normal pension or enroll for free in the tontine. I suppose a start-up could implement the technology and try to sell it to big pension funds. That's more like contract work rather than a high-growth business.
- SirLJ 9y agoPlan accordingly and leave what is left to your children or the less fortunate relatives, family first!
- kerkeslager 9y agoOkay, so the argument against tontines that I know of is that it encourages murder, but that argument doesn't seem persuasive to me. The same can be said for life insurance, which is a commonplace financial instrument. Is there any other reason that tontines are bad?