QUESTION:

Please let me know the regulation of current laws on annuity-receiving order and interest rate in interest-bearing tontine?

ANSWER:

v     Regarding to the annuity-receiving order:

Annuity-receiving order in interest-free tontine:

According to Article 19 of Decree No 19/2019/NĐ-CP, the annuity-receiving order in interest-free tontine is stipulated as follows:

• The annuity-receiving order at each tontine opening is determined by drawing lots, voting, or other forms as agreed by tontine participants.
• If tontine participants cannot reach an agreement on annuity-receiving order, the drawing lots shall apply.

Annuity-receiving order in interest-bearing tontine:

• Unless otherwise agreed upon, the annuity-receiving member at a tontine opening is the one who offers the highest interest rate.
• Unless otherwise agreed upon, if at a tontine opening many members offer the same highest interest rate, these members will draw lots to identify the member eligible to receive the annuities.
• Except for the case specified in Clause 4 of this Article, members who have received the annuities may not participate in offering interest rates in subsequent tontine openings.
• If a member contributes more than one annuity share in a tontine, he/she is entitled to offer interest rates until the number of times of annuity receipt corresponds the number of annuity shares he/she has contributed in a tontine.

v     Regarding to interest rate in interest-bearing tontine:

Article 21 of Decree No 19/2019/NĐ-CP stipulated the interest rate in interest-bearing tontine as follows:

• Interest rate in interest-bearing tontine is agreed by the tontine members or offered by every tontine member in order to receive the annuities at each tontine opening but not exceeding 20% per year of total value of annuity shares to be contributed less contributed annuity shares of the remaining period of the tontine group. If the maximum interest rate is governed by the competent authority under Clause 1 Article 468 of the Civil Code, such interest rate shall prevail.
• If the interest rate agreed by the tontine members or offered by every tontine member in order to receive the annuities at each tontine opening exceeds the maximum interest rate, such interest rate shall not apply

v     Regarding to interest rate in case of late contribution or late transfer of annuity shares:

• If the tontine holder does not transfer or does not transfer fully annuity shares to the annuity receiving member upon the tontine opening, members who have not received annuities but not contributed annuity shares or not contributed annuity shares fully, they must pay interest on late payment corresponding to the delayed duration.
• Interests accruing due to late contribution or late transfer of annuity shares shall be determined according to agreement of members but not exceeding the maximum interest rate prescribed in Clause 1 Article 21 of this Decree of the late payment based on the delayed duration. If there is no agreement, the interest rate is 50% of maximum interest rate prescribed in Clause 1 Article 21 of this Decree of the late payment based on the delayed duration./.