The tontinas, the investment funds where the last survivor took everything

Now that the debate on the future of pensions is on the board, it is curious to remember the foolishness. Let no one think of trash TV contestants because the term is not what a priori It seems. It is a system to invest money and receive interest on a regular basis that in some places with little social coverage such as the US, retirees are beginning to consider, for example, to increase the amount of their pensions. A method that is currently illegal for multiple reasons and that, despite its appearance as a current scam, was actually conceived as an investment centuries ago.

The name itself alludes to its presumed inventor, a banker from Naples -where he was also governor- named Lorenzo de Tonti, who would have developed it in France in 1653, although some scholars believe that Tonti limited himself to perfecting and giving popularity to a method that already existed in Italy at the time. In any case, it is known that Tonti proposed it to the French government when he took refuge in that country fleeing from the Spanish viceroy, against whom he had conspired. Perhaps it was the right time, the Uprising of the Fronde against Cardinal Mazarin had just ended due to the strong increase in taxes decreed to finance the Thirty Years’ War.

The minister himself was interested in creating a kind of mutual that distributed dividends under the supervision of the State. But if the economic context was propitious, the political one was not, with a somewhat delicate situation as King Louis XIV was a minor and, therefore, his mother, Anne of Austria, acted as regent. Consequently, the French parliament rejected Tonti’s idea. However, it had already begun to spread throughout Europe and there is even evidence of where it was officially organized for the first time. It was in Kampen, a city of what was then one of the most powerful powers on the continent, the Dutch Republic of the United Provinces. The year, 1670.

Once the door was opened, the tontina spread rapidly and in 1689, already with the sun king at its height, France agreed to organize its own version, although Tonti did not get to see it because he had died five years before (and after seven years in prison without knowing exactly the cause). He had to contribute three hundred French pounds per head (that was the currency that was in force in the country from the eighth century until 1791, when the franc replaced it) and the money collected was used to pay for military campaigns.

Front and back of a gold French 24 Pound coin, 1793/Photo: Public Domain on Wikimedia Commons

From there, the tontine jumped to England in 1693, also adopted by the executive to, paradoxically, finance the Nine Years’ War against France. And so, the system became general: the French had the opportunity to participate in a dozen editions until 1759, the English four until 1789. Several German territories and the aforementioned Netherlands also joined the fashion with notable success, since it was promoted by the governments themselves, which obtained an extra source of income.

And it is that the operation of the tontina facilitated the obtaining of liquidity, very necessary in times in which wars were frequent and required financing promptly. Basically, it consisted of a series of subscribers who contributed an agreed capital to a fund in exchange for regularly receiving a proportional payment, normally paid once a year.

But what was truly original about the system was that, as the investors died, their participation was reallocated among the others, so that their respective benefits increased (only these, since the invested capital was not recovered as such). The process continued until only one last subscriber remained, who was the one who kept the interests of the rest (a ninety-six-year-old widow named Charlotte Barbier was the last collector of the 1683 tontina, receiving seventy-three thousand pounds). ; when the last survivor died, the tontina was suspended.

Despite the fact that the states were in charge of organizing and managing the tontinas, problems often arose, because as time went by, investors learned and ended up knowing everything: member identification; the fact that they used to include their sons (rather daughters, whose mortality rate was lower) as new investors, so that the payment for the family would be guaranteed; that the youngest had a greater life expectancy and, therefore, more possibilities than the others (which made it necessary to establish tontinas by age segments); and even the resort to murder to reduce the number of members and touch more (which exacerbated the imagination of writers like Stevenson, in his novel the wrong box).

For all this, the tontinas began to decline at the end of the 18th century, at least in their original form. The growing longevity and the thousand and one tricks used favored the distribution of dividends but, at the same time, reduced the income of the organizer, so the states tended to ignore the system. Some still continued, combining the method with the lottery (the Frenchman Dousset even patented a lottery fool in 1792) or with life insurance, something especially used in the Anglo-Saxon world (England, USA, Australia, New Zealand…); clauses were included to prevent crimes ad hoc.

Basically, the nineteenth-century tontinas were of a particular and/or different nature (such as the so-called penny police, a kind of proto-pension plans), designed with specific objectives such as raising money for certain projects; A good part of them were public works and thus equipment such as bridges and roads could be built. In other words, they became a private initiative and thanks to that, with many restrictions, they were able to continue until the middle of the 20th century.

today the word silly It has a broader meaning in the French language and refers to group savings methods and microcredit plans in which dividends are distributed without the death of the interested parties, while in Great Britain it is associated with similar initiatives but related to the Christmas holidays (a kind of Christmas bonus). On the other hand, in African countries the tontinas are widespread and established, almost always made up of women and with an important charitable and supportive component.

They also abound in Asia and especially in Cambodia. Tontines have become fashionable again due to the studies that, as we said at the beginning, are being carried out in the US to complement the pension plans that companies make to their employees.


A short history of tontines (Kent McKeever)/Sale with a survival agreement (Fernando García-Mon Quirós)/King William’s Tontine. Why the retirement annuity of the future should resurrect its past (Moshe A. Milevsky)/Wikipedia