AXA adds longevity risk to North

AXA Australia has announced details of a new North solution that guarantees income for life, addressing the problem of Australians outliving their retirement savings.

AXA general manager of sales and marketing Adrian Emery said the new income guarantee helped address longevity risk.

“Until now our industry has been mainly focused on accumulation, as that is where the need has been. Many advisers are still understandably focused on pre-retirement planning as this group has large assets, reduced liabilities and surplus income, but we as an industry need to realign our thinking,” he said.

AXA is also finalising details of another product specifically made for retirees, a new multi-manager Income Generator Fund, which is designed to give clients a regular and stable income that will rise over time.

“The move from accumulation to pension drawdown phase will entail a complete shift in thinking about investment portfolio planning for retirees. We have to think about building purpose-based asset allocation strategies that deliver regular income,” he said.

The North Protected Retirement guarantee allows a client to remain invested in growth assets while insuring against the risk of running out of money, Emery says.

As with the existing Protected Growth guarantee, in superannuation AXA locks in any increase in account value as the future income base on an annual basis.

The income is guaranteed for life, even if the capital is depleted; and the investor always has access to their account balance and can withdraw their funds at any point, Emery says.

“There are no exit fees, and they can withdraw the full capital sum if they want to. They can come and go within the product as they choose,” he said.

The guarantee fee ranges between 1.2 per cent and 2.15 per cent, and provides access up to 85 per cent growth assets. The provider of the lifetime guarantee is NMLA, AXA’s life insurance company.