The modern tontine. An innovative instrument for longevity risk management in an aging society (Q825287)

The changing social, financial and regulatory framework lead to the search for new product forms for private pension provision. Authors of the paper propose the traditional tontine to use as a new product especially in combination with a traditional life annuity. To assess the effects of tontine investments on policyholders, authors develop a life utility model based on \textit{multi cumulative prospect theory}. To show the effects of a tontine investment on retirement planning, authors establish the development of the population structure in Germany. Based on the mortality dynamics, they describe a fair revolving tontine. The results obtained show that a portfolio of annuity and tontine can provide the highest expected \textit{multi cumulative prospect theory} utility.