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Means test changes an opportunity says Challenger
Annuities specialist Challenger has confirmed it is banking on the Government’s new Age Pension means test rules supporting the increased take-up of lifetime annuities and longevity products more broadly.
Challenger chief executive told the company’s annual general meeting today, Richard Howes told the AGM Challenger had seen positive changes from the introduction of the Age Pension means test rules.
“The changes mean that only a proportion of an investment in a lifetime annuity is counted under the assets test,” he said. “For some retirees this can mean a higher age pension payment early in retirement, offset by lower age pension as the annuity payments continue at older ages.”
“We believe these reforms will ultimately support the take-up of lifetime annuities and longevity products more broadly,” Howes said.
“These means testing changes are part of a broader recognition, from a public policy perspective, of the role that innovative retirement income streams such as lifetime annuities can play in improving outcomes for retirees and for the system overall.”
Howes also suggested that inflation linked annuities could represent a means of dealing with Australia’s current low interest rate environment.
“While low rates generally mean lower returns across the board, inflation-linked annuities are a compelling product in this environment, providing retirees with the confidence to safely spend part of their savings,” he said.
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