Challenger Financial Services Group is preparing to issue its first lifetime annuity product since 2007.
The annuity would provide protection against longevity and inflation risk, Challenger Life Company chief executive Richard Howes told financial planners at the firm's retirement income roadshow in Brisbane yesterday.
It would also guarantee investors with "attractive rates" of returns, he said.
The product would also allow investors to redeem 70 per cent of their capital within the first 15 years, therefore addressing key criticisms of annuities centered on their limited flexibility and lack of access to capital, Howes said.
"While we haven't issued any lifetime annuities since 2007, we're encouraged by the Henry review's recommendations in support of both lifetime and deferred lifetime annuities, and would like to make available to retirees an innovative product with liquidity and attractive pricing," a Challenger spokesperson said.
The Henry review, officially released earlier in the month, recommended the government support development and innovation in the private annuity market, and also mentioned that deferred annuities are a good way of providing longevity insurance cover.
The government announced in the budget a 50 per cent discount on the first $1000 of interest earned on annuities, deposits, bonds and debentures.
Challenger's new lifetime annuity product is set to be launched before the end of September.
The product will be linked to Australian inflation via the consumer price index.
Challenger Life Company's assets under management stood at $6.6 billion at the end of March.
