Longevity Risk-Sharing Pools (Tontine-Like Arrangements):
Evidence of Support Across OECD, EU, UK, and US Policy
Executive Summary
Longevity risk-sharing pools—historically known as tontines and today implemented through collective, non-guaranteed retirement income arrangements—are increasingly recognised by governments and international institutions as a legitimate and desirable mechanism for delivering lifetime retirement income.
Although modern policymakers rarely use the word tontine, OECD, EU, UK, and U.S. authorities explicitly endorse the underlying economic structure:
Pooling longevity risk among participants to deliver lifetime income without costly insurance guarantees.
This article consolidates official policy statements and research (2020–2025) demonstrating that tontine-like arrangements are aligned with:
- Higher expected retirement income
- Improved pension adequacy
- Lower costs than guaranteed annuities
- Sustainable retirement systems
1. Definition: Longevity Risk-Sharing Pools as Tontine-Like Arrangements
For policy and regulatory purposes, a longevity risk-sharing pool (tontine-like arrangement) is a retirement income structure in which:
- Longevity risk (although not necessarily assets) is pooled among the members
- Income is paid for life
- Payments adjust based on mortality as well as investment experience
- No external insurer provides guarantees
This definition corresponds exactly to how OECD, UK, and U.S. authorities describe non-guaranteed collective retirement income arrangements, even when alternative terminology (e.g. CDC, pooled income funds) is used.
2. OECD: Explicit Institutional Support (2020–2024)
OECD Recommendation on DC Pension Design (2022)
The OECD formally adopted a legal instrument recognising tontine-like structures:
“Lifetime income can be provided by non-guaranteed arrangements where longevity risk is pooled among participants.”
The OECD explicitly contrasts these arrangements with guaranteed products, noting:
“The choice of arrangements depends on the trade-off between the cost of guarantees and the stability of retirement income.”
This language directly supports tontines’ central advantage:
higher expected income due to the absence of guarantee costs.
OECD Pensions Outlook 2024
“This edition focuses on protecting against longevity risk and improving retirement outcomes.”
https://www.oecd.org/en/publications/oecd-pensions-outlook-2024_51510909-en.html
The report repeatedly emphasises payout-phase design and risk pooling, which are defining features of tontine-like income pools.
OECD Pensions Outlook 2020
“Retirement income arrangements can share both investment and longevity risks among different stakeholders.”
https://www.oecd.org/en/publications/oecd-pensions-outlook-2020_67ede41b-en.html
3. European Union: Collective Risk-Sharing Endorsed
European Parliament Research Service (2023)
“Member States should encourage social partners to set up collective pension plans with risk-sharing between members.”
https://www.europarl.europa.eu/RegData/etudes/BRIE/2023/753953/EPRS_BRI(2023)753953_EN.pdf
European Commission: Pension Adequacy
“Pension adequacy assesses how well pension systems enable people to retire with sufficient income.”
Longevity risk-sharing pools directly address this adequacy objective by converting savings into lifetime income.
4. United Kingdom: CDC as Statutory Tontine-Like Arrangements
UK Department for Work and Pensions (DWP)
The UK Government explicitly defines CDC pensions as pooled longevity structures:
“Collective Defined Contribution schemes pool investment and longevity risks.”
The DWP further notes:
“CDC schemes can invest in a higher proportion of growth-seeking assets, designed to produce higher returns.”
This reflects the classic tontine mechanism: higher expected income through pooling rather than guarantees.
UK Government Press Release (2022)
“Collective pension schemes could boost retirement incomes by up to 60%.”
House of Lords – Pension Schemes Act
“Contributions into the scheme are pooled and invested with a view to delivering an aspired benefit level.”
https://bills.parliament.uk/bills/2622
The legislation makes clear that benefits are not guaranteed and depend on collective outcomes—hallmarks of tontine-like design.
House of Commons Library Briefing
“CDC schemes reduce these risks by paying pensions based on average life expectancy across the scheme’s members.”
https://commonslibrary.parliament.uk/research-briefings/cbp-8674/
The Pensions Regulator (TPR)
When authorising the UK’s first CDC scheme, TPR stated:
“The pooling of longevity and investment risks makes CDC schemes more resilient to market shocks.”
5. United States: Emerging Federal Recognition of Longevity Pools
The White House – Executive Order (2025)
The U.S. Executive Branch explicitly recognised longevity pooling:
“It is the policy of the United States that every American preparing for retirement should have access to….lifetime income investment strategies including longevity risk-sharing pools.”
This is the first explicit White House reference to longevity risk-sharing pools as a retirement income strategy.
Council of Economic Advisers (White House-Affiliated Research)
White House-linked analysis concludes:
“DC plan participants would benefit from diversification, higher risk-adjusted returns, and higher retirement income.”
This supports pooled approaches that reduce individual longevity risk and insurance costs.
U.S. Department of Labor (SECURE Act Context)
While not using the term tontine, U.S. retirement policy increasingly focuses on lifetime income solutions that improve outcomes beyond individual drawdown:
https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/secure-act
6. Fiduciary and Trustee Governance of Tontine-Like Arrangements
United States: ERISA fiduciary framing
The White House Executive Order explicitly situates longevity risk-sharing pools within an ERISA fiduciary framework, directing regulators to examine:
“…guidance regarding a fiduciary’s duties under [ERISA]…”
This establishes longevity pools not as retail speculative products, but as plan-level options subject to fiduciary process, prudence, and loyalty obligations.
United Kingdom: Trust-based fiduciary governance
UK government policy explicitly links CDC (tontine-like pooling) to fiduciary trusteeship:
“Trust-based pensions law places fiduciary duties on trustees… trustees always act in the best interests of the scheme’s beneficiaries.”
https://www.gov.uk/government/consultations/retirement-collective-defined-contribution-pension-schemes
The DWP further clarifies:
“Trustees can delegate functions… but they cannot delegate their overall responsibility and fiduciary duty.”
CDC schemes therefore operate by design within a fiduciary governance structure.
OECD: Best-interest governance principle
While not prescribing legal form, the OECD grounds its recommendations in a best-interest standard:
“Build trust by ensuring people’s best interest is taken into account.”
This principle is consistent with fiduciary or trustee-based oversight of tontine-like arrangements.
7. Comparative Structure of Retirement Income Designs
| Feature | Drawdown | Guaranteed Annuity | Tontine-Like / CDC Pool |
|---|---|---|---|
| Longevity risk | Individual | Insurer | Shared |
| Guarantees | None | Full | None |
| Capital cost | Low | High | Low |
| Expected income | Lowest | Medium | Highest (expected) |
| Mortality credits | ❌ | ✔ (priced) | ✔ (shared directly) |
| Governance model | Individual | Insurance | Fiduciary / Trustee |
Conclusion
Across OECD, EU, UK, and U.S. policy, a consistent message emerges:
Longevity risk-sharing pools—tontine-like arrangements—are a legitimate, cost-efficient, and increasingly endorsed mechanism for delivering lifetime retirement income.
While modern legislation avoids historical terminology, the economic substance of tontines is now embedded in mainstream pension policy through CDC schemes, pooled income funds, and non-guaranteed lifetime income arrangements.
From a policy perspective, tontine-like structures:
- Improve retirement income adequacy
- Reduce reliance on expensive guarantees
- Align with demographic realities
- Are compatible with modern regulation
Tontines, and moreover, those structure as tontine trusts are no longer fringe concepts—they are institutionally recognised solutions.