Tontine Bond Ladders

10 Pages Posted: 15 May 2019

Date Written: April 16, 2019

Abstract

Tontines are useful vehicles for providing retirement income. Their payouts, however, will necessarily vary as a function of investment returns and the mortality experience of the membership pool. Retirees who place a high value on income stability will desire to minimize the variability of these payouts. This can be accomplished via a large membership pool to minimize the effect of mortality experience volatility and by using immunizing cash-flow matching techniques to minimize the effect of investment volatility. A structured bond ladder can achieve this quite effectively.

Keywords: Tontines, Pensions, Retirement, Structured Payouts

JEL Classification: G11, J26

Suggested Citation

Fullmer, Richard K. and Sabin, Michael J., Tontine Bond Ladders (April 16, 2019). Available at SSRN: https://ssrn.com/abstract=3373251 or http://dx.doi.org/10.2139/ssrn.3373251

Richard K. Fullmer (Contact Author)

Nuova Longevità Research ( email )

Baltimore, MD 21297-1215
United States
253-820-6576 (Phone)

HOME PAGE: http://www.nuovalongevita.com

Michael J. Sabin

Independent ( email )

Sunnyvale, CA 94087

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