“System And Method For A Global Peer To Peer Retirement Savings System” in Patent Application Approval Process (USPTO 20210374861): Patent Application

2021 DEC 16 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- A patent application by the inventor McClelland, Dean (Hong Kong, HK), filed on October 31, 2018, was made available online on December 2, 2021, according to news reporting originating from Washington, D.C., by NewsRx correspondents.

This patent application has not been assigned to a company or institution.

The following quote was obtained by the news editors from the background information supplied by the inventors: “Investment plans in general have existed for centuries. According to Wikipedia, one of the oldest known investment plans to raise capital was known as a “Tontine”, pronounced as “tontin.” A tontine is an investment plan for raising capital, devised in the 17th century and relatively widespread in the 18th and 19th centuries. In its original design a tonine combines features of a group annuity and lottery where each subscriber pays a sum or sums into the fund, and thereafter receives a periodical payment for the rest of their life. As subscribers die, their share of the periodical payouts devolve to the other participants, and so the value of each periodical payout increases as the number of surviving subscribers falls. On the death of the last subscriber, the scheme was typically wound up.

“Tontines are regulated in Europe under the Directive 2002/83/EC of the European Parliament and are still common in France.

“Tontines Life Insurance policies were a major insurance category at the end of the 19^th century having been pioneered by Equitable Life Assurance Society until the 1905 Armstrong Investigation in the United States which exposed the practices of US Life Insurers which had engaged in excessive fee charging, misleading marketing based upon false payout projections (justified by using obsolete data and investment return projections) and inappropriate use of customer monies in respect of the underlying investments of the Tontines. Whilst the Armstrong Commission Report did not criticise the tontine principle per se, it led to the introduction of rules restricting the sale of some forms of tontine linked policies. It is notable that the Armstrong Commission Records along with Equitable Life Assurance Society archive’s were burned in and 1911 [Source: http//www.americasmutualbanks.com/images/0714_YangPaper.pdf] Nevertheless, in March 2017, The New York Times reported that tontines were attracting fresh consideration as a scheme for people to subscribe to in return for the promise of lifetime retirement incomes. The investment plan is named after Neapolitan banker Lorenzo de Tonti, who is credited with inventing it in France in 1653, although it has been suggested that he merely modified existing European investment schemes. Tonti put his proposal to the French royal government, but after consideration it was rejected by the Parliament de Paris. The first true tontine was therefore organised in the city of Kampen in the Netherlands in 1670.

“The key feature was that a relatively fixed payout amount which, for example, could be in the form of dividends or interest, was shared equally among individual members of the Tontine for as long as they lived which meant that in later years as the number of surviving members declined, the payouts per member kept rising, sometimes dramatically.

“Since their creation, Tontines have historically proven to be a more appealing source of lifetime income than annuities as recorded by economist Adam Smith in his book “The Wealth of Nations” first published in 1776 in which he stated that “more money can always be raised by tontines than by annuities” and as a result, many variants of Tontines have been used to raise capital or for retirement products or pension plans. A shortcoming of the nature of a Tontine is the existence of a perception that the subscribers, having a financial incentive to do so, might murder each other. In some jurisdictions this perception may have contributed to the creation of practice or legislation that only insurance companies should be authorized to provide any type of mortality-contingent products including Tontines. Retirement investment plans are a recent and natural evolution of the industrial revolution of the last century.

“According to Wikipedia, a Canadian “Retirement Savings Plan” (RSP), is a type of Canadian account for holding savings and investment assets. RRSPs have various tax advantages compared to investing outside of tax-preferred accounts. They were introduced in 1957 to promote savings for retirement by employees and self-employed people. In the early 1970s a group of high earning individuals from Kodak approached the US Congress to allow a part of their salary to be invested in the stock market and thus be exempt from income taxes. Section 401(k) was inserted into the Internal Revenue Code making such tax exemptions plans possible and this was enacted into law in 1978. It was intended to allow taxpayers a break on taxes on deferred income. In 1980, a benefits consultant and attorney named Ted Benna took note of the previously obscure provision and figured out that it could be used to create a simple, tax-advantaged way to save for retirement. The client for whom he was working at the time chose not to create a 401(k) plan. He later went on to install the first 401(k) plan at his own employer.

