LF36 | Tontines are the best idea for financial security for later life. Why aren't they more popular?
Thanks for this insightful (and humorous!) overview of tontines and their history.
I'm with you that tontines make logical and initiative sense.
Reflecting personally, what might make me reluctant to tip in significant amounts of cash is reluctance to trust that any one organisation will be around long enough to administer the funds when I actually need them.
I know that doesn't make a tonne of sense, given I have money sitting with banks and superannuation companies. Maybe that could be one path forward.... just as I can adjust the settings of the investment profile of superannuation, imagine if there was an option to click a button join a tontine, but with the backing of a regulated super fund.
I would like to believe that web3 and crypto could play a role in all this. I can totally see how the technology and the ethos are a great fit. Recent events in the crypto world would make me hesitant though.
Something you don't mention in your article that I am curious about is attitudes related to inheritance. Given that we are in a historic period of intergenerational wealth transfer, and that younger generations in places like Australia can't really hope to be able to buy property without support from their parents (and indirectly from their grandparents), I wonder how this would play into things? Might this make people more inclined to keep their cash and assets "in the family"? Or if there was a more direct cost to families rather than society for caring for elders, then maybe that would influence attitudes?
A very interesting topic that seems to spawn lots of questions!
Money is trust. Current trust is being eroded and new systems are well "new". I would think a good starting point is risk mitigation. Take 10% of your voluntary contributions to super and put it here.... Start that way with a simple app/allied infrastructure. Similar to smaller investment apps. And/or you get the existing system to create this as a product in their mix. Take it to a challenger super fund. The industry is hooked on fees and won't/can't guarantee an outcome. So a tontine either needs to help existing super keep clients or go the UBER strategy, deep pockets and challenge the status quo and legal fights all over :) Both are valid strategies... Hmm, what about a community pool with a trusted third-party administrator? Would a Tontine actively invest its pooled fund or is the "growth" in the "death" of members?