The Retirement Income Covenant is spearheading product innovation in Australia as retirees have a “hunger for yield”, according to Challenger.
Lucy Foster and Catherine van der Veen, Challenger Life general managers strategy and growth, said this had led to a focus on decumulation products.
“The retirement income covenant is absolutely spearheading product innovation in Australia which is terrific,” Foster said.
“It’s not just us that are designing new products which is great and at the heart of it Australian retirees a hunger for yield and they’re looking for stable income.”
Challenger launched its market-linked annuity in October as part of its ongoing development for new decumulation products.
“There is more attention among advisers and consumers, with interest rates where they are, customers and advisers are looking for alternative vehicles and we think the market linked annuity is a really neat innovative way of selling those needs,” Foster said.
van der Veen said advisers in Australia had been designing retirement portfolios for decades and product providers needed to improve.
“They are the masters of designing retirement income portfolios for their clients it’s what they do day in day out,” van der Veen said.
“Where the lift needs to happen amongst the product providers is to help advisers construct the world’s best retirement portfolios.
“Advisers have been focusing on decumulation for years now and now the product providers are starting to lift.”
Foster said the market-linked annuity is “the first cab off the rank” for Challenger but the firm had a broad product development agenda to serve the retail advice market.
“We’ve essentially got an ‘always on’ product development engine and we’re speaking to our own panel of advisers set up that we’re speaking to on a regular basis to get feedback on what the next product could look like,” Foster said.