“The 21st century has seen the emergence of distributed ledger technologies or “Blockchain” technologies for immutable record-keeping amongst parties that may wish to transact but which may or may not trust each other. In the original paper openly published on May 24, 2009, by Nakamoto and titled “Bitcoin: A Peer-to-Peer Electronic Cash System” (see URL http://en.bitcoin.it/wiki/Bitcoin_white_paper).Nakamoto described a system where parties could transact with each other by means of pseudonymous accounts recorded on a public distributed ledger where each set of transactions which are appended into tamper proof ledger containing blocks of transactions to form a Blockchain”. We have also seen the increasing emergence of advanced biometric identification technologies which can accurately detect whether biometric data is artificially created or is coming from a living source. These technologies have enabled the creation of systems where users enter into transactions by proving their identity but with the incidental effect that these systems now have the potential to be used to prove the liveness of a particular individual and that a particular individual has not died. Through combining these technologies within a single system, we can create a system where users can create pseudonymous accounts in a system where their transactions and status as well as the transactions and status of other pseudonymous members of the system transactions can be made wholly or partly conditional upon users interacting with the system to provide proof of life when authorising transactions and as such we can design these systems to safely permit mortality-contingent transactions on a peer-to-peer basis thereby mitigating the need for the participation of a central counterparty such as an insurance company which typically comes with high costs which must be borne by members of the system and which on the evidence of the global financial crisis in 2008 can still expose members to the practices which were uncovered during the Armstrong investigation 113 years earlier. Accordingly, we can now use these technologies to create a system where peer-to-peer financial products such as Tontines which can be safely operated without the significant costs and risks which can affect such products when offered by or guaranteed by governments, corporations or life insurers. As such, the Tontine System of this invention is designed around the precise needs of consumers, such that groups of consumers can now safely self-insure the financial risks of increasingly lengthy retirements through pooling their capital into a peer-to-peer longevity risk sharing system which can be constructed to offer members of the system lifetime income products such as Tontines and/or other annuity type products and where such peer-to-peer products can potentially have far lower running costs and as such would be able to offer better outcomes for the consumers than equivalent products traditionally offered by insurance companies.

“This invention is part of a Tontine system which can offer the following utility to consumers and pension providers:

“

“a far more cost-efficient solution for the millions of consumers across the planet currently investing an estimated $350Bn+ per annum into annuity type products to secure suitable levels of income in retirement, and

“a new type of commission system which will incentivize networks of financial advisors to take Tontines to the global marketplace without the consumer having to bear the costs of advisor commissions out of their capital contributions rather than deducting sums from the customers capital In essence, the fees and commissions can be wholly or partly settled using a medium of exchange the value of which is represented by its utility value to users including professional users of the Tontine System itself.

“

“An adaptive payout system which is designed to ensure that the system is always-fully-funded and as such eliminates the insolvency risk which affects consumers with entitlements that are or will become due from government, state and corporate pension funds as well as many annuity providers and insurance companies,

“User interfaces which can display accurate and realistic projections as to the potential payouts of the fund based upon near real time data thereby ensuring that users can make more informed investment decisions with the underlying projections being recreatable at any point in the future due to the data & statistics being recorded in immutable ledgers.”

There is additional background information. Please visit full patent to read further.”

In addition to the background information obtained for this patent application, NewsRx journalists also obtained the inventor’s summary information for this patent application: “The present invention is designed to overcome the shortcomings of the prior art and to provide an automated way of resolving the shortcomings of the prior art specifically for mitigating member fraud as well as the probability of human error by partially or fully automating the interaction between the Tontine System, the Tontine Members, the Auto-Actuary and the data it uses to make decisions by means of an Auto-Actuary (method to measure and fairly recalculate corrections on current and future payouts based on ever changing and evolving internal and external accessed risk data without human interaction) communicating with a plurality of internal and external sources over the internet and updating by itself any required data in real-time or at certain time intervals and in an automated form mathematically avoiding insolvency of the fund (also referred to herein as the tontine) by adapting the periodical payments to members as a result of recalculating the payouts every time any input data to the Auto-Actuary changes.

