Challenger launches growth pension alternative
Challenger Internationalhas turned the financial services sector’s push to have its proposed ‘growth pensions’ granted complying income stream status on its head, with the release of its latest retirement income product yesterday.
The new product, dubbed RetireEasy, combines an allocated pension with a Social Security asset test exempt annuity to provide a packaged income stream for retirees.
But Challenger managing director Bill Ireland is positioning the products as an alternative to the financial service industry’s growth pension proposal, which is still languishing without Government approval.
At the last election, the Government made it part of its official policy to conduct a review of growth pensions, a new type of pension product that can invest in growth assets and still gain complying income stream status.
But since then, the Government has steadfastly refused to set out a formal timetable for a review.
“The whole concept behind the funds management industry’s push for ‘growth pensions’ is to combine an investment-linked income stream with exemption from the assets test,” Ireland says.
“We believe RetireEasy already achieves these twin goals. By using the annuity as the fixed interest part of the asset mix, and investing most of the allocated pension in growth assets, investors can earn an optimum rate of return through combining both Social Security and investment products.”
According to Ireland, RetireEasy will be pitched at people with up to $450,000 in retirement savings, although the product is more likely to find its niche with those with between $250,000 and $350,000.
“This product is targeted at those who would not usually make contact with a financial planner. So, people with less money not more,” he says.
Challenger will refer potential investors on to a financial planner, who will establish the amount that each investor should split between the asset test exempt annuity and allocated pension components of the RetireEasy product in order to maximise investment returns and access to Government benefits.
Challenger currently holds the top market position for the sale of long-term annuity products in Australia.
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