Where did tontines come from? What are they for?

Start learning why the 400 year old tontine has always proven so popular all over the world


What is a tontine?

A tontine is a simple financial arrangement in which a group of investors contribute money to buy an asset upon in return for receiving a portion of the cashflow generated by the asset for as long as they remain alive.


Where does the cashflow come from?

The cashflow comes from the assets financed by the contributions of the members.

Historically these assets included toll-bridges, hotels, commercial real estate or a government bond portfolio.


Who manages the tontine?

Regardless of whether the tontine is created by a government, a city or among a number of private individuals, a tontine administrator is appointed to act in a fiduciary capacity safeguarding the asset and distribution of the cashflow to the surviving members.


What happens when a member of the tontine dies?

Whenever a member dies, the portion of the cashflow being received by the surviving members increases.

Example: A tontine has 11 members each receiving $1,000 per month ($11,000 in total). 1 member passes away. The 10 remaining members now receive $1,100 per month.


How long does a tontine last for?

A properly designed tontine continues dividing up the cashflow for as long as at least two members are alive.


What happens when there is only one member left?

Typically, when the second last member passes away, the assets of the tontine are distributed to the sole surviving member that has been blessed with the longest life.


Why would someone become a member of a tontine?

Tontines are the simplest possible 'passive income strategy' because the only requirement to receive a steady stream of cashflow is that the member remains alive.


Why not buy an income generating asset to generate passive income?

The cashflow paid by a tontine will always be higher because it includes a portion of the cashflow no longer being paid to the members that have already passed away.


Who invented the tontine?

The name 'tontine' comes from the Italian banker Lorenzo Di Tonti who designed a national tontine to raise money for the king of France.

That said, tontine type arrangements are part of a cultural heritage stretching back to the cradle of civilisation in the middle east where the greeting 'live long & prosper' is still used to this day.


Why did tontines become so popular?

According to the 'godfather' of economics Adam Smith, the reason that tontines 'always raise more money and faster' than any other financial instrument is that each of us fancies our chances of living a very long life if we know that we will have plenty of money to live on in our golden years.


What tontines are available today?

Since 2007 financial experts and institutions have called for the return of tontines to help solve the global pensions crisis.

Tontine Trust was established to make modern tontines a reality for savers all over the world.

The first modern tontine is the TontineIRA™ which is optimised for the needs of US savers.

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© 2024 Tontine Trust Advisors LLC ('Tontine Trust'). All rights reserved.

Tontine Trust is a fintech enabling consumer-friendly lifetime income retirement products such as the state of the art TontineIRA™ via banks, chartered trust companies and credit unions (each a ‘Bank’).

Banking, trustee and fiduciary services in the US are provided by partner Banks which are regulated in the US to act as fiduciaries on behalf of US Tontine IRA™ accountholders (‘members’).

Tontine Trust provides and operates the TontineIRA™ administration and record-keeping platform on behalf of and under the supervision of the Banks.

Tontine Trust is not a Bank or a trust company and does not provide banking & fiduciary services other than certain administrative services in a ministerial capacity as the Trust Advisors to the Tontine IRA™s.

No information on this website or the platforms provided by Tontine Trust should be taken as constituting individual advice to you. The information is informational and of general guidance only. Tontine Trust does not provide investment management services, financial advice, banking or fiduciary services.

The choices you make or do not make around the investment of your retirement account are your own responsibility.‍ Neither Tontine Trust nor the Banks can be held responsible for any financial loss arising from your retirement choices or lack of them.

The amounts and duration of the lifetime income from the Tontine IRA™ are indicative only. By design, neither the amounts nor the duration of retirement income payments from a tontine plan are fixed or guaranteed.

Based upon many years of research and development, the TontineIRA™ platform displays reasonable best estimates of what level of income you can expect to receive over the course of your lifetime. These estimates are constantly reviewed (sometimes nightly) to incorporate any effects on expected incomes caused by changes in interest rates, investment returns, life expectancy and/or the actual mortality experience of members sharing the same tontine.

The Banks we work with are required to manage US trust assets in accordance with the Uniform Prudent Investor Act.‍

To ensure maximum security of capital and income for members, the Tontine IRA™ assets will be invested by the Banks in a basket of FDIC insured deposits such that each up Tontine IRA™ account can obtain FDIC coverage up to approximately $10m of assets per member.

Note that while the deposits made on behalf of the Tontine IRA™s are FDIC insured, the IRA accounts themselves are not a deposit or other obligation of, or guaranteed by a Bank or state chartered trust company and are not directly insured by the FDIC. Therefore they should be considered as being subject to investment risks, including a possible loss on the principal amount invested, for example when a member passes away before they have received total income in excess of their original contribution to the TontineIRA™.