ING Australia will be first to market with its product to combat longevity risk faced by people in retirement across the nation.
Called ING Money For Life, the product provides investors with a guaranteed income stream from retirement age for the remainder of their lives.
"It's a market-linked investment which is a normal account-based pension and we've wrapped in a lifetime guarantee or life policy. So it's a bundled life policy if you like in a standard account-based pension," ING Australia director retirement and investment solutions David Kan said.
The product gives investors a guaranteed income stream for the remainder of their lives of either 4 or 5 per cent of the protected income base amount.
"If you are 65 or more when you start the pension payments it's 5 per cent. If you start it at less than age 65 it's 4 per cent," Kan said.
If the underlying investment increases in value, the protected income base amount increases with it on a biannual basis.
The underlying investments are managed by ING Investment Management and individuals will have the choice of three options: an index balanced fund with 60 per cent invested in equities and the rest in cash and bonds, an index moderate fund with 50 per cent invested in equities, and an index conservative fund with only 35 per cent allocated to equities.
Individuals are eligible to invest in the product between the ages of 18 and 85 and the minimum investment amount is $50,000 with additional investments of $20,000.
Investors will have control of the investment at all times and can withdraw from the product without penalty at any time. ING Money For Life will be available to investors from 26 October via the ING OneAnswer platform.
