Savers don't want a normal pension, they want 'the iPhone of retirement products'
Being a partner means to offer a savings product with all of the best features consumers actually want from their 'perfect pension'. We call this PEPPs-as-a-Service.
Everyone knows what consumers want
In 2017 a comprehensive study by 100 insurers, banks & financial institutions sought to answer the question of what consumers want from a retirement income product.
The study concluded that "(for consumers) the ‘perfect’…product is likely to have" the following:
A Lifelong Income
Our tontines will offer monthly payouts from retirement age up until age 120+ if needed.
Each tontine is a closed pool of up to 10,000 same-age, same-gender members who contribute as much and as often as they wish. Their payouts are proportional to the amount invested.
The Income Increases
In a tontine, when a member dies, their expected payouts are shared with the other members of the pool. So-called 'mortality credits' are thereby created, resulting in the payouts for surviving members rising over time.
By design, payouts should rise faster than inflation and increase substantially in later years as the remaining capital must all be paid out to the surviving members.
The Capital Is Safe
The capital of the tontines is held in trust on behalf of the members and is invested by globally trusted asset managers via highly conservative portfolio strategies of the kind deemed suitable for widows and orphans.
This means that the capital is safer than if it is paid to a large insurer, which by its nature carries very high liabilities.
The Fees Are Very Low
Unlike annuities, which can carry an initial charge of up to 30 per cent and 3-5 per cent in annual management fees, our tontine pensions will charge a flat 1 per cent per year.
By reducing the fees so drastically, our tontines offer higher monthly payouts than annuities, even before mortality credits start to boost the monthly income of surviving members.
Why PEPPs?
PEPPs are the EU's new pensions gold standard
In 2019, the EU passed the Pan-European Personal Pension (PEPP) Regulation, instantly creating a new cross-border pension standard that ensures:
High transparency and disclosure standards
Low fees capped at 1% per annum
High governance and asset protection rules
Full disclosure on ESG investment policies
Full portability between member states
Tontines are the original pan-European pensions
Since they were invented in 1653, Europeans have enthused about their tontines.
In his 1776 book 'The Wealth of Nations', Adam Smith explained that tontines 'always raise more money than annuities' because:
For the same money, a tontine is worth more than an annuity.
Tontines pre-dispose us to think positively about our future retirements.
How issuers can benefit
Governments
Bridging the state pension gap, and more
Tontines can represent an indispensable aid to governments as they strive to wean ageing populations off increasingly unsustainable state pensions onto self-funded schemes.
More pension participation
Taking the lesson from history, tontines have the potential to rapidly increase people’s willingness to provide for their own pensions. In the US in the second half of the nineteenth century, the performance, transparency and simplicity of tontines attracted many millions of new investors, leading to a huge rise in the voluntary savings rate.
By encouraging and facilitating the uptake of tontines, governments can also reap the associated benefit of a more contented, productive and healthier nation.
No need for politically difficult legislation
Introducing mandatory private pension schemes can cause resentment or disharmony as savers tend to feel that they are unlikely to reap any future benefit. By contrast, history has shown that investors embrace the tontine concept.
Transparency ensures confidence and credibility
Thanks to our distributed ledger technology, every stakeholder can be certain that all records are accurate and that there are no ‘black holes’ or conflicts of interest at play. Confidence in the integrity, transparency and fairness of the system will play an important role in increasing participation.
Cooperatives
Sharing the benefits with members
As state pension provision fades, TontineTrust will partner unions and cooperatives to help secure their members’ long-term financial well-being.
We understand that the welfare of members is of the utmost importance to such organisations, which is why we will offer only the highest-grade pensions.
The underlying assets of schemes will be stewarded by independent asset management companies, who will construct conservative, highly diversified strategies that will be best able to ride out the peaks and troughs of the economic cycle and deliver more reliable returns over the long term.
As well as securing exceptional pension benefits for their members, organisations investing via the TontineTrust cooperative pensions platform will receive share of the scheme’s management fees.
Financial Institutions
Enhancing your product range
Our TontineTrust platform is designed to slip neatly into the product offering of financial services companies, from established banks and asset managers to up-and-coming fintechs.
By being our partner, financial services companies will be able to offer their customers a compelling alternative to traditional pensions, including both income and savings options.
Companies wishing to bring younger clients into their business will see that the transparency and flexibility of our tontines are attractive to a millennial generation that is habitually sceptical towards pensions.
By including our pensions products onto their apps, financial services companies can also reap the long-term and recurring revenues associated with schemes designed to generate a rising lifelong income.
Testimonials
Tontine Trust & Tontines are receiving more & more endorsements from Financial Scholars, Institutions & the Financial Media
A Tontine resembles a simple low-fee annuity with lifetime payments. Yet unlike an annuity….a Tontine can pay a higher yield because of its relative simplicity of structure.
Love the idea of tontines. They solve so many problems for retirees. These guys are bringing them back... super interesting.
You are the first Retiretech in the world and we are sick of hearing about you... When you enter the US market, we are your natural partner.
Tontines pose less risk to members than conventional annuities since there is no contractual obligation on payout, no counter-party risk and no need for insurance-company reserves.
Considered as a life-cycle asset, [a tontine] proved to be an excellent investment, earning a rate of return substantially in excess of that generally available on other assets.
(Annuities) are relatively expensive because their issuers must hold a large capital buffer. Retired people tend not to like them as they pay a low rate. Tontines are simple to understand and could be much less costly than annuities because the risks are not taken onto the balance-sheet of an insurer.
The Tontine: A 17th Century Solution to a 21st Century Problem…….. What is insurance except a pool of people coming together to share risks? What better product for our era than a crowd-sourced, peer-to-peer, sharing economy life insurance solution.
You get thrown 30-, 40-, 50-page documents explaining some kind of annuity using this particular background, and 12 different kinds of investments that feed into it, and your eyes gloss. By comparison…the tontine is unbelievably simple — you can explain it in two pages.
A trust and efficiency engine like blockchain technology has the potential to drive radical change in the insurance industry while improving transparency and outcomes across the entire value chain… Failure to act may consign many large players to the continuing trust deficit or, worse, irrelevance.
FAQs
Tontine pensions provide true lifetime income pensions to the members but in this case the sponsors have zero exposure to the risks or liabilities that came with defined benefit (DB) pensions.
Our tontine pensions are more like collective defined contribution (CDC) pensions which have a 'defined ambition' to pay members 'target returns' which can adjust up or down over time depending on investment performance and mortality experience.
No. Not unless the employer is legally or contractually obliged to pay into the pension on their employees' behalf.
Our standard pensions are personal pensions which can accept contributions from members and/or employers.
For organisations with large numbers of members, we offer white-labelled PEPPs 'Powered by TontineTrust'.
In theory, yes. However, this subject to the rules in your country and the specific regulation and funding status of your existing schemes.
We work with Westerbrink who are one of the top pension law consultancies in Europe and we would be happy to discuss how we can help offer an alternative scheme for your members.
Want to be one of the 1st to offer a gold standard retirement product?
Together with our expert advisors we are able to manage the whole process..