A 400-year-old system that pools money, paying out increasingly large amounts to surviving members upon the death of other members, is being discussed as a possible means of alleviating, at least in part, the current retirement crisis.

So says an NPR report that looks at the financial arrangement, invented by Lorenzo de Tonti—a Neapolitan banker in the 1600s—who first devised them as a financing mechanism for cities, states and governments that needed to raise money.

Jonathan Forman, a professor of tax and pension law at the University of Oklahoma, is quoted in the report saying, "In this original version, the government of a city said, listen, rich citizens, give us a pile of money and we will pay you a regular payment kind of like interest. But there is one dark twist. As investors in the group die, their payments go to the survivors who get bigger and bigger payouts, which is perfect for retirement."

Continue Reading for Free

Register and gain access to:

  • Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.