JOURNAL OF ACCOUNTING AND FINANCE
Individual Tontine Accounts
Author(s): Richard K. Fullmer, Michael J. Sabin
Citation: Richard K. Fullmer, Michael J. Sabin, (2019) "Individual Tontine Accounts", Journal of Accounting and Finance, Vol. 19, ss. 8, pp. 31-61
Article Type: Research paper
Publisher: North American Business Press
Abstract:
An individual tontine account (ITA) is similar to a conventional investment brokerage account, but with the added feature of mortality pooling through participation in an open-ended fair tontine. In showing them to be fair to all participants, we envision ITAs as complementary to individual retirement accounts (IRAs), allowing retirees to derive extra income from savings without taking additional investment risk and to obtain lifetime income at a lower cost than with insurance products. ITAs represent an efficient new solution in addressing retirement needs and may help address the “annuity puzzle” by providing a more transparent, lower-cost alternative to insurance-based products.