A tontine ( / ˈ t ɒ n t aɪ n , - iː n , ˌ t ɒ n ˈ t iː n / ) is an investment linked to a living person which provides an income for as long as that person is alive. Such schemes originated as plans for governments to raise capital in the 17th century and became relatively widespread in the 18th and 19th centuries.
121-413: Tontines enable subscribers to share the risk of living a long life by combining features of a group annuity with a kind of mortality lottery . Each subscriber pays a sum into a trust and thereafter receives a periodical payout. As members die, their payout entitlements devolve to the other participants, and so the value of each continuing payout increases. On the death of the final member, the trust scheme
242-409: A structured settlement of a personal injury lawsuit . Life annuities may be sold in exchange for the immediate payment of a lump sum (single-payment annuity) or a series of regular payments (flexible payment annuity), prior to the onset of the annuity. The payment stream from the issuer to the annuitant has an unknown duration based principally upon the date of death of the annuitant. At this point
363-470: A centralised state governed from the capital. He sought to eliminate the remnants of feudalism persisting in parts of France; by compelling many members of the nobility to reside at his lavish Palace of Versailles , he succeeded in pacifying the aristocracy, many of whom had participated in the Fronde rebellions during his minority. He thus became one of the most powerful French monarchs and consolidated
484-509: A beneficiary gets either a lump sum or annuity payments. An annuity with only a distribution phase is an immediate annuity, single premium immediate annuity (SPIA), payout annuity , or income annuity . Such a contract is purchased with a single payment and makes payments until the death of the annuitant(s). Annuities that make payments in fixed amounts or in amounts that increase by a fixed percentage are called fixed annuities. Variable annuities, by contrast, pay amounts that vary according to
605-479: A chief minister: "Up to this moment I have been pleased to entrust the government of my affairs to the late Cardinal. It is now time that I govern them myself. You [secretaries and ministers] will assist me with your counsels when I ask for them. I request and order you to seal no orders except by my command . . . I order you not to sign anything, not even a passport . . . without my command; to render account to me personally each day and to favor no one". Capitalizing on
726-591: A combination of both. In the UK any annuities that are taken out after 21 December 2012 will have to comply with the ruling. Louis XIV Louis XIV (Louis-Dieudonné; 5 September 1638 – 1 September 1715), also known as Louis the Great ( Louis le Grand ) or the Sun King ( le Roi Soleil ), was King of France from 1643 until his death in 1715. His verified reign of 72 years and 110 days
847-540: A common diplomatic front against France, leading to the Triple Alliance , between England, the Dutch and Sweden . The threat of an escalation and a secret treaty to divide Spanish possessions with Emperor Leopold , the other major claimant to the throne of Spain, led Louis to relinquish many of his gains in the 1668 Treaty of Aix-la-Chapelle . Louis placed little reliance on his agreement with Leopold and as it
968-520: A counterweight against his domestic Orangist opponents. Louis provided support in the 1665-1667 Second Anglo-Dutch War but used the opportunity to launch the War of Devolution in 1667. This captured Franche-Comté and much of the Spanish Netherlands ; French expansion in this area was a direct threat to Dutch economic interests. The Dutch opened talks with Charles II of England on
1089-461: A favoured few. Financial officials were required to keep regular accounts, revising inventories and removing unauthorized exemptions: up to 1661 only 10 per cent of income from the royal domain reached the king. Reform had to overcome vested interests: the taille was collected by officers of the Crown who had purchased their post at a high price, and punishment of abuses necessarily lowered the value of
1210-467: A form of life annuity typically provided by employers or governments (such as Social Security in the United States). The size of payouts is usually determined based on the employee's years of service, age and salary. Individual annuities are insurance products marketed to individual consumers. With the complex selection of options available, consumers can find it difficult to decide rationally on
1331-430: A kootu, cheetu, chit fund, hwei, tontine or otherwise whereby the participants subscribe periodically or otherwise to a common fund and such common fund is put up for sale or payment to the participants by auction, tender, bid, ballot or otherwise...". In the UK during the mid-20th century, the term "tontine" was applied to communal Christmas saving schemes, with participants making regular payments of an agreed sum through
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#17327729090321452-464: A patent was issued to inventor F. P. Dousset for a new type of tontine in combination with a lottery . In 2024, Tontine Trust founder Dean McClelland was granted a patent in Canada for a System And Method For A Global Peer To Peer Retirement Savings System for the operation of digital tontines. Louis XIV first made use of tontines in 1689 to fund military operations when he could not otherwise raise
1573-489: A pension scheme) are referred to as Purchase Life Annuities and Immediate Vesting Annuities. In October 2009, the International Longevity Centre-UK published a report on Purchased Life Annuities (Time to Annuitise). In the UK it has become common for life companies to base their annuity rates on an individual's location. Legal & General were the first company to do this in 2007. In Canada
1694-715: A powerful but war-weary kingdom, in major debt after the War of the Spanish Succession that had raged on since 1701. Some of his other notable achievements include the construction of the Canal du Midi , the patronage of artists , and the founding of the French Academy of Sciences . Louis XIV was born on 5 September 1638 in the Château de Saint-Germain-en-Laye , to Louis XIII and Anne of Austria . He
1815-412: A result, and Anne was forced, under intense pressure, to free Broussel. Moreover, on the night of 9–10 February 1651, when Louis was twelve, a mob of angry Parisians broke into the royal palace and demanded to see their king. Led into the royal bed-chamber, they gazed upon Louis, who was feigning sleep, were appeased, and then quietly departed. The threat to the royal family prompted Anne to flee Paris with