“The Auto-Actuary forming part of a system and method of operating a peer-to-peer retirement savings system (Tontine System) which allows for automatic correction of the longevity risk and wherein the composition (but not the identities) of the peer-to-peer retirement savings system members (Tontine Members) and the underlying assets are made publicly visible through the internet. This removes the risk of double counting of assets or hidden liabilities, as each Tontine Member will own a set of units or tokens biometrically tagged to their encrypted identity thereby ensuring that the member’s share of underlying payout entitlements is tagged to her or him only during their lifetime or otherwise as prescribed by the member under the rules of the tontine. To provide the ultimate security, the ownership of the assets of the Tontine System of this invention may be held within accounts recorded on a public block chain Blockchain or through Blockchain enabled remote custodians, thus removing herewith the risk of insolvency through exposure to the balance sheets of any bank, insurer or other centralized counterparty. Further, to resolve the shortcoming seen in the entire prior art in that none provide an automated insolvency risk protection. In one embodiment of the present invention, the Tontine System, through the Auto-Actuary system, mitigates that risk completely by adopting a fully automated method to measure and decide corrections based on ever changing and evolving risk data accessed autonomously from internal and external sources (Auto-Actuary) that auto corrects the Tontine System periodic payouts amounts at any given time going forward. This last method warrants the solvency of the tontines (funds) of Tontine System for the duration of the payout period, be it until the last surviving member or until a defined final payout date for distribution amongst all surviving members at such final payout date.

“The invention does not require any human intervention for the normal operation once the Tontine System initiates a tontine (fund) be it in any such known assets, funds, (exchange traded funds), company shares, stock market index funds, currencies, digital assets, cash, Governments Bonds (Bonds) or any combination, as the Auto-Actuary will take all required inputs not only from its starting databases but it will get by itself any more recent data from external sources (401 to 403, 201 to 203) globally by itself though the internet and recalculate any and all outputs such as monthly payouts to the members of the Tontine System fund members and performs automatically simulations to choose one case where the payout is the optimal of all the values that provide liquidity and positive cash flow until the date of the oldest member would be of an age equal to the set parameter at the start of the tontine (for example 120 years old).

“The Auto-Actuary method or module that overcomes the shortcomings of the prior art provides an overall robust financial protection against insolvency and against potential human errors as the overall Tontine System would be fully automatic running without any human intervention to keep the tontine running properly and payouts flowing until the expected end date.

“The current invention offers through the Auto-Actuary method a further solution to the prior art shortcoming of the necessity of manual interaction by employees or staff from a longevity risk sharing product to gather documentary evidence from heirs on the death of a member which in some cases is never provided as heirs may not even know of the member’s pension fund. In a further embodiment of the present invention, the proprietary Auto-Actuary interacts at certain intervals through the internet with a plurality of internal and/or external sources globally to verify if any of the published deceased corresponds with a member of the Tontine System, and if so, request an interaction with the actual member through an electronic application on the member’s phone requiring a biometrical feedback (eye scan and/or fingerprint and/or facial recognition and/or any such other ID confirmation method) as proof of life.

“In a further embodiment of the present invention, the Auto-Actuary requests, at certain time intervals which may coincide with payout frequency set at the beginning, or as decided by the Auto-Actuary based upon the risk parameters of the Tontine System fund or tontine (for example every 1 or 3 months or so), proof of life by a notification to the member on their Smartphone, tablet or other device or via an application on one of these devices. If no proof of life is provided within a pre-defined time, the notification could repeat until a maximum number of tries (for example 3 tries over a 3 month period) then triggers a specific search at external sources for that specific member identity to confirm or disproof his death. Additionally, the triggering event could send an email and/or call a registered heir’s phone number with a pre-recorded digital voice inserting the member’s name with a message to inform of a deadline to provide biometrical proof of life through the member’s electronic application or otherwise interact with an oracle or other authoritative digital services whether private or civil which have the capability to certify as being dead or alive. Individual members must establish proof of life or otherwise, and based upon the results of any of the above methods, the Auto-Actuary could then decide that the member has died and suspend payments or re-allocate or cancel the validity of the expired members tokens in accordance with the conditions of how the tontine and the Tontine System were established at the outset.

