King William's Tontine

Why the Retirement Annuity of the Future Should Resemble its Past

Moshe A. Milevsky

• Publisher: Cambridge University Press
• Year: 2015
• Print ISBN: 9781107076129
• eBook ISBN: 9781316407585
• Topic: Business
• Subtopic: Finance
• Index: Business

In a time before bonds, treasury notes, or central banks, there were tontines. These were schemes in which a group of investors lent money to a government, corporation, or king, similar to a modern-day loan syndicate. But unlike conventional debt, periodic interest payments were distributed only to survivors. As tontine nominees died, the income of survivors correspondingly increased. Morbid, perhaps, but this was one of the earliest forms of longevity insurance in which the pool shared the risk. Moshe A. Milevsky tells the story of the first tontine issued by the English government in 1693, known as King William's tontine, intended to finance the war against French King Louis XIV. He explains how tontines work, the financial and economic thinking behind them, as well as why they fell into disrepute. Milevsky concludes with a provocative argument that suitably modified tontines should be resurrected for twenty-first-century retirement income planning.

Table of contents

• Cover
• Half-title
• Title page
• Copyright information
• Epigraph
• Table of contents
• Preface: In Memoriam for Jared
• Acknowledgments
• 1 King Billy, Protestant Hero of England
• 2 Tontine’s Economic Origins: Cheaper Debt
• 3 A Most Curious Will(iam) and Older Than You Think
• 4 The Million Act to Fight a War against France
• 5 Don’t Englishmen Die? Anti-Selection vs. Fraud
• 6 Is Your Tontine a Stock or a Bond?
• 7 Optimal Tontine: Hedging (Some) Longevity Risk
• 8 Conclusion: Tontines for the Twenty-First Century
• Appendix A: The List of Nominees
• Appendix B: The Gompertz-Makeham Law of Mortality
• Appendix C: 14% for One, 12% for Two, or 10% for Three?
• Source Notes and Guide to Further Reading
• References
• Index