The Australian annuities market is expected to reach $2 billion in sales by the end of the 2011 calendar year, making it the biggest-selling year for annuities since 2004, according to independent research from Plan for Life.
While the past 12 months has seen sales in annuities rise to only half of the peaks experienced in 2004 (around $4 billion), this year’s expected results will have been achieved with only 25 per cent of providers active in the market (Challenger, CommInsure and BT Financial), according to Plan for Life.
The research house pointed to changes to the Government’s age pension asset test exemption as a key motivator for investors to buy into the annuities market in 2004.
Data also revealed that in the 2011 September quarter, Challenger held an 83 per cent share of flows, compared with 38.2 per cent in the same period in 2007.
The uncertainty surrounding the global financial crisis and the shift in demand driven by retirement demographics has influenced the growth in the sales of annuities, said Challenger chief executive, Richard Howes.
"It looks like long-term annuity sales will soon reach the average levels experienced throughout the normal age pension exemption years," he added.
Commenting on the release of Challenger’s 2010 end of year financial year results in August, the firm’s chief executive Dominic Stevens said Challenger had recorded annuity sales growing by an annual compound rate of 33 per cent since 2006.
