Tontines in Australia: Investment Innovation or Relic?

What if your retirement savings could grow—and potentially last longer—by pooling them with others? The tontine, a centuries-old financial concept, is making headlines in 2025 as Australians seek innovative ways to manage longevity risk and create sustainable retirement income.

What is a Tontine and Why Is It Back in the Spotlight?

A tontine is a group investment scheme dating back to 17th-century Europe. Each participant contributes money to a pooled fund, which pays out returns to surviving members as others pass away. Ultimately, the last surviving member receives the remaining capital. While this sounds macabre, modern tontines have been reimagined to address ethical concerns and regulatory requirements, focusing on shared longevity risk rather than windfalls for the last survivor.

Globally, the idea is gaining traction again as retirees outlive their savings and governments search for ways to make superannuation stretch further. In Australia, the Albanese government’s 2025 Retirement Income Review highlighted the need for innovative solutions to help retirees manage longevity risk—putting tontines back on the radar for policymakers and super funds alike.

How Modern Tontines Work

Unlike their historical predecessors, modern tontines are designed for fairness and transparency. Here’s how a 2025-style tontine might operate in Australia:

• Pooled Longevity Risk: Members of a tontine pool their superannuation or retirement savings. Payments are structured to increase as some members pass away, sharing the benefit among survivors.

• No Single Winner: Today’s tontines don’t pay everything to the last survivor. Instead, the pool is gradually distributed, ensuring all members benefit as they age.

• Regulated Structures: Under APRA and ASIC oversight, any new tontine-like product must comply with strict consumer protections, transparency, and actuarial fairness.

• Digital Platforms: With fintech advances, tontines can be managed online, providing easy access, real-time reporting, and even integration with your existing super fund.

For example, an Australian retiree could allocate a portion of their super to a tontine pool managed by their fund. As members age, the pool pays regular income that can rise over time, providing a natural hedge against outliving your savings.

Benefits and Risks: What Australians Should Consider

Tontines address a core challenge for retirees: longevity risk. By pooling resources, they can deliver higher payouts in later life than traditional annuities, which must price in the risk of everyone living longer than expected. But they’re not without drawbacks.

Pros:

  - Potentially higher retirement income, especially for those who live longer than average.

  - Lower fees compared to insurance-based products, as there’s no need for guarantees.

  - Transparent, rules-based payouts that adjust with the pool’s demographics.

Cons:

  - Uncertainty about future payouts, which depend on how long others in the pool live.

  - Limited liquidity—funds are typically locked in for life.

  - Complexity: Tontines require clear communication and robust technology to ensure fairness.

In 2025, the Australian Securities and Investments Commission (ASIC) has flagged the need for strong consumer education around any new tontine products. Super funds are experimenting with pilot schemes, often in partnership with global fintechs and actuaries, to test appetite and ensure compliance with the Retirement Income Covenant.

Real-World Examples and Policy Momentum in 2025

Australia isn’t alone in revisiting tontines. Canada, the UK, and several European countries have launched regulated tontine products over the past two years. In Australia, the 2025 Retirement Income White Paper included recommendations for pilot programs, and several industry super funds are expected to launch tontine-style income streams by the end of the year.

One example: A large industry super fund is trialling a digital tontine platform for members aged 65 and over, offering regular income payments that rise over time. Early feedback suggests strong interest from retirees seeking a balance between income certainty and longevity protection.

Key takeaways for Australians:

• Expect to see more tontine-style products offered by super funds in 2025 and beyond.

• Legislative frameworks are evolving to ensure consumer protection and product transparency.

• Tontines are not a silver bullet, but they offer a creative tool for managing retirement risk in a world where we’re all living longer.

The Bottom Line

Tontines are no longer just a quirky historical footnote—they’re being reimagined as a smart solution for Australians looking to make their retirement savings last. As the regulatory landscape evolves and pilot programs expand, tontines could soon become a mainstream option in your super fund’s retirement toolkit.