1936-578: A secret marriage to Queen Anne. However, Louis's coming-of-age and subsequent coronation deprived them of the Frondeurs ' pretext for revolt. The Fronde thus gradually lost steam and ended in 1653, when Mazarin returned triumphantly from exile. From that time until his death, Mazarin was in charge of foreign and financial policy without the daily supervision of Anne, who was no longer regent. During this period, Louis fell in love with Mazarin's niece Marie Mancini , but Anne and Mazarin ended
2057-523: A separate tontine, with the shares of deceased members devolving to fellow-nominees within the same class. Works of fiction (see In popular culture below) often feature a variant model of the tontine in which the capital devolves upon the last surviving nominee, thereby dissolving the trust and potentially making the survivor very wealthy. It is unclear whether this model ever existed in the real world. Financial inventions were patentable under French law from January 1791 until September 1792. In June 1792
2178-562: A single member state. In most places in the United States using tontines to raise capital or obtain lifetime income is consistently upheld as being legal; however, legislation in two states has fostered the false perception that selling tontines in the broader U.S. is not legal. Several new pension architectures have been designed or deployed which partially or fully utilise the tontine risk-sharing structure including: In French-speaking cultures, particularly in developing countries ,
2299-502: A single missed payment. The profits produced by the tontines' deferred payout structures proved tempting for the issuers – especially the profligate James Hyde . As the funds in the investment account accumulated, they found their way into directors' and agents' pockets, and also into the hands of judges and legislators, who reciprocated with prejudicial judgments and laws. Finally, in 1905, the Armstrong Investigation
2420-489: A strong position and on the Spanish marriage. Additionally, Mazarin's relations with Marie Mancini were not good, and he did not trust her to support his position. All of Louis's tears and his supplications to his mother did not make her change her mind. The Spanish marriage would be very important both for its role in ending the war between France and Spain, because many of the claims and objectives of Louis's foreign policy for
2541-833: A system of absolute monarchy in France that endured until the French Revolution . Louis also enforced uniformity of religion under the Catholic Church . His revocation of the Edict of Nantes abolished the rights of the Huguenot Protestant minority and subjected them to a wave of dragonnades , effectively forcing Huguenots to emigrate or convert, virtually destroying the French Protestant community. During Louis's long reign, France emerged as
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#17327729090322662-461: A variety of funds ("subaccounts") from various money managers . This gives investors the ability to move between subaccounts without incurring additional fees or sales charges. Variable annuities have been criticized for their high commissions, contingent deferred sale charges, tax deferred growth, high taxes on profits, and high annual costs. Sales abuses became so prevalent that in November 2007,
2783-567: A variety of products, including lifetime annuities, fixed term annuities and flexi-access drawdown, or they can take all of their pension savings as cash. In the UK there are a large market of annuities of different types. The most common are those where the source of the funds required to buy the annuity is from a pension scheme. Examples of these types of annuity, often referred to as a Compulsory Purchase Annuity, are conventional annuities, with profit annuities and unit linked, or "third way" annuities. Annuities purchased from savings (i.e. not from
2904-437: Is credited with generating an actuarial life annuity table between AD 211 and 222. Medieval German and Dutch cities and monasteries raised money by the sale of life annuities, and it was recognized that pricing them was difficult. The early practice for selling this instrument did not consider the age of the nominee, thereby raising interesting concerns. These concerns got the attention of several prominent mathematicians over
3025-464: Is lent the kitty in turn. They are wound up after each cycle of loans. In West Africa, "tontines" – often consisting of mainly women – are an example of economic, social and cultural solidarity. Informal group savings and loan associations are also traditional in many east Asian societies, and under the name of tontines are found in Cambodia , and among emigrant Cambodian communities. In Singapore,
3146-532: Is now becoming more common in the UK and the U.S. (see Future of annuities, below) while Chile, in comparison to the U.S., has had a very large life annuity market for 20 years. It is expected that the aging of the baby boomer generation in the US will increase the demand for this type of instrument and for it to be optimized for the annuitant. This growing market will drive improvements necessitating more research and development of instruments and increase insight into
3267-610: Is the longest of any sovereign . An emblematic character of the Age of Absolutism in Europe, Louis XIV's legacy is widely characterized by French colonial expansion , the conclusion of Eighty Years' War involving the Habsburgs , and his architectural bequest , marked by commissioned works of art and buildings. His pageantry, opulent lifestyle and ornate cultivated image earned him enduring admiration. Louis XIV raised France to be
3388-423: Is the calculation of economic value or worth. Valuation of an annuity is calculated as the actuarial present value of the annuity, which is dependent on the probability of the annuitant living to each future payment period, as well as the interest rate and timing of future payments. Life tables provide the probabilities of survival necessary for such calculations. With a "single premium" or "immediate" annuity,
3509-483: Is to pay recurring expenses, such as assisted living expenses, mortgage or insurance premiums. The disadvantage of such an annuity is that the election is irrevocable and, because of inflation, a guaranteed income for life is not the same thing as guaranteeing a comfortable income for life. In the United Kingdom conversion of pension income into an annuity was compulsory by the age of 75 until new legislation
3630-665: Is usually wound up . Tontines are still common in France. They can be issued by European insurers under the Directive 2002/83/EC of the European Parliament. The Pan-European Pension Regulation passed by the European Commission in 2019 also contains provisions that specifically permit next-generation pension products that abide by the "tontine principle" to be offered in the 27 EU member states. Questionable practices by U.S. life insurers in 1906 led to
