Challenger has flagged 25 per cent growth in annuities sales in the 2012 financial year and its chief executive expects continued double-digit growth as Australia's ageing population and volatile markets worldwide steer more retirement money to allocated pensions.
"We think, firstly, that there's a lot of money to go into retirement, secondly, the retirement demographic is increasing. There are more people with more money who will spend more money on fixed-income-style products, so there's sort of a multiplier effect going on there," Challenger chief executive Dominic Stevens told InvestorDaily.
"If you just pare that back and say 'how much is the system increasing each year in retirement', it's probably somewhere between 10 and 15 per cent - probably 12 or 13 per cent. What we think is we should at least grow by that because that's the amount of money going into retirement."
Stevens signalled annuities sales of about $1.8 billion in the current financial year.
"In FY2012, we're targeting our organic retail sales to grow by a further 25 per cent. This will see the net book grow 10 per cent," he told a briefing.
He also flagged record life earnings of $430 million for the 2012 financial year, up 7 per cent.
Challenger's annuities sales soared 56 per cent in 2010/11 to $1.46 billion from $930 million a year earlier.
The group's normalised net profit rose 7 per cent to $248 million, spurred by total life sales of just under $2 billion.
"This was a stellar effort led by an increase in organic retail annuity sales of 56 per cent," Stevens said.
"We've seen tremendous growth in demand for our core retail products."
