Macquarie launches new longevity risk protection product

Macquarie Funds Group has launched a longevity risk protection product that it says will provide investors with a guaranteed minimum level of income for life.

The Macquarie Lifetime Income Guarantee Policy provides investors with a guaranteed minimum level of income for life even if their retirement savings are depleted.

“Although Australia has led the world in developing a mandatory defined contribution retirement savings system — superannuation — we trail many other markets including the US and the UK in providing longevity risk protection products,” said Macquarie Funds Group's head of longevity solutions, Andrew Robertson, adding that this was the motivation behind the launch.

Money invested in the policy is held in an investment account that allows investors continued access to and control over their investments. Investors also have the options to provide security for a spouse and protect estate capital from poor market performance.

The premium is 1.1 per cent per annum of the amount protected, although other fees and charges apply.

Robertson said longevity risk is becoming the primary financial concern for many Australians as they have seen their super savings decrease due to the unprecedented market downturn of the past two years, and that concern is being exacerbated by increasing life expectancies.

“We see the emerging market for flexible, longevity insurance products as one of the most challenging and exciting in the superannuation industry,” Robertson said. “Our plans include working with industry funds and wealth managers to make this product available within their existing superannuation accounts and pensions.”