3751-533: The Armstrong Investigation in the United States restricting some forms of tontines. Nevertheless, in March 2017, The New York Times reported that tontines were getting fresh consideration as a way for people to get steady retirement income. The investment plan is named after Neapolitan banker Lorenzo de Tonti , who is popularly credited with inventing it in France in 1653. He more probably merely modified existing Italian investment schemes; while another precursor
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3872-548: The Australian Mutual Provident Society criticised tontine insurance, calling it "an immoral contract" which "put a premium on murder". In New Zealand at the time, another of the chief critics of tontines had been the government, which also issued its own insurance. In France and Belgium, tontines clauses are inserted into contracts such as ownership deeds for property as a means to potentially reduce inheritance tax. The First Life Directive of
3993-653: The Battle of Lens , Mazarin, on Queen Anne's insistence, arrested certain members in a show of force. The most important arrest, from Anne's point of view, concerned Pierre Broussel , one of the most important leaders in the Parlement de Paris . People in France were complaining about the expansion of royal authority, the high rate of taxation, and the reduction of the authority of the Parlement de Paris and other regional representative entities. Paris erupted in rioting as
4114-588: The Deparcieux table discounted at 5%. Continuing practice is an everyday occurrence with well-known theory founded on robust mathematics, as witnessed by the hundreds of millions worldwide who receive regular remuneration via pension or the like. The modern approach to resolving the difficult problems related to a larger scope for this instrument applies many advanced mathematical approaches, such as stochastic methods, game theory, and other tools of financial mathematics . Defined benefit pension plans are
4235-485: The Duchess of Longueville ; dukes of legitimised royal descent, such as Henri, Duke of Longueville , and François, Duke of Beaufort ; so-called " foreign princes " such as Frédéric Maurice, Duke of Bouillon , his brother Marshal Turenne , and Marie de Rohan , Duchess of Chevreuse; and scions of France's oldest families, such as François de La Rochefoucauld . Queen Anne played the most important role in defeating
4356-627: The Duke of Beaufort and Marie de Rohan , who conspired against him in 1643. The best example of Anne's loyalty to France was her treatment of one of Richelieu's men, the Chancellor Pierre Séguier . Séguier had brusquely interrogated Anne in 1637 (like a "common criminal", as she recalled) following the discovery that she was giving military secrets to her father in Spain, and Anne was virtually under house arrest for years. By keeping
4477-613: The Electorate of Cologne . Rapid French advance led to a coup that toppled De Witt and brought William III to power. Leopold viewed French expansion into the Rhineland as an increasing threat, especially after they seized the strategic Duchy of Lorraine in 1670. The prospect of Dutch defeat led Leopold to an alliance with Brandenburg-Prussia on 23 June, followed by another with the Republic on 25th. Although Brandenburg
4598-569: The European Union includes tontines as a permitted class of business for insurers. However, this does not mean that tontines should be considered insurance contracts. According to the Supreme Court of the United States the nature of "insurance" involves some investment risk-taking on the part of the company. Tontines replace idiosyncratic longevity risk with systemic longevity risk and therefore have aspects of insurance however unless
4719-971: The Peace of Westphalia , which ended the Thirty Years' War . Its terms ensured Dutch independence from Spain , awarded some autonomy to the various German princes of the Holy Roman Empire , and granted Sweden seats on the Imperial Diet and territories controlling the mouths of the Oder , Elbe , and Weser Rivers . France, however, profited most from the settlement. Austria, ruled by the Habsburg Emperor Ferdinand III , ceded all Habsburg lands and claims in Alsace to France and acknowledged her de facto sovereignty over
4840-661: The Secretary of War , helped maintain large field armies that could be mobilised much more quickly, allowing them to mount offensives in early spring before their opponents were ready. The French were nevertheless forced to retreat from most of the Dutch Republic, which deeply shocked Louis; he retreated to St Germain for a time, where no one, except a few intimates, was allowed to disturb him. French military advantages allowed them however to hold their ground in Alsace and
4961-496: The Securities and Exchange Commission approved FINRA Rule 2821 requiring brokers to determine specific suitability criteria when recommending the purchase or exchange (but not the surrender) of deferred variable annuities. A pure life annuity ceases to make payments on the death of the annuitant. A guaranteed annuity or life and certain annuity , makes payments for at least a certain number of years (the "period certain"); if
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5082-607: The Three Bishoprics of Metz , Verdun , and Toul . Moreover, many petty German states sought French protection, eager to emancipate themselves from Habsburg domination. This anticipated the formation of the 1658 League of the Rhine , which further diminished Imperial power. As the Thirty Years' War came to an end, a civil war known as the Fronde erupted in France. It effectively checked France's ability to exploit
5203-403: The capital invested. As each investor dies, their share is reallocated among the surviving investors. This process continues until the death of the final investor, when the trust scheme is wound up. Each subscriber receives only interest; the capital is never paid back. Strictly speaking, the transaction involves four different roles: In most 18th- and 19th-century schemes, parties 2 to 4 were
5324-419: The "annuitant" pays for the annuity with a single lump sum. The annuity starts making regular payments to the annuitant within a year. A common use of a single premium annuity is as a destination for roll-over retirement savings upon retirement. In such a case, a retiree withdraws all of the money he/she has saved during working life in, for example, an Individual Retirement Account (IRA) , and uses some or all of
5445-527: The Chit Funds Act of 1971 defines the application of legislation to the operation of chit funds , which were also known colloquially as tontines (although more properly a variant type of ROSCA). In Malaysia , chit funds are primarily known as "kootu funds", which again are ROSCAs and which are defined under the Kootu Funds (Prohibition) Act 1971 as "...a scheme or arrangement variously known as
5566-496: The French crown and nobility: the king might raise taxes on the nation without consent if only he exempted the nobility. Only the "unprivileged" classes paid direct taxes, which came to mean the peasants only, as most bourgeois finagled exemptions in one way or another. The system laid the whole burden of state expenses on the backs of the poor and powerless. After 1700, with the support of Louis's pious secret wife Madame de Maintenon ,
