Retirement income partnerships set to rise to boost product innovation
The industry can expect to see more partnerships in the retirement income space in the future, enabling firms to progress their innovation.
Appearing at the Citi Investment Conference 2025 in Sydney, a panel of commentators from Challenger, AMP, and Generation Life discussed the opportunities for innovation in the retirement income space.
Grant Hackett, CEO of Generation Development Group (GDG), said: “We’re definitely going to see more competition over the next five or six years. It does create more opportunity and more consideration [for products].”
But he flagged product innovation is dependent on the government providing support for these types of products, or they can expect to see only minimal uptake from consumers.
“The more we see changes that are going to be pro the industry, that will give businesses like ours the opportunity to be able to innovate,” Hackett said.
“But at the same time, we need to see scale in our products and we need the government to support that as we don’t want to be in a situation where we are creating all these products but they’re sub-scale and have to be closed down.
“The opportunity here is as you get more players in the space, the share will grow and market could be magnitudes larger than it is currently and the key to making that happen is more competition.”
Ben Hillier, director of retirement at AMP, noted that none of the companies on the panel are marketing their products as ‘solving’ the retirement income problem, and that they will form part of a combination of products suitable for retirees.
“We aren’t marketing this as an all-or-nothing approach, you can’t solve multiple problems with a single solution. For far too long, we’ve been trying to solve the retirement problem but you’re talking about longevity risk, inflation risk, sequencing with one investment option and it cannot be efficiently done,” Hillier said.
“What we’ve done in Australia is demonstrate you can decouple the investment risk from the longevity risk, you can let the specialists specialise and get a better outcome. All of us will be selling our products alongside an account-based pension.”
Partnerships
One way firms are able to speed up this innovation and development is via partnerships, and they have already been active in this space in recent months. In April, TAL acquired a minority interest in Challenger, while GDG signed a partnership with BlackRock. At AMP, it appointed TAL as its default and retail insurance provider for AMP Super.
In July, MLC entered into a tripartite relationship with TAL and Challenger on a retirement solution amid a series of retirement income offerings for financial advisers.
Anton Kapel, CEO of Challenger Life, said: “Different parties are better at different components and getting partnerships or providers to come together and construct the different components that can be used in a retirement portfolio for an individual just makes sense.”
At GDG, BlackRock took a $25 million stake in the firm as part of a strategic alliance to design and distribute tailored retirement solutions. Funds provided by BlackRock will support the development and rollout of the new retirement solutions and the alliance will explore additional product and service opportunities.
Hackett said: “Our super system is fourth-biggest in the world, set to grow to be the second-biggest and there’s a big commercial opportunity in decumulation and big brands do see that opportunity in Australia.
“It really helps with the innovation side. You have some core competencies and skills that do really well but you can bring in partnerships to help and support other aspects. It also gives us the opportunity to access their global IP, BlackRock is the biggest asset manager in the world and has some great technology behind it.
“So these partnerships allow us to innovate quicker and have better solutions for some of the biggest trustees out there to help them comply with the Retirement Income Covenant.”
AUTHOR
Laura Dew
Recommended for you
Those large AFSLs are among the groups experiencing the most adviser growth, indicating they are ready to expand following a period of transition and stabilisation after the Hayne royal commission.
Vanguard has launched a suite of five model portfolios in partnership with Lonsec Investment Solutions to offer active-passive solutions for financial advisers.
AMP has reported a 61 per cent rise in inflows to its platform, with net cash flow passing $1 billion for the quarter, but superannuation fell back into outflows.
ASIC commissioner Alan Kirkland has detailed the regulator’s intentions to conduct surveillance on licensees and advisers who are recommending managed accounts, noting a review is “warranted and timely” given the sector’s growth.
