Tontine Trust Wins Another Award for Bringing Shariah-Compliant Lifelong Income to Aging Muslims
Every day, approximately 30,000 Muslims around the world celebrate their 65th birthday—a milestone often associated with retirement in many societies.
Yet, for many, this new chapter comes not with celebration, but with deep financial uncertainty.
Unlike retirees in Western nations, who often rely on annuities or state pensions to secure a steady income for life, millions of aging Muslims face a stark reality: conventional retirement products are either unavailable or forbidden under Islamic law.
This disparity highlights a looming crisis—and an opportunity for innovative, faith-aligned solutions like tontines to fill the void.
The Pension Gap in the Muslim World
In Western economies, annuities—financial products that convert savings into guaranteed lifetime income—are a cornerstone of retirement planning.
These contracts pay a fixed rate of interest which is designed to ensure retirees never outlive their savings.
However, annuities are structurally incompatible with Islamic finance.
They rely on interest (riba), which is explicitly prohibited in the Quran, and involve excessive uncertainty (gharar) in their profit-sharing mechanisms.
For Muslims seeking halal alternatives, this creates a dilemma: How can they secure their retirement without compromising their faith?
The problem is further compounded by the absence of robust public pension system in many Muslim-majority countries. In Pakistan, Egypt, or Indonesia for examples, only a small fraction of workers—often government employees—have access to formal pensions. The rest, particularly those in informal sectors, rely on family support or personal savings, which are vulnerable to inflation, emergencies, or outliving one’s assets.
Tontines: A Shariah-Compliant, Community-Driven Retirement Solution
Tontines are an age-old cooperative model rooted in mutual support and ethical risk-sharing—values central to Islamic finance. Unlike conventional insurance or annuities, which prioritize shareholder profits at the expense of consumers, tontines are founded on the principles of mutual assistance (ta’awun) and voluntary contribution (tabarru).
Here’s how it works:
- Members make contributions to their individual savings trusts which are managed transparently and invested in Shariah-compliant assets (e.g., halal businesses, ethical equities, sukuk bonds or gold).
- Each individual’s trust is linked to a cohort of members of the same age and gender. Each member nominates the other members of their cohort as their beneficiaries of any leftover savings in their trusts upon their death.
- The Tontine Trusts then start paying monthly incomes to their members with the income being paid calculated every month based upon:
- the members balance within the trust;
- the expected investment returns; and
- the members remaining life expectancy.
- Over time, as members pass away, their leftover funds are redistributed within the group, ensuring longer-living members are supported without violating Shariah principles.
Why Tontines Are a Superior Alternative to Conventional Annuities
1. Ethical Foundations:
Tontines are simple arrangements which eliminate riba and gharar, ensuring compliance with Islamic law. Trust investments are screened to avoid prohibited (haram) industries (e.g., alcohol, gambling, banking).
2. Collective Security:
By sharing longevity risk across a large group, tontines ensure no individual is left vulnerable if they live longer than expected. This contrasts with annuities, where the shareholders of insurance companies profit from policyholders who die early.
3. Lower fees enable Higher Incomes for savers:
Modern Tontine Trusts can be established at zero costs or commissions and only attract a 1% per year fee which includes all of standard passive investment options. Annuities typically involve an upfront commission, a costly guarantee and ongoing asset management charges estimated at between 3-8% per annum. Modern Tontine Trusts are cost-efficient, transparent, and empowering. Members retain full ownership of their savings, with fees minimized and returns maximized—creating higher income potential for their retirement and fostering trust.
| Tontines | Annuities |
|---|---|
| Risk shared by the members | Risk transferred to a company for a fee |
| Leftover funds shared among participants | Leftover funds paid to the shareholders of the insurance company |
| Ethical, riba-free investments | Typically invest in non-halal investments and industries |
| Transparent, community-focused ethos | Commercial, profit-driven ethos |
Challenges and the Way Forward
Despite their long proven popularity and effectiveness, for over a hundred years tontines have been underutilized globally.
Many Muslims remain unaware of tontines and their benefits, leaving them to navigate retirement on their own—often with growing anxiety about depleting their savings in old age.
To prevent this problem among Muslim societies, it is important to:
- Raise awareness about Shariah-compliant retirement tools such as tontines through education and advocacy
- Promote supportive policies that encourage adoption, especially among low- and middle-income communities
- Leverage technology (e.g., fintech platforms) to scale tontines regionally, nationally, and globally.
A Call for Faith-Centered Financial Justice
As 30,000 Muslims enter retirement age every day, the need for sustainable, halal income solutions grows more urgent. Tontines provide more than just financial security—they revive the Prophetic legacy of community, justice, and compassion.
By embracing this model, Muslim societies can honor their ethical values while providing security and dignity to their elders. In a world struggling to support aging populations, tontines represent not just a solution for Muslims, but a blueprint for ethical and inclusive retirement solution everywhere.
Tontine Trust is honored to receive the Best Shariah-Compliant Investment Platform award at the 2nd Global Islamic Fintech Awards in Dubai from the AlHuda Centre of Islamic Banking and Economics.
This recognition affirms our commitment to delivering innovative, ethical, and faith-aligned financial solutions for a better future.
About Tontine Trust
Tontine Trust is a fintech offering risk sharing lifetime income trusts globally. Our mission is enable savers to enjoy the comfort and security of having a monthly income that lasts for the rest of their lives and which is resistant to the effects of inflation.
Our Swedish based trust company acts as a fiduciary, always acting in the best interest of our members to help them meet or exceed their lifetime income needs. Our low fee model is designed to ensure that we profit with, rather than from, our members.
Our simple & transparent lifetime income platform enables members to establish and control their lifetime income savings trusts from the comfort of their desktops or using our mobile apps. Members can also establish trust funds for their spouses and children, ensuring that their loved ones enjoy a similar level of financial security for life.
For further details about Tontine Trust, please visit: TontineTrust.
About the AlHuda Centre of Islamic Banking and Economics:
AlHuda CIBE is a well-recognized name in Islamic banking and finance industry for research and provides state-of-the-art Advisory Consultancy and Education through various well-recognized modes viz. Islamic Financial Product Development, Shariah Advisory, Training Workshops, and Islamic Microfinance and Takaful Consultancies etc. side by side through their distinguished and widely read publications in Islamic Banking and Finance.
For 20 years AlHuda CIBE has dedicated itself to serving the global Islamic community as a unique institution offering both advisory and capacity building. The prime goal has always been its commitments to serving the community not only in UAE/Pakistan but all over the world. They have served more than 35 countries in the development of the Islamic Banking and Finance industry.
For further details about AlHuda CIBE, please visit: ALHuda.