5687-490: The Fronde because she wanted to transfer absolute authority to her son. In addition, most of the princes refused to deal with Mazarin, who went into exile for a number of years. The Frondeurs claimed to act on Louis's behalf, and in his real interest, against his mother and Mazarin. Queen Anne had a very close relationship with the Cardinal, and many observers believed that Mazarin became Louis XIV's stepfather by
5808-518: The King's authority, in a manner that was much more radical than the one proposed by Mazarin. The Cardinal depended totally on Anne's support and had to use all his influence on the Queen to temper some of her radical actions. Anne imprisoned any aristocrat or member of parliament who challenged her will; her main aim was to transfer to her son an absolute authority in the matters of finance and justice. One of
5929-520: The Peace of Westphalia. Anne and Mazarin had largely pursued the policies of Cardinal Richelieu, augmenting the Crown's power at the expense of the nobility and the Parlements . Anne was more concerned with internal policy than foreign affairs; she was a very proud queen who insisted on the divine rights of the King of France. All this led her to advocate a forceful policy in all matters relating to
6050-535: The Reunions . Warfare defined Louis's foreign policy, impelled by his personal ambition for glory and power: "a mix of commerce, revenge, and pique". His wars strained France's resources to the utmost, while in peacetime he concentrated on preparing for the next war. He taught his diplomats that their job was to create tactical and strategic advantages for the French military. Upon his death in 1715, Louis XIV left his great-grandson and successor, Louis XV ,
6171-630: The Spanish Netherlands while retaking Franche-Comté. By 1678, mutual exhaustion led to the Treaty of Nijmegen , which was generally settled in France's favour and allowed Louis to intervene in the Scanian War . Despite the military defeat, his ally Sweden regained much of what it had lost under the 1679 treaties of Saint-Germain-en-Laye , Fontainebleau and Lund imposed on Denmark–Norway and Brandenburg. Yet Louis's two primary goals,
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#17327729090326292-410: The annuitant outlives the specified period certain, annuity payments then continue until the annuitant's death, and if the annuitant dies before the expiration of the period certain, the annuitant's estate or beneficiary is entitled to collect the remaining payments certain. The tradeoff between the pure life annuity and the life-with-period-certain annuity is that in exchange for the reduced risk of loss,
6413-647: The annuitants, any guaranteed payments on non-registered annuities are continued to beneficiaries after the second death. This way the balance of the guaranteed payments supports family members and becomes a two-generation income. Some countries developed more options of value for this type of instrument than others. However, a 2005 study reported that some of the risks related to longevity are poorly managed "practically everywhere" due to governments backing away from defined benefit promises and insurance companies being reluctant to sell genuine life annuities because of fears that life expectancy will go up. Longevity insurance
6534-426: The annuity payments for the latter will be smaller. Joint-life and joint-survivor annuities make payments until the death of one or both of the annuitants respectively. For example, an annuity may be structured to make payments to a married couple, such payments ceasing on the death of the second spouse. In joint-survivor annuities, sometimes the instrument reduces the payments to the second annuitant after death of
6655-568: The aristocracy, this rebellion represented a protest for the reversal of their political demotion from vassals to courtiers . It was headed by the highest-ranking French nobles, among them Louis's uncle Gaston, Duke of Orléans and first cousin Anne Marie Louise d'Orléans, Duchess of Montpensier , known as la Grande Mademoiselle ; Princes of the Blood such as Condé, his brother Armand de Bourbon, Prince of Conti , and their sister
6776-621: The average benefit from Social Security is $ 14,000 per year, the replacement cost would be about $ 250,000 for a 66-year-old individual. The figures are based upon the individual receiving an inflation-adjusted stream that would pay for life and be insured. In March 2011 a European Court of Justice ruling was made that prevents annuity providers from setting different premiums for men and women. Annuity rates for men are generally lower than those for women because men, on average, have shorter life expectancies. The change means that either annuity rates for men will rise, annuity rates for women will fall, or
6897-493: The boundaries of his kingdom. Contemporary treaties were intentionally phrased ambiguously. Louis established the Chambers of Reunion to determine the full extent of his rights and obligations under those treaties. Cities and territories, such as Luxembourg and Casale , were prized for their strategic positions on the frontier and access to important waterways. Louis also sought Strasbourg , an important strategic crossing on
7018-479: The capital and the larger strategic picture, with the old military aristocracy ( noblesse d'épée , nobility of the sword) monopolizing senior military positions and the higher ranks. Louvois modernized the army and reorganised it into a professional, disciplined, well-trained force. He was devoted to the soldiers' material well-being and morale, and even tried to direct campaigns. Louis's legal reforms were enacted in his numerous Great Ordinances . Prior to that, France
7139-466: The contract will terminate and the remainder of the fund accumulated is forfeited unless there are other annuitants or beneficiaries in the contract. Thus a life annuity is a form of longevity insurance , where the uncertainty of an individual's lifespan is transferred from the individual to the insurer, which reduces its own uncertainty by pooling many clients. The instrument's evolution has been long and continues as part of actuarial science . Ulpian
7260-414: The creation of a coalition headed mainly by Marie de Rohan and the duchess of Longueville. This aristocratic coalition was strong enough to liberate the princes, exile Mazarin, and impose a condition of virtual house arrest on Queen Anne. All these events were witnessed by Louis and largely explained his later distrust of Paris and the higher aristocracy. "In one sense, Louis's childhood came to an end with
