Legacy Trust Brings Cryptocurrency to Pensioners

Custody firm Legacy Trust announced the launch of a digital asset-based pension plan to allow the public to hold crypto for their retirement corpus. As per Coindesk, September 4, 2019, the Hong Kong-based firm will offer the scheme to employees of participating firms and self-employed individuals through an underlying portfolio of cryptocurrencies and fiat currencies.

Crypto Pension and Custody

Bitcoin IRA pioneered the trend of including cryptocurrencies in a retirement portfolio, but many other firms are now joining in on this charge.

Legacy’s scheme will be funded by voluntary contributions or direct salary deductions and will be paid out to the member at the time of their retirement, or to beneficiaries in the event of death.

By tying up with Ledger, the scheme will provide institutional grade custody for all assets held by the fund. Utilizing Ledger’s multi sig cold storage facility will allow clients to securely manage a diverse range of digital assets.

Capital Appreciation With a Small Allocation

For long, advocates of crypto investment have spoken of how a tiny allocation to Bitcoin or crypto can boost a portfolio by several percent. A recent study concluded that over the last 10 years, a portfolio of 1 percent bitcoin and 99 percent cash would return a compounded annual return of over 10 percent.

1% #bitcoin + 99% cash allocation beats S&P500 over last 10 years:

– higher return

– lower risk (!)

– better risk/return, raroc etc

– including: 3x bitcoin "crash" -80% (2011, 2014, 2017)

– note: last 10 yrs was great for S&P500 (no -40% like 2002, 2008)#asymmetricbet #arbitrage pic.twitter.com/WQc1kt3RWO — PlanB (@100trillionUSD) January 21, 2019

This beats the S&P 500 by quite a healthy margin and shows the power of a hyper appreciative asset even in small quantities.

Pension funds are currently facing a doom loop, as most of them are unable to generate a return high enough to adequately fund their liabilities.

In addition to this, with the last of the baby boomers entering their retirement age, there are now more people who will be reliant on a pension than ever before. If pension funds are unable to fund this, this demographic will find it difficult to maintain their standard of living.

Therefore, a small allocation to Bitcoin makes a lot of sense and doesn’t significantly affect portfolio risk. It does, however, help boost the risk-adjusted return of the portfolio, as it is the best performing asset since its inception in 2009.