Tontine Pensions: A Solution to the State and Local Pension Underfunding Crisis

Forman, Jonathan Barry; Sabin, Michael J.

doi:10.2139/ssrn.2393152

Cited by 5 publications

(3 citation statements)

References 7 publications

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“…Credit is of high importance for the gardening activity. Sixty percent of gardeners indicated that they had obtained credit from financial institutions, whereas 9 percent indicated that they obtained credit through a 'tontine' (In a simple tontine, a group of investors pool their money together to buy a portfolio of investments, and, as investors die, their shares are forfeited, with the entire fund going to the last surviving investor [43]. )/informal group, 3 percent obtained credit from family members, and 19 percent had no access to credit (Table 8).…”

Section: Credit Sources From Financial Institutionsmentioning

confidence: 99%

How to Transition from Cooperations to Cooperatives: A Case Study of the Factors Impacting the Organization of Urban Gardeners in Benin

et al. 2019

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Urban gardening offers a viable option to improve diet diversity for the urban poor. Yet, its success rate is particularly dependent on the managerial capacities of urban gardeners to coordinate and organize collective actions for the successful exploitation of the gardens. The calls from governments to organize cooperative structures among farmers seem justified and merits a high priority on agricultural policy agendas. Although principles of cooperative structures exist, there is no blueprint available that indicates how to start a gardeners’ cooperation. Moreover, these collaborations need to ally with and build on existing social structures of the urban gardeners involved. Our research can contribute to this alignment process by exploring and comparing international standards of prevailing organizations and their functioning among 261 gardeners in two cities in Benin. We found that a vast majority of urban gardeners are members of a cooperation. Nevertheless, their membership is largely titular because gardeners mostly behave semi-autonomously and few decisions are taken collectively. The obvious economic advantages of leveraging bargaining power, reducing transaction costs, and increasing possibilities for loans are seriously underutilized. We suggest that capacity building can help to develop cooperation among urban gardeners to reach their full potential which, congruently, should also improve the livelihoods of the urban poor.

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Section: Credit Sources From Financial Institutionsmentioning

confidence: 99%

How to Transition from Cooperations to Cooperatives: A Case Study of the Factors Impacting the Organization of Urban Gardeners in Benin

et al. 2019

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“…By doing so, they raise the question whether an optimally designed tontine with low implications regarding capital requirements for the sponsor will gain more attention in times of risk-based capital standards and conclude that, due to higher volatility of the payments, the tontine provides a lower utility than a traditional life annuity. Forman and Sabin (2014) construct a fair transfer plan (FTP) to guarantee a fair bet for all participating investors of a tontine by accounting for each age, death expectancy and investment level. They show that a fairly designed tontine is superior to defined benefit plans in terms of funding and sponsoring of the pension system.…”

Section: Literature Reviewmentioning

confidence: 99%

The Modern Tontine: An Innovative Instrument for Longevity Risk Management in an Aging Society

Weinert

Gründl

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe changing social, financial and regulatory frameworks, such as an increasingly aging society, the current low interest rate environment, as well as the implementation of Solvency II, lead to the search for new product forms for private pension provision. In order to address the various issues, these product forms should reduce or avoid investment guarantees and risks stemming from longevity, still provide reliable insurance benefits and simultaneously take account of the increasing financial resources required for very high ages. In this context, we examine whether a historical concept of insurance, the tontine, entails enough innovative potential to extend and improve the prevailing privately funded pension solutions in a modern way. The tontine basically generates an age-increasing cash flow, which can help to match the increasing financing needs at old ages. However, the tontine generates volatile cash flows, so that -especially in the context of an aging society -the insurance character of the tontine cannot be guaranteed in every situation. We show that partial tontinization of retirement wealth can serve as a reliable supplement to existing pension products.

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“…I refer toMilevsky (2014) for a detailed discussion of the tontines issued by King William, and toForman and Sabin (2014) for a discussion of tontines for resolving the current funding crises for pension funds.5 For a recent treatment of intergenerational risk sharing seeBeetsma and Bovenberg (2009); Beetsma, Romp, and Vos (2013);Cui, Jong, and Ponds (2011);Gollier (2008) 6Shiller (1999) has suggested that old people are more risk averse than young people, therefore transfer of risk from more risk averse to less risk averse is logical.7 SeeBenartzi and Thaler (2001) andBrown, Liang, and Weisbenner (2007) for a discussion on suboptimal behavior by individuals in saving and investing for retirement.8 For a brief overview of the financial situation of the public pension plans in the US see http:…”

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confidence: 99%

Risk in pension plans

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Tontine Pensions: A Solution to the State and Local Pension Underfunding Crisis

Cited by 5 publications

References 7 publications

How to Transition from Cooperations to Cooperatives: A Case Study of the Factors Impacting the Organization of Urban Gardeners in Benin

How to Transition from Cooperations to Cooperatives: A Case Study of the Factors Impacting the Organization of Urban Gardeners in Benin

The Modern Tontine: An Innovative Instrument for Longevity Risk Management in an Aging Society

Risk in pension plans

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