Annuities provider Challenger has thrown its support behind the government's commitment in the federal budget to remove tax impediments to products that provide pooled longevity risk, such as deferred lifetime annuities (DLAs).
The new rules will permit a range of options to suit retirees and superannuation funds, with DLAs able to be bought pre-retirement on retirement or post-retirement, with either a single or multiple premiums, Challenger said in a statement.
The rules are scheduled to come into effect in July 2017.
Challenger said that once the legislation is effective, the company can provide DLAs that will allow retirees to insure against the possibility of running out of money due to their living beyond an expected age.
The firm's chief executive officer, Brian Benari, said the government has created an innovative structure to broaden the range of retirement income products.
“Treasury ran an open and exhaustive consultation with the industry on these reforms over more than a year,” Mr Benari said.
“DLAs will give Australians a simple and effective way to insure against the risk of outliving their savings.
“They will give retirees greater confidence to spend and enjoy a better standard of living in their retirement because they will have the comfort of knowing they have effectively planned for their savings to go the distance.”