Arrangement in which a group pools funds and the share of each member who dies is redistributed to the survivors, whose income rises accordingly.
The tontine is the mirror image of insurance. Insurance pools so that the unlucky are compensated by the lucky, the tontine pools so that survivors are enriched by the dead, the mathematics being identical and the moral sign opposite. Put to the French court in 1653 by Lorenzo de Tonti, it financed states for two centuries before being discredited, notably in the United States where tontine-inspired policies founded the life insurance market before being regulated. It makes explicit what every life annuity performs silently, that the longevity of some is funded by the disappearance of others, and its flaw was never one of calculation but one of legibility.
Contemporary retirement tontine designs avoid pooling assets through separate structures with redistribution after death, reproducing longevity risk sharing without the difficulties of collective ownership.
tontine, rente tontinière