“The shortcomings of the prior art have been addressed and resolved by the present invention and resolved by the novelties and different embodiments of the present invention, such as but not limited to, in a different embodiment of the present invention by using a combination of one or more methods or any combination thereof of modules that become operable when embedded into one or more systems or distributed systems or Blockchains activating a peer-to-peer retirement savings system (Tontine System) of this invention, such Tontine System having the ability to access multiple other distributed systems, protocols, oracles and other data sources through the internet.

“In another embodiment, the Auto-Actuary becomes operable when embedded into a cloud based or a server-based pension fund system or peer-to-peer retirement savings system (Tontine System) of this invention, such Tontine System having alternatively several redundancy servers in different geographical regions.

“In yet another embodiment of the present invention, the Auto-Actuary can interact by itself without human intervention with a plurality of asset exchanges and/or third party data sources accessed through the internet, such as ETF exchanges, Bonds exchanges, Stock exchanges, Currency exchanges and so forth as to automatically change the investment composition of the tontine (fund) depending on the established portfolio asset allocation strategy or to make adjustments following a standardised model such as a risk parity portfolio model or other modem portfolio theory investment model or in response to pre-defined risk criteria (such as but not limited to, valuation drop more than a prefixed %, valuation increase more than a pre-fixed %, if crowd sourced news on the internet is recognised as a natural or manmade catastrophe, nuclear incident or potential war that could adversely affect the valuation or return or expected mortality of one or all parts of a tontine to trigger an automated sale or additional buy if cash available if it is understood to positively affect valuation or return).

“In a different embodiment of the present invention, the Auto-Actuary monitors Meta Data from the accounts or virtual wallets and interactions with the Tontine Members, including but not limited to biometrical interactions, to flag potential fraud or irregular or suspicious activities as part of risk management to reduce fraud risks.

“In yet a different embodiment, multiple Tontine Systems independently or interacting amongst them could form a global Tontine, wherein the Auto-Actuary fully autonomously connects to a plurality of sources (external databases or information accessed through the internet), through the internet, in each country and manage individual member payouts, for example, based upon the IDL data (international database on longevity) from each of the members region or other such cohort specific data sources. This allows for fairly calculated global pools of different nationalities with different longevity expectations yet with the ability to share degrees of risk between otherwise partially or completely distinct cohorts.”

There is additional summary information. Please visit full patent to read further.”

The claims supplied by the inventors are:

