IDEAS home Printed from https://ideas.repec.org/a/cup/astinb/v55y2025i2p352-373_7.html
   My bibliography  Save this article

Dynamic tonuity: Adapting retirement benefits to a changing environment

Author

Listed:
  • Chen, An
  • Chen, Yusha
  • Rach, Manuel

Abstract

The tonuity, proposed by Chen et al. ((2019) ASTIN Bulletin: The Journal of the IAA, 49(1), 530.), is a combination of an immediate tontine and a deferred annuity. However, its switching time from tontine to annuity is fixed at the moment the contract is closed, possibly becoming sub-optimal if mortality changes over time. This article introduces an alternative tonuity product, wherein a dynamic switching condition is pivotal, relying on the observable mortality trends within a reference population. The switching from tontine to annuity then occurs automatically once the condition is satisfied. Using data from the Human Mortality Database and UK Continuous Mortality Investigation, we demonstrate that, in a changing environment, where an unforeseen mortality or longevity shock leads to an unexpected increase or decrease in mortality rates, the proposed dynamic tonuity contract can be preferable to the regular tonuity contract.

Suggested Citation

  • Chen, An & Chen, Yusha & Rach, Manuel, 2025. "Dynamic tonuity: Adapting retirement benefits to a changing environment," ASTIN Bulletin, Cambridge University Press, vol. 55(2), pages 352-373, May.
    • Handle: RePEc:cup:astinb:v:55:y:2025:i:2:p:352-373_7
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0515036125000054/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:astinb:v:55:y:2025:i:2:p:352-373_7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/asb .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.