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Govt backs down on Challenger product

  •  
By Tim Stewart
  •  
2 minute read

The Department of Social Services (DSS) has agreed to continue providing Challenger’s Care Annuity customers with favourable means test assessments after the company instigated legal action.

Challenger mounted the legal action after the DSS reversed its March 2012 decision about the treatment of the Care Annuity in early December 2014.

The reversal of the decision was likely to decrease the amount of aged pension received by Care Annuity customers, as well as increasing their aged care fees, according to Challenger.

InvestorDaily understands Challenger instigated proceedings against the DSS and was granted a full hearing in the Federal Court, which was set down for yesterday.

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However, in a statement to the ASX yesterday Challenger said it had been informed by the DSS that the government will “continue to assess the Challenger Care Annuity as having a zero percent residual capital value for its customers”.

As a consequence, the financial services firm has withdrawn its court action against the DSS.

Challenger chief executive Brian Benari said yesterday’s decision was “an appropriate outcome for our frail and vulnerable aged customers”.

“[They] will continue to receive the means test treatment they expected when they bought their Care Annuities,” Mr Benari said.

“We agree with the DSS that the reliability and consistency of the social security and aged care systems has been assured through working together on this issue,” he said.

“Over the last few weeks we have been working constructively with the DSS to provide certainty to our existing care customers,” Mr Benari said.

“To address future uncertainty, we have discontinued the Care Annuity in its current form. Both parties will work together in relation to an alternative Care product,” he said.

Govt backs down on Challenger product

The Department of Social Services (DSS) has agreed to continue providing Challenger’s Care Annuity customers with favourable means test assessments after the company instigated legal action.

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