7381-565: The destruction of the Dutch Republic and the conquest of the Spanish Netherlands, had failed. Louis was at the height of his power, but at the cost of uniting his opponents; this increased as he continued his expansion. In 1679, he dismissed his foreign minister Simon Arnauld, marquis de Pomponne , because he was seen as having compromised too much with the allies. Louis maintained the strength of his army, but in his next series of territorial claims avoided using military force alone. Rather, he combined it with legal pretexts in his efforts to augment
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#17327729090327502-417: The direction of religious policy strongly in hand until her son's majority in 1661. She appointed Cardinal Mazarin as chief minister, giving him the daily administration of policy. She continued the policies of her late husband and Cardinal Richelieu , despite their persecution of her, in order to win absolute authority in France and victory abroad for her son. Anne protected Mazarin by exiling her followers
7623-528: The effective Séguier in his post, Anne sacrificed her own feelings for the interests of France and her son Louis. The Queen sought a lasting peace between Catholic nations, but only after a French victory over her native Spain. She also gave a partial Catholic orientation to French foreign policy. This was felt by the Netherlands, France's Protestant ally, which negotiated a separate peace with Spain in 1648. In 1648, Anne and Mazarin successfully negotiated
7744-407: The end of the 18th century, the tontine had fallen out of favour as a revenue-raising instrument with governments, but smaller-scale and less formal tontines continued to be arranged between individuals or to raise funds for specific projects throughout the 19th century, and, in modified form, to the present day. Each investor pays a sum into the tontine. Each investor then receives annual interest on
7865-428: The exemplar nation-state of the early modern period , and established a cultural prestige which lasted through the subsequent centuries until today. Louis began his personal rule of France in 1661, after the death of his chief minister Cardinal Mazarin , when the King famously declared that he would take over the job himself. An adherent of the divine right of kings , Louis continued his predecessors' work of creating
7986-444: The first knots which tied me to my mother. But attachments formed later by shared qualities of the spirit are far more difficult to break than those formed merely by blood." It was his mother who gave Louis his belief in the absolute and divine power of his monarchical rule. During his childhood, he was taken care of by the governesses Françoise de Lansac and Marie-Catherine de Senecey . In 1646, Nicolas V de Villeroy became
8107-461: The first. There has also been a significant growth in the development of enhanced or impaired annuities . These involve improving the terms offered due to a medical diagnosis which is severe enough to reduce life expectancy. A process of medical underwriting is involved and the range of qualifying conditions has increased substantially in recent years. Both conventional annuities and Purchase Life Annuities can qualify for impaired terms. Valuation
8228-480: The grandson of Louis XIV and Maria Theresa. The War of Devolution did not focus on the payment of the dowry; rather, the lack of payment was what Louis XIV used as a pretext for nullifying Maria Theresa's renunciation of her claims, allowing the land to "devolve" to him. In Brabant (the location of the land in dispute), children of first marriages traditionally were not disadvantaged by their parents' remarriages and still inherited property. Louis's wife
8349-407: The initial premium during the accumulation phase. The phases of an annuity can be combined in the fusion of a retirement savings and retirement payment plan: the annuitant makes regular contributions to the annuity until a certain date and then receives regular payments from it until death. Sometimes there is a life insurance component added so that if the annuitant dies before annuity payments begin,
8470-404: The investment performance of a specified set of investments, typically bond and equity mutual funds . Variable annuities are used for many different objectives. One common objective is deferral of the recognition of taxable gains. Money deposited in a variable annuity grows on a tax-deferred basis, so that taxes on investment gains are not due until a withdrawal is made. Variable annuities offer
8591-447: The issuer of a tontine provides a fixed return, the issuer assumes no true risk in the insurance sense. The new Pan-European Pension legislation which came into effect in March 2022 specifically paves the way for other types of financial service providers to create new pension products that abide by the "tontine principle" which tontine PEPP (pan-European Personal Pension Product) products can be offered throughout Europe once approved in
8712-498: The king and his courtiers. Shortly thereafter, the conclusion of the Peace of Westphalia allowed Condé's army to return to aid Louis and his court. Condé's family was close to Anne at that time, and he agreed to help her attempt to restore the king's authority. The queen's army, headed by Condé, attacked the rebels in Paris; the rebels were under the political control of Anne's old friend Marie de Rohan . Beaufort, who had escaped from
8833-525: The king at the opulent château of Vaux-le-Vicomte , flaunting a wealth which could hardly have accumulated except through embezzlement of government funds. Fouquet appeared eager to succeed Mazarin and Richelieu in power, and he indiscreetly purchased and privately fortified the remote island of Belle Île . These acts sealed his doom. Fouquet was charged with embezzlement; the Parlement found him guilty and sentenced him to exile; and finally Louis altered
8954-421: The king was persuaded to change his fiscal policy. Though willing enough to tax the nobles, Louis feared the political concessions which they would demand in return. Only towards the close of his reign under the extreme exigency of war, was he able, for the first time in French history, to impose direct taxes on the aristocracy. This was a step toward equality before the law and toward sound public finance, though it
9075-548: The king's infatuation by sending Mancini away from court to be married in Italy. While Mazarin might have been tempted for a short time to marry his niece to the King of France, Queen Anne was absolutely against this; she wanted to marry her son to the daughter of her brother, Philip IV of Spain , for both dynastic and political reasons. Mazarin soon supported the Queen's position because he knew that her support for his power and his foreign policy depended on making peace with Spain from
9196-483: The leaders of the Parlement of Paris, whom she had jailed, died in prison. The Frondeurs , political heirs of the disaffected feudal aristocracy, sought to protect their traditional feudal privileges from the increasingly centralized royal government. Furthermore, they believed their traditional influence and authority was being usurped by the recently ennobled bureaucrats (the Noblesse de Robe , or "nobility of
