Advisers maintain ‘optimistic’ view on lifetime income products

5 December 2023
| By Jasmine Siljic |
expand image

Financial advisers are increasingly turning towards lifetime annuities to meet clients’ needs in retirement, while the government places more pressure on super funds.

Andrew Lowe, head of technical services at Challenger, expressed that financial advisers are holding an optimistic outlook towards the future of retirement income products.

“I have increasingly found advisers like the positive ways of representing the benefits that this type of income stream can bring to their clients,” he told Money Management.

“I see advisers being excited by the prospect of being able to deliver better [outcomes] to their clients’ needs.”

While lifetime annuities have been previously perceived as offering poor value, advisers are now progressively realising the compelling advantages they bring to a retiree’s portfolio.

On 4 December, Treasury released a discussion paper on how the superannuation system can provide the needed security and income in retirement via member support and retirement products.

The Retirement Phase of Superannuation paper increases the focus on the retirement phase by examining key areas, such as:

  • Supporting members to navigate the retirement income system.
  • Supporting funds to deliver better retirement income products and services.
  • Making lifetime income products more accessible.

“Over the last five years, the number of annuities held by Australian members has declined in both absolute terms and as a proportion of total member pension accounts,” the paper wrote.

However, Lowe observed the opposite, clarifying that growing or slowing demand depends on which specific time period you look at.

In Challenger’s results for the 2023 financial year, the firm saw a 53 per cent increase in domestic annuity sales to $3.6 billion underpinned by popularity amongst advisers.

Mandy Mannix, chief executive of customer division, also noticed this growing uptake from advisers over the past 18 months.

“Challenger had record sales in these products last year and we continue to have very strong flows. The Challenger team are also hosting retirement workshops for advisers and these are consistently oversubscribed,” she said.

Looking ahead, Jonathan Kearns, chief economist at Challenger, shared his confidence towards the future of retirement income products creating visible change for retirees.

“The maturing of the superannuation system with more people getting through retirement creates more demand. Then you have a government that is more focused on using this large pool of superannuation [savings] for people in retirement, rather than them living frugally and saving it for the kids.

“I think there’s a change in desire from the policy framework, as well as increased demand from people because of their retirement situation,” he explained.

Read more about:


Add new comment

The content of this field is kept private and will not be shown publicly.

Recommended for you



sub-bg sidebar subscription

Never miss the latest news and developments in wealth management industry


My view is that after 2026 there will be quite a bit less than 10,000 'advisers' (investment advisers) and less than 100...

1 day 2 hours ago
Jason Warlond

Dugald makes a great point that not everyone's definition of green is the same and gives a good example. Funds have bee...

1 day 3 hours ago
Jasmin Jakupovic

How did they get the AFSL in the first place? Given the green light by ASIC. This is terrible example of ASIC's incompet...

2 days 2 hours ago

AustralianSuper and Australian Retirement Trust have posted the financial results for the 2022–23 financial year for their combined 5.3 million members....

9 months 1 week ago

A $34 billion fund has come out on top with a 13.3 per cent return in the last 12 months, beating out mega funds like Australian Retirement Trust and Aware Super. ...

8 months 3 weeks ago

The verdict in the class action case against AMP Financial Planning has been delivered in the Federal Court by Justice Moshinsky....

9 months 1 week ago