The year 2004 saw a spike in annuity sales as retirees sought to take advantage of the assets test exemption, which expired in 2005.
According to figures from Plan for Life, $280 million worth of lifetime annuity policies were written by the six life insurance companies in 2004 – AMP, Aviva, AXA, CommInsure, ING and MLC.
Challenger chief executive for distribution, product and marketing Paul Rogan said the market in Australia “now exceeds that [market] that existed when the asset test exemption was in place”.
“Liquid Lifetime [Challenger’s lifetime annuity] is growing very strongly and we’ve reinvented the market for long-term income streams,” said Mr Rogan. “Sales in the last half were $74 million, up from $30 million in the previous corresponding period,” he said.
Between Liquid Lifetime and Challenger’s Care Annuity, the company expects to write $240 million in the current financial year, said Mr Rogan.
“That’s up more than 400 per cent on the same period last year,” he added.
Challenger CEO Brian Benari said the changing demographics in Australia were driving a 20-year growth cycle in specialist retirement investments.
“Structural demand drivers have kept us committed to developing the lifetime annuity market in Australia. There’s clearly room for wealth managers willing to invest shareholder capital to protect customers from the risks of retirement,” Mr Benari said.