9317-529: The leading European power and regularly made war. A conflict with Spain marked his entire childhood, while during his personal rule, Louis fought three major continental conflicts, each against powerful foreign alliances: the Franco-Dutch War , the Nine Years' War , and the War of the Spanish Succession . In addition, France contested shorter wars such as the War of Devolution and the War of
9438-414: The left bank of the Rhine and theretofore a Free Imperial City of the Holy Roman Empire , annexing it and other territories in 1681. Although a part of Alsace, Strasbourg was not part of Habsburg-ruled Alsace and was thus not ceded to France in the Peace of Westphalia. Following these annexations, Spain declared war, precipitating the War of the Reunions . However, the Spanish were rapidly defeated because
9559-498: The meaning of the term "tontine" has broadened to encompass a wider range of semi-formal group savings and microcredit schemes. The crucial difference between these and tontines in the traditional sense is that benefits do not depend on the deaths of other members. As a type of rotating savings and credit association (ROSCA), tontines are well established as a savings instrument in central Africa, and in this case function as savings clubs in which each member makes regular payments and
9680-404: The mechanics involved on the part of the buying public. An example of increased scrutiny and discussion is that related to privatization of part of the U.S. Social Security Trust Fund . In late 2010, discussions related to cutting Federal taxes raised anew the following concern: how much would an annuity cost a retiree if he or she had to replace his or her Social Security income? Assuming that
9801-507: The money to buy an annuity whose payments will replace the retiree's wage payments for the rest of his/her life. The advantage of such an annuity is that the annuitant has a guaranteed income for life, whereas if the retiree were instead to withdraw money regularly from the retirement account (income drawdown), he/she might run out of money before death, or alternatively not have as much to spend while alive as could have been possible with an annuity purchase. Another common use for an income annuity
9922-439: The money. The initial subscribers each put in 300 livres and, unlike many later schemes, this one was run honestly; the last survivor, a widow named Charlotte Barbier, who died in 1726 at the age of 96, received 73,000 livres in her last payment. The English government first issued tontines in 1693 to fund a war against France, part of the Nine Years' War . Tontines soon caused financial problems for their issuing governments, as
10043-406: The most common type of annuity is the life annuity, which is normally purchased by persons at their retirement age with tax-sheltered funds or with savings funds. The monthly payments from annuities with tax-sheltered funds are fully taxable when withdrawn as neither the capital or return thereon has been taxed in any way. Conversely income from annuities purchased with savings funds is divided between
10164-453: The nation's outstanding insurance contracts. During the Panic of 1873 many life insurance companies went out of business as deteriorating financial conditions created solvency problems: those that survived had all offered tontines. However, the contracts included an obligation to maintain monthly payments, and as a result spawned large numbers of policy owners whose life savings were wiped out by
10285-433: The net outflow of precious metals from France. Louis instituted reforms in military administration through Michel le Tellier and his son François-Michel le Tellier , successive Marquis de Louvois. They helped to curb the independent spirit of the nobility, imposing order on them at court and in the army. Gone were the days when generals protracted war at the frontiers while bickering over precedence and ignoring orders from
10406-467: The next 50 years would be based upon this marriage, and because it was through this marriage that the Spanish throne would ultimately be delivered to the House of Bourbon. Louis XIV was declared to have reached the age of majority on the 7th of September 1651. On the death of Mazarin, in March 1661, Louis personally took the reins of government and astonished his court by declaring that he would rule without
10527-463: The organisers tended to underestimate the longevity of the population. At first, tontine holders included men and women of all ages. However, by the mid-18th century, investors were beginning to understand how to game the system , and it became increasingly common to buy tontine shares for young children, especially for girls around the age of 5 (since girls lived longer than boys, and by which age they were less at risk of infant mortality). This created
10648-461: The outbreak of the Fronde. It was not only that life became insecure and unpleasant – a fate meted out to many children in all ages – but that Louis had to be taken into the confidence of his mother and Mazarin on political and military matters of which he could have no deep understanding". "The family home became at times a near-prison when Paris had to be abandoned, not in carefree outings to other chateaux but in humiliating flights". The royal family
10769-574: The possibility of significant returns for the shareholders, but significant losses for the organizers. As a result, tontine schemes were eventually abandoned, and by the mid-1850s tontines had been replaced by other investment vehicles, such as " penny policies ", a predecessor of the 20th-century pension scheme. A property development tontine, The Victoria Park Company, was at the heart of the notable case of Foss v Harbottle in mid-19th-century England. Tontines were often used to raise funds for private or public works projects. These sometimes contained
10890-404: The practice by prohibiting the separation of families. Additionally, in the colonies, only Roman Catholics could own slaves, and these had to be baptised. Louis ruled through a number of councils: The death of Louis's maternal uncle King Philip IV of Spain in 1665 precipitated the War of Devolution . In 1660, Louis had married Philip IV's eldest daughter, Maria Theresa , as one of
11011-437: The prison where Anne had incarcerated him five years before, was the military leader in Paris, under the nominal control of Conti. After a few battles, a political compromise was reached; the Peace of Rueil was signed, and the court returned to Paris. Unfortunately for Anne, her partial victory depended on Condé, who wanted to control the queen and destroy Mazarin's influence. It was Condé's sister who pushed him to turn against
