Australia’s ageing population is the “immutable force” that will drive the take-up of annuities over the coming decades, argues Challenger chief executive Brian Benari.
Speaking to InvestorDaily, Mr Benari, noted that in the short term, baby boomers are only four years into a 20-year retirement phase.
As a result, organic growth for Challenger will be “very strong”, he said.
“This is the catalyst for the super industry’s progressive investment in retirement phase offerings to members,” Mr Benari said.
He pointed to Challenger’s recent partnership with VicSuper as evidence of the industry-wide move towards the retirement phase – as well as Zenith’s recent inclusion of annuities in its model retirement portfolio.
In the medium term, Challenger also has regulatory impetus in its favour, Mr Benari said – noting the Financial System Inquiry's recommendation that super funds pre-elect income stream products with longevity protection for their members.
“We are expecting continued support for the introduction of deferred lifetime annuities, enabled through the removal of minor and unintended legislative impediments,” he said.
But the most important point for Mr Benari is demographics.
“It all gets back to the fact that over the next 40 years, the proportion of the population over the age of 65 will almost double to 25 per cent,” he said.
Challenger, which operates the boutique funds management stable Fidante Partners in addition to its annuities business, recently recruited former CBA executive Ian Saines as chief executive for funds management.
Current Challenger chief executive for funds management Rob Woods has moved into the newly created role of chief executive for group strategy.