State-Sponsored Pensions for Private Sector Workers: The Case for Pooled Annuities and Tontines

Wharton Pension Research Council Working Paper No. 2020-17

Published in Mitchell, O. (Ed.) (2022). New Models for Managing Longevity Risk: Public-Private Partnerships. Oxford, UK: Oxford University Press.

Posted: 29 Jul 2020 Last revised: 25 Feb 2022

See all articles by Richard K. Fullmer

Richard K. Fullmer

Nuova Longevità Research; Nuovalo

Jonathan Barry Forman

University of Oklahoma College of Law

Date Written: July 24, 2020

Abstract

This paper explains how state governments could create new low-cost lifetime assurance funds to help provide retirement income security for millions of private-sector workers who currently lack pension coverage. Basically, an assurance fund operates like a mutual fund held within a defined contribution plan, but with the added features of mortality pooling and fully-funded lifetime payouts. As we envision them, assurance funds would be offered as annuity-like investment options on the new investment platforms being created by states like Oregon, California, and Maryland that offer their citizens the opportunity to participate in state-sponsored retirement savings plans. Adding an assurance fund could effectively turn these retirement savings plans into lifetime pensions. To ensure their sustainability, assurance funds would operate under a strict budget constraint and be organized as either tontines or pooled annuities.

Keywords: pensions, state-sponsored pensions, retirement savings, annuities, tontines, pooled annuities, assurance fund, budget constraint, underfunding

Suggested Citation

Fullmer, Richard K. and Forman, Jonathan Barry, State-Sponsored Pensions for Private Sector Workers: The Case for Pooled Annuities and Tontines (July 24, 2020). Wharton Pension Research Council Working Paper No. 2020-17, Published in Mitchell, O. (Ed.) (2022). New Models for Managing Longevity Risk: Public-Private Partnerships. Oxford, UK: Oxford University Press., Available at SSRN: https://ssrn.com/abstract=3660125 or http://dx.doi.org/10.2139/ssrn.3660125

Richard K. Fullmer (Contact Author)

Nuova Longevità Research ( email )

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

Nuovalo ( email )

3120 Dillon St
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HOME PAGE: http://www.nuovalo.com

Jonathan Barry Forman

University of Oklahoma College of Law ( email )

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Norman, OK 73019
United States
405-325-4779 (Phone)
405-325-0389 (Fax)

HOME PAGE: http://www.law.ou.edu/directory/jonathan-forman

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