11132-624: The provisions of the 1659 Treaty of the Pyrenees . The marriage treaty specified that Maria Theresa was to renounce all claims to Spanish territory for herself and all her descendants. Mazarin and Lionne , however, made the renunciation conditional on the full payment of a Spanish dowry of 500,000 écus . The dowry was never paid and would later play a part persuading his maternal first cousin Charles ;II of Spain to leave his empire to Philip, Duke of Anjou (later Philip V of Spain ),
11253-485: The purchase. Nevertheless, Colbert achieved excellent results, with the deficit of 1661 turning into a surplus by 1666, with interest on the debt decreasing from 52 million to 24 million livres. The taille was reduced to 42 million in 1661 and 35 million in 1665, while revenue from indirect taxation progressed from 26 million to 55 million. The revenues of the royal domain were raised from 80,000 livres in 1661 to 5.5 million in 1671. In 1661,
11374-411: The queen. After striking a deal with her old friend Marie de Rohan, who was able to impose the nomination of Charles de l'Aubespine, marquis de Châteauneuf as minister of justice, Anne arrested Condé, his brother Armand de Bourbon, Prince of Conti , and the husband of their sister Anne Genevieve de Bourbon, duchess of Longueville . This situation did not last long, and Mazarin's unpopularity led to
11495-402: The receipts were equivalent to 26 million British pounds, of which 10 million reached the treasury. The expenditure was around 18 million pounds, leaving a deficit of 8 million. In 1667, the net receipts had risen to 20 million pounds sterling , while expenditure had fallen to 11 million, leaving a surplus of 9 million pounds. Money was the essential support of
11616-489: The reorganized and enlarged army, the panoply of Versailles, and the growing civil administration. Finance had always been the weakness of the French monarchy: tax collection was costly and inefficient; direct taxes dwindled as they passed through the hands of many intermediate officials; and indirect taxes were collected by private contractors called tax farmers who made a handsome profit. The state coffers leaked at every joint. The main weakness arose from an old bargain between
11737-408: The return of capital and interest earned, with only the latter being taxable. An annuity can be a single life annuity or a joint life annuity where the payments are guaranteed until the death of the second annuitant. It is regarded as ideal for retirees as it is the only income of any financial product that is fully guaranteed. In addition, while the monthly payments are for the upkeep and enjoyment of
11858-508: The right type of annuity product for their circumstances. There are two phases for a deferred annuity: Deferred annuities grow capital by investment in the accumulation phase (or deferral phase) and make payments during the distribution phase. A single premium deferred annuity (SPDA) allows a single deposit or premium at the issue of the annuity with only investment growth during the accumulation phase. A flexible premium deferred annuity (FPDA) allows additional payments or premiums following
11979-417: The robe"), who administered the kingdom and on whom the monarchy increasingly began to rely. This belief intensified the nobles' resentment. In 1648, Anne and Mazarin attempted to tax members of the Parlement de Paris . The members refused to comply and ordered all of the king's earlier financial edicts burned. Buoyed by the victory of Louis, duc d'Enghien (later known as le Grand Condé ) at
12100-476: The same individuals; but in a significant minority of schemes each initial subscriber–shareholder was permitted to invest in the name of another party (generally one of his or her own children), who would inherit that share on the subscriber's death. Because younger nominees clearly had a longer life expectancy, the 17th- and 18th-century tontines were normally divided into several "classes" by age (typically in bands of 5, 7 or 10 years): each class effectively formed
12221-402: The sentence to life imprisonment. Fouquet's downfall gave Colbert a free hand to reduce the national debt through more efficient taxation. The principal taxes included the aides and douanes (both customs duties ), the gabelle (salt tax), and the taille (land tax). The taille was reduced at first, and certain tax-collection contracts were auctioned instead of being sold privately to
12342-567: The sole regent of France, the king decreed that a regency council would rule on his son's behalf, with Anne at its head. Louis XIII died on 14 May 1643. On 18 May Queen Anne had her husband's will annulled by the Parlement de Paris , a judicial body of nobles and high clergymen, and she became sole regent. She exiled her husband's ministers Chavigny and Bouthilier and appointed the Count of Brienne as her minister of foreign affairs. Anne kept
12463-648: The state's registers, not the church's, and it strictly regulated the right of the Parlements to remonstrate. The Code Louis later became the basis for the Napoleonic code , which in turn inspired many modern legal codes. One of Louis's more infamous decrees was the Grande Ordonnance sur les Colonies of 1685, the Code Noir (black code). Although it sanctioned slavery, it attempted to humanise
12584-451: The time. Contemporaries and eyewitnesses claimed that the Queen would spend all her time with Louis. Both were greatly interested in food and theatre, and it is highly likely that Louis developed these interests through his close relationship with his mother. This long-lasting and loving relationship can be evidenced by excerpts in Louis's journal entries, such as: "Nature was responsible for
12705-411: The treasury verged on bankruptcy. To rectify the situation, Louis chose Jean-Baptiste Colbert as Controller-General of Finances in 1665. However, Louis first had to neutralize Nicolas Fouquet , the powerful Superintendent of Finances . Although Fouquet's financial indiscretions were not very different from Mazarin's before him or Colbert's after him, his ambition worried Louis. He lavishly entertained
12826-453: The widespread public yearning for peace and order after decades of foreign and civil strife, the young king consolidated central political authority and at the expense of the feudal aristocracy. Praising his ability to choose and encourage men of talent, the historian Chateaubriand noted: "it is the voice of genius of all kinds which sounds from the tomb of Louis". Louis began his personal reign with administrative and fiscal reforms. In 1661,
12947-637: The word "tontine" in their name. Some notable tontine-funded projects included: Tontines became associated with life insurance in the United States in 1868 when Henry Baldwin Hyde of the Equitable Life Assurance Society introduced them as a means of selling more life insurance and meeting the demands of competition. Over the next four decades, the Equitable and its imitators sold approximately 9 million policies – two-thirds of
