The next generation of annuities are allowing retirees to access their capital at any time as Allianz Retire+ responds to the regulator’s call for innovative retirement solutions.
The development of new strategies had been prompted by a call for innovative retirement solutions from the Australian Prudential Regulation Authority (APRA) and Allianz Retire+ felt it had an opportunity in the annuity space.
Adrian Stewart, chief executive, said it was much harder to innovate in the decumulation space, he said, as any tool created would need to be able to provide retirees with a certainty and guarantee so it had a high barrier to entry.
There had previously been concerns around annuities as retirees were concerned the payments would stop on death and their money would be lost. However, Stewart said this was no longer an issue.
Speaking to Super Review, he said: “Australia only has a small annuity market and we think they are expanding rapidly.
“People worry they will forfeit money in death in traditional annuities but the next generation ones can provide flexibility and certainty and give access to capital if people’s circumstances change. The estate will be the beneficiary on death of the remaining assets.
“Retirees want certainty that they can enjoy the life they want without running out and annuities provide that guaranteed income and can be an anchor in their portfolio.”
He said the current higher rates were a good time for pre-retirees to “lock in” an income for life and for adviser to embrace the product, even if the client wasn’t looking to retire straightaway.
“You can plan well in advance of retirement and lock in a rate now and defer your retirement until later whereas before you could only do that at the point of retirement.”
The firm was already exploring what it could learn from other markets it operated in and had appointed chief executive of Allianz Life Insurance Company of North America, Jasmin Jirele, to its board.
“We are working with our teams worldwide to see what products they have that would be relevant to Australia and able to provide that guaranteed income for life.”
An interesting concept. The tax and pension implications would need to be considered.