“1. A method for calculating, implementing and remotely communicating accurate payout projections in, or near, real-time with users of a peer-to-peer risk-sharing pension fund (Tontine System) comprising of servers connected to or adapted to access the internet, wireless devices adapted to access the internet, each server including an auto-actuary software module (AASM), each wireless device (WD) including a respective downloaded application software module (APP), and wherein; (a) the WD is adapted to download a respective APP over the air, over the internet, and each WD automatically upon download of the respective APP into the WD, makes the APP operable to access WD functions and also makes the APP operable to communicate through the WD with the servers and the servers communicate with the WD and also to make the APP detect and be operable with, the hardware sensors or other biometric functionality of the WD and to transmit details of the functionality to the Tontine System to confirm that the WD meets the required minimum biometric recognition functionality of the AASM and wherein; (b) each server is adapted to upload a respective AASM over the internet, and each server automatically upon upload of the respective AASM into a remote server, makes the AASM operable to access server functions and also makes the AASM operable to communicate through the server with the WDs and the WDs communicate with the servers and wherein; © the AASM connects to external servers (ES) through the internet, these servers being different than the previous mentioned servers and wherein; (d) the AASM fully autonomously interacts with the users of each WD, wherein the users APP receives notifications for the user to authenticate through providing data including the requested type of biometric information (e.g. facial recognition, eye recognition, hand palm scan, finger print scan, voice recognition) at regular time intervals (monthly, yearly) (e) when the user accesses the APP, for example to respond to the notification, the AASM will validate that such data being provided belongs to the UserID being created and/or authenticated, (f) at the same time the AASM interacts with a server or an ES capable of performing liveness detection upon the biometric information being transmitted to ensure that it is being generated in real time from the living user and thereby is neither an artificial biometric sample nor a legitimate biometric sample being used to authenticate access to system after the end of the User’s life; (g) once the user successfully authenticates their access to the Tontine System whilst passing the liveness detection challenge, the AASM creates and/or updates the status of the users Members account relating to the relevant UserID to record that, in the absence of any conflicting data to the contrary, proof of life has been confirmed and that the user is a living Member in the relevant period; (h) the AASM updates the living Members account relating to the UserID to confirm that it is entitled to any upcoming relevant mortality credit (MC) related re-allocations of Tontine Member Units as well as any payouts in the period and transmits any new collected data including any updated facemap of the Member to the Tontine System to be appended to the ledgers in connection with the UserID; (i) the AASM then calculates and re-allocates any Tontine Member Units available as a result of MCs from the accounts of Members who have not validated their Member accounts by passing the liveness detection challenge or otherwise providing proof of life in a format recognised by the AASM before the cut-off date for the relevant period of the same Tontine System fund or pool; (j) the AASM then re-calculates in, or near, real-time the predicted payouts for the relevant Tontine System fund or pool using the latest data and Risk Factors and stores the updated forecasts on the ledgers from where the updated forecasts can be detected and downloaded to the APP when the WD next connects to the internet thus enabling the users to view the updated forecasts in or near real-time; (k) at the end of any relevant period for each Tontine System fund or pool, the AASM communicates with and authorises and/or instructs its or the Tontine Systems payment module or a payment module on an ES to give initiate the relevant payout calculated by and predicted by the AASM for the period to each validated Member of that Tontine System fund or pool for the period and then updates the ledgers to record the payments made and to update the remaining predicted payout forecasts.

“2. The system of claim 1 wherein, the WD functions accessed by the APP are: (a) biometrical authentication scanning functions as camera access and/or (b) finger print scanner access and/or © microphone access and/or (d) email contacts access and/or (e) phone numbers contacts access wherein the previously listed accessed information by the APP is send to the AASM and wherein, (f) the AASM uses such biometrical and other information for any authentication interaction and as proof of life for the relevant period by interacting with a server or an ES capable of performing liveness detection upon the biometric information being transmitted to ensure that it is being generated in real time from the living user and thereby is neither an artificial biometric sample nor a legitimate biometric sample being used to authenticate access to system after the end of the User’s life, and wherein (g) the AASM stores any relevant collected data including any detected health data of the Member to its own ledgers in particular where such health or other data may be utilised in and potentially affect the ongoing Risk Factors calculations either for the Member individually or for the Tontine System as a whole, and wherein (h) in the event of the user failing to successfully authenticate and pass the liveness detection test after a certain number of attempts in a defined period of elapsed time then the AASM may initiate a module within the AASM, the Tontine System or through an ES to utilise the emails, and phone numbers or other means of contact either for the user and/or their designated contacts to deliver notifications that for automated contact if no proof of life has been is obtained for the user and to offer alternative means of providing such required proof if in fact the user is still alive, or to initiate other processes including transfers of death benefits or inheritances where the user has passed away and/or wherein (i) in the event of the AASM detecting a substantial variance in the health data or other data of the user as a result of analysing the biometric and liveness detection results and/or when compared to previously saved data including health data that the AASM may initiate a module within the AASM, the Tontine System or through an ES to utilise the emails, phone numbers or other means of contact either for the user and/or their designated contacts such as next of kin and/or to third parties such as, but not limited to, healthcare professionals, to deliver notifications that the user may be experiencing health issues and such notifications may include the transmission of data to request, suggest or initiate further actions.”

There are additional claims. Please visit full patent to read further.

URL and more information on this patent application, see: McClelland, Dean. System And Method For A Global Peer To Peer Retirement Savings System. Filed October 31, 2018 and posted December 2, 2021. Patent URL: https://appft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PG01&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.html&r=1&f=G&l=50&s1=%2220210374861%22.PGNR.&OS=DN/20210374861&RS=DN/20210374861

(Our reports deliver fact-based news of research and discoveries from around the world.)