Wednesday, June 7, 2017

Upcoming event: “Using Tontines for Retirement Income”

Jonathan Forman
Alfred P. Murrah Professor of Law
University of Oklahoma

Who will discuss his paper:
“Using Tontines for Retirement Income”
Wednesday June 21, 2017
Noon-1:00 p.m.
Location: Cato Institute
1000 Massachusetts Ave, NW
Washington, DC 20001-5403
(Lunch will be provided)

Forman (“Jon”) is the Alfred P. Murrah Professor of Law at the University of Oklahoma, where he teaches courses on tax and pension law and writes about retirement policy. 

Background on Tontines

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, often with the entire fund going to the last surviving member.  For example, in an episode of the TV show M*A*S*H, Colonel Sherman T. Potter, as the last survivor of his World War I unit, got to open the bottle of cognac that he and his buddies brought home from France (and share it with his Korean War compatriots).
The ttontine principle—“that the share of each, at her death, is enjoyed by the survivors” —can be used to design financial products that would benefit multiple survivors, not just the last survivor. Unlike traditional defined benefit plans, these tontines would always be fully funded; and, unlike annuities, these tontines could be run by low-cost mutual funds rather than high-cost insurance companies.

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