Tontines for DC Pension Drawdown
In recent years retirees are increasingly managing their own money in retirement. DC pension drawdown in the UK has focused the need for DC drawdown strategies such as safe withdrawal rates as it has passed the risk of living longer than expected back to the retiree. In the future, Tontines could be used to pool longevity risk - at the expense of your estate - so that when you die the other Tontine members split what's left in your DC pension fund (if anything) in exchange for Tontine credits while you are alive. Tontines were hugely popular in previous centuries but fell into disrepute in the early 1900s. Could they make a comeback?
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Finbarr Kiely is a Fellow of the Society of Actuaries in Ireland and a former Pension Scheme Actuary. He now works as a lecturer in Actuarial Science in University College Cork where he teaches Financial Maths and Life Contingencies for Actuarial Science. His research interest is "Tontines" and the impact they could have on the future of pensions.