The premium that baby boomers place on capital preservation has been reflected in the fact that the value of Challenger's average annuity sale has grown from $80,000 to $200,000 over the last decade.
That is the assessment of Challenger chief executive, Brian Benari, who pointed to the trend at the same time as the company announced a strong first half with record retail annuity sales of $1.6 billion and total annuity sales of $2.1 billion.
The half-year result saw the company's directors declare an interim dividend of 14.5 cents per share, up 16 per cent.
Benari pointed to the degree to which the times were suiting Challenger when he said that retail annuity sales had continued to grow strongly but noted that "we're only four years into the 20 year retirement phase of Australia's four million plus baby boomers".
"As the wealthiest generation in history, the boomers have a lot to lose, so place a very high value on capital preservation, as reflected in the size of our average annuity sale, which has grown from $80,000 to $200,000 over the last decade," he said.
"A trend to longer-term guaranteed ‘income layering" has also become more evident among retirement-focused advisers, wealth managers, asset consultants, research houses and super funds," he said. "When you add to this the FSI's recommendation that super funds be required to pre-select certain income stream products with longevity protection, the Treasury's review of the obstacles preventing the issuance of deferred lifetime annuities, Challenger is clearly very well positioned for continued growth."
