Breaking through ‘old world’ legacy

Retirement Product Innovation

Winner

Challenger Guaranteed Annuity

Finalists

CommInsure Lifestream Guaranteed Income Annuity
Mercer LifetimePlus

‘Old world’ lifetime annuities that offered little access to capital have been flipped on their head by Challenger, which saw its Challenger Guaranteed Annuity named the most innovative retirement product.

Challenger chief executive, distribution, product and marketing, Richard Howes said the acknowledgement of the importance of both a competitive income stream and access to capital had set the fund apart from its competitors.

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“In 2017, Challenger expanded to include two new options that balance income needs against capital: a flexible income option that provides higher regular payments,” he said.

“It provides retirees with a secure regular payment for their lifetime regardless of how long they live, or how markets perform.”

Judges said the fund’s attractive features, which included choice of consumer price index (CPI) indexation, certainty of return over the investment term, and help in accessing seniors’ benefits, had set it apart. 

Howes said innovation in the management of longevity risk, market risk, and inflation risk made the product a success, as well as its investment alignment to fixed income.

“The statutory fund primarily invests in fixed income (including cash), with some investments in commercial property and infrastructure,” he said.

CommInsure head of annuities, George Lytas said annuity income in the current market environment was low, but that the CommInsure Lifestream Guaranteed Income Annuity, a finalist, had invested in a diverse portfolio to provide competitive rates and minimise risk for policyholders. 

Lytas said the focus for CommInsure had been on tackling longevity risk and the creation of extra security and asset protection. 

Mercer senior partner, David Knox said the other finalist, Mercer LifetimePlus product, stood out for its competitive pricing and specialist consultation with advisers. 

Knox said an investment strategy that remained simple to explain and execute had helped Mercer’s product deliver strong returns in the Australian market. 

While many retirees would not think to the future, Knox said it was vital that retirement product providers sought to work alongside advisers to deliver offerings with strong returns for clients at present, as well as security in the long run.