13068-688: The year, which would be withdrawn shortly before Christmas to fund gifts and festivities. Tontines (or schemes described as tontines) have been featured as plot devices in many stories, movies and television programs, including: Annuity (financial contracts) A life annuity is an annuity , or series of payments at fixed intervals, paid while the purchaser (or annuitant) is alive. The majority of life annuities are insurance products sold or issued by life insurance companies however substantial case law indicates that annuity products are not necessarily insurance products. Annuities can be purchased to provide an income during retirement, or originate from
13189-541: The years, such as Huygens , Bernoulli , de Moivre and others: even Gauss and Laplace had an interest in matters pertaining to this instrument. It seems that Johan de Witt was the first writer to compute the value of a life annuity as the sum of expected discounted future payments, while Halley used the first mortality table drawn from experience for that calculation. Meanwhile, the Paris Hôtel-Dieu offered some fairly priced annuities that roughly fit
13310-502: The young king's tutor. Louis XIV became friends with Villeroy's young children, particularly François de Villeroy , and divided his time between the Palais-Royal and the nearby Hotel de Villeroy. Sensing imminent death in the spring of 1643, King Louis XIII decided to put his affairs in order for his four-year-old son Louis XIV. Not trusting the judgement of his Spanish wife Queen Anne, who would normally have become
13431-619: Was Philip IV's daughter by his first marriage, while the new king of Spain, Charles II, was his son by a subsequent marriage. Thus, Brabant allegedly "devolved" to Maria Theresa, justifying France to attack the Spanish Netherlands . During the Eighty Years' War with Spain , France supported the Dutch Republic as part of a general policy of opposing Habsburg power. Johan de Witt , Dutch Grand Pensionary from 1653 to 1672, viewed this as crucial for Dutch security and
13552-507: Was a patchwork of legal systems, with as many traditional legal regimes as there were provinces, and two co-existing legal systems— customary law in the north and Roman civil law in the south. The Grande Ordonnance de Procédure Civile of 1667, the Code Louis , was a comprehensive legal code imposing a uniform regulation of civil procedure throughout the kingdom. Among other things, it prescribed baptismal, marriage and death records in
13673-523: Was a proposal put to the Senate of Lisbon by Nicolas Bourey in 1641. Tonti put his proposal to the French royal government, but after consideration it was rejected by the Parlement de Paris . The first true tontine was therefore organised in the city of Kampen in the Netherlands in October 1670, and was soon followed by three other cities. The French finally established a state tontine in 1689 (though it
13794-653: Was driven out of Paris twice in this manner, and at one point Louis XIV and Anne were held under virtual arrest in the royal palace in Paris. The Fronde years planted in Louis a hatred of Paris and a consequent determination to move out of the ancient capital as soon as possible, never to return. Just as the first Fronde (the Fronde parlementaire of 1648–1649) ended, a second one (the Fronde des princes of 1650–1653) began. Unlike that which preceded it, tales of sordid intrigue and half-hearted warfare characterized this second phase of upper-class insurrection. To
13915-852: Was forced out of the war by the June 1673 Treaty of Vossem , in August an anti-French alliance was formed by the Dutch, Spain , Emperor Leopold and the Duke of Lorraine . The French alliance was deeply unpopular in England, and only more so after the disappointing battles against Michiel de Ruyter 's fleet. Charles II of England made peace with the Dutch in the February 1674 Treaty of Westminster . However, French armies held significant advantages over their opponents; an undivided command, talented generals like Turenne , Condé and Luxembourg and vastly superior logistics. Reforms introduced by Louvois ,
14036-458: Was introduced by the coalition government in April 2011. The new rules allow individuals to delay the decision to purchase an annuity indefinitely. The rules (known as the 'pension freedoms') also mean that from the age of 55, people with money in a 'money purchase' or 'defined contribution' pension scheme have more choice and flexibility in accessing their pension savings. They can now choose from
14157-478: Was named Louis Dieudonné (Louis the God-given) and bore the traditional title of French heirs apparent : Dauphin . At the time of his birth, his parents had been married for 23 years. His mother had experienced four stillbirths between 1619 and 1631. Leading contemporaries thus regarded him as a divine gift and his birth a miracle of God. Louis's relationship with his mother was uncommonly affectionate for
14278-638: Was not described by that name because Tonti had died in disgrace, about five years earlier). The English government organised a tontine in 1693. Nine further government tontines were organised in France down to 1759; four more in Britain down to 1789; and others in the Netherlands and some of the German states. Those in Britain were not fully subscribed, and in general the British schemes tended to be less popular and successful than their continental counterparts. By
14399-522: Was now clear French and Dutch aims were in direct conflict, he decided to first defeat the Republic , then seize the Spanish Netherlands. This required breaking up the Triple Alliance; he paid Sweden to remain neutral and signed the 1670 Secret Treaty of Dover with Charles, an Anglo-French alliance against the Dutch Republic. In May 1672, France invaded the Republic , supported by Münster and
14520-711: Was predictably diminished by concessions and exemptions won by the insistent efforts of nobles and bourgeois. Louis and Colbert also had wide-ranging plans to grow French commerce and trade. Colbert's mercantilist administration established new industries and encouraged manufacturers and inventors, such as the Lyon silk manufacturers and the Gobelins tapestry manufactory . He invited manufacturers and artisans from all over Europe to France, such as Murano glassmakers, Swedish ironworkers, and Dutch shipbuilders. He aimed to decrease imports while increasing French exports, hence reducing
14641-476: Was set up to enquire into the selling of tontines. It resulted in the banning of the continued sale of any tontines which contained toxic clauses for consumers. In essence, these toxic versions of tontine pensions were effectively (though not literally) outlawed in response to corrupt insurance company management. When Equitable Life Assurance was establishing its business in Australia in the 1880s, an actuary of
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