Historical
What is a tontine ?
The tontine is an association of individuals who, united by family ties, friendship, profession, or region, pool their savings to solve particular or collective problems.
The essential condition for the success of a tontine lies in the existence of a very strong trust bond between its members.
Tontines exist on all continents around the world, but they are more widespread in Africa and Asia and come in two main types.
Rotating tontine
The participants in a tontine commit to paying a predetermined amount at a given frequency. For each payment cycle, one of the participants is designated to receive the funds collected from the other participants. The beneficiary is chosen by drawing lots (either before each payment or only once at the beginning of the cycle).
For the first beneficiary, the tontine resembles an interest-free loan. For the last participant, the tontine resembles a (forced) chosen savings plan.
Accumulation tontine
In an accumulating tontine, the contributions are not redistributed to a member but accumulated in the tontine’s fund. The funds collected belong to the tontine until the members decide to perform a share-out, meaning to redistribute all the accumulated money to the members, in proportion to what they have contributed.
In an accumulating tontine, the contributions are not redistributed to a member but accumulated in the tontine’s fund. The funds collected belong to the tontine until the members decide to perform a share-out, meaning to redistribute all the accumulated money to the members, in proportion to what they have contributed.
