Tontines

Paz-CCFC

Are they legal in Ireland? A quick search on the Irish Statute Book website seems to suggest that there's no legislation on it. Is there any common law authority on this?

Victor

Paz-CCFC wrote: »

Are they legal in Ireland? A quick search on the Irish Statute Book website seems to suggest that there's no legislation on it. Is there any common law authority on this?

"I don't know what a tontine is .." http://en.wikipedia.org/wiki/Tontine

The First Life Directive of the European Union specified tontines as a class of insurance business to be underwritten by authorised and regulated companies, but that part of the regulations was not enacted in the United Kingdom.

Whatever about the correctness of the wiki statement, the First Life Directive would be a good starting point. You need to find out if Ireland has any exemptions.

FreudianSlippers

Victor wrote: »

Paz-CCFC wrote: »

Are they legal in Ireland? A quick search on the Irish Statute Book website seems to suggest that there's no legislation on it. Is there any common law authority on this?

"I don't know what a tontine is .." http://en.wikipedia.org/wiki/Tontine

The First Life Directive of the European Union specified tontines as a class of insurance business to be underwritten by authorised and regulated companies, but that part of the regulations was not enacted in the United Kingdom.

Whatever about the correctness of the wiki statement, the First Life Directive would be a good starting point. You need to find out if Ireland has any exemptions.

Would certainly be a good start. My understanding of them is that they are similar to pyramid schemes in their payment and recruitment method. So if I were to make a wild guess based on that logic they'd be illegal.

Delancey

I recall years ago a Tontine Society for CIE workers collapsed taking the savings of many workers with it.

Paz-CCFC

Victor wrote: »

"I don't know what a tontine is .." http://en.wikipedia.org/wiki/Tontine Whatever about the correctness of the wiki statement, the First Life Directive would be a good starting point. You need to find out if Ireland has any exemptions.

As in the 1979 directive, here? It was repealed by a 2002 directive, which gives a few mentions of tontines. I think this might be the most relevant, though:

"This Directive concerns the taking-up and pursuit of the self-employed activity of direct insurance carried on by undertakings which are established in a Member State or wish to become established there in the form of the activities defined below:

2. the following operations, where they are on a contractual basis, in so far as they are subject to supervision by the administrative authorities responsible for the supervision of private insurance:
(a) tontines whereby associations of subscribers are set up with a view to jointly capitalising their contributions and subsequently distributing the assets thus accumulated among the survivors or among the beneficiaries of the deceased;"

Am I right in saying that this would suggest that tontines are legal if the individual member state wants it to be? And, that if they are legal, they're subject to these provisions? I haven't much experience of reading EU legislation, and I was bewildered looking at some of the stuff on that website, so I'm not really sure.

FreudianSlippers wrote: »

My understanding of them is that they are similar to pyramid schemes in their payment and recruitment method.

Well, I wouldn't say that they're too similar. The recruiter in a pyramid scheme gets a cut from what his recruitees recruite, right (and, he in turn, gives a cut to the people above him on the scheme)? Whereas, a tontine, everything goes into a pot and the remaining survivor(s) share it. I suppose they'd be similar in that the more people signed up to it, the more you get.

So if I were to make a wild guess based on that logic they'd be illegal.

I think that logic would dictate that they're illegal, because you have in interest in the death of the others in the tontine and might be swayed to kill them.


The reason I'm curious as to whether they're legal or not is because for Property Law in college, we got a question whether Joint Tenancies should be recognised in Irish Law. I don't think they should, due to their close relation with tontines (ie, having an interest in the other joint tenants' death). To be honest, I thought there'd be clear legislation outlawing tontines, but, obviously, that's not the case.

ldxo15wus6fpgm

Paz-CCFC wrote: »

I think that logic would dictate that they're illegal, because you have in interest in the death of the others in the tontine and might be swayed to kill them.

By the same logic we would have to outlaw life assurance policies where a wife receives financial compensation when her husband dies, because she has a financial interest in the husband's death.

It almost seems like a bet that you're going to outlive the rest of the members. Apart from the smell of a pyramid scheme off of it, it seems acceptable in my opinion! But I'm only a student like you.

MagicSean

It looks like a death pool. Everyone pays into the pool hoping to be the last one standing.

coylemj

It's not at all like a Ponzi or pyramid scheme, both of which are fraudulent in nature from the start. If a tontine scheme is implemented with no fraudulent intent it amounts to a savings scheme where the longer you live, the more you get and the last man standing gets to keep all of the remaining cash.

Victor

Hadleigh Fancy Swordsman wrote: »

By the same logic we would have to outlaw life assurance policies where a wife receives financial compensation when her husband dies, because she has a financial interest in the husband's death.

The difference is that presumably a wife also has an interest in her husband being alive and is being compensated for his death.

With a tontine, there is no interest in having the others alive and plenty of interest in having them dead.

coylemj wrote: »

It's not at all like a Ponzi or pyramid scheme, both of which are fraudulent in nature from the start. If a tontine scheme is implemented with no fraudulent intent it amounts to a savings scheme where the longer you live, the more you get and the last man standing gets to keep all of the remaining cash.

However, a pension fund, which one the face of it is the same as a tontine is much more acceptable as it detaches the income of the beneficiary from the the lives of specific other beneficiaries.

Peregrinus

Tontines are, in principal, legal and enforceable. But they are regulated; as a class of insurance only a licensed insurer can issue a tontine contract.

Consquently if a bunch of friends want to set up a tontine arrangement, for it to legally enforceable they would have to have themselves authorised as a mutual life assurance company (which, realistically, they will not be able to do).

ldxo15wus6fpgm

Victor wrote: »

The difference is that presumably a wife also has an interest in her husband being alive and is being compensated for his death.

That's a presumption that could very very easily be rebutted.