Challenger annuities are provided by Challenger Life, a Life Company regulated by the Australian Prudential Regulation Authority (APRA). APRA is the authority that regulates the banking, insurance and superannuation industries. When your clients invest in a Challenger annuity their capital investment goes into a fund along with the capital received from other annuity customers. This fund is known as the statutory fund, and all regular payments to our annuity customers are paid from this fund. We are also required by APRA to invest our own money into the fund. This statutory fund is required to hold enough capital to withstand a significant share market shock event. Challenger Life is subject to legislative and regulatory requirements designed to ensure that your clients’ investment is kept safe. APRA actively monitor our investments with the aim of ensuring that we can meet the promises we have made to your clients both now and into the future. If at any time we don’t achieve investment returns that are sufficient to cover all the promises that we have made to our annuity customers, we must cover the shortfall from the money we have invested in the fund.

Challenger is regulated under the Life Insurance Act and the prudential standards made under it. Compliance with these regulations is supervised by APRA to help ensure we’re able to meet our obligations to your clients now, and in the future. 

Challenger Life holds significantly more capital in the fund than the APRA minimum. So even if an unfortunate event occurs, or there is a significant share market or property crash, our customers’ annuity payments will still be made. In fact, we aim to hold between 1.3 times and 1.6 times APRA’s minimum requirement no matter the market environment.

Our products have no investment management fees (although you may charge fees to your clients for your services). The amount we promise to pay your clients is what they will receive. This is important to note when comparing our products to other investments that may charge separate management and investment fees.

We simply invest the money your clients give us. We take the costs of providing an annuity (including payments to a third party administrator if applicable) into account when setting the amount of your clients’ regular payments, and we also make various assumptions about your clients’ longevity and potential investment returns. 

If we achieve investment returns that are above the amount required to cover the promises made to our annuity investors, we keep the excess amount. This is how Challenger makes a profit. If we don’t achieve investment returns that are sufficient to cover all promises made to our annuity investors, we cover the shortfall from our own money. 

Challenger Limited is an ASX-listed investment management firm and the Challenger Group includes an APRA-regulated life insurer (Challenger Life). We are not underwritten by any other entity. You can find out more about the Challenger Group here. 

Your clients’ annuity payments are not impacted by our share price and are provided by Challenger Life, a Life Company regulated by the Australian Prudential Regulation Authority (APRA). 

We understand that this is a question that your clients may have.

When most people ask this question, they are generally referring to Challenger Limited, the ASX-listed company. It’s important to understand that Challenger annuities are provided by Challenger Life rather than by Challenger Limited.

The assets of Challenger Life that support the annuity payments are held in a separate statutory fund. These assets are unaffected by the share price of Challenger Limited.

Challenger Life (and any investment it makes in relation to the statutory fund) is regulated under the Life Insurance Act and the prudential standards made under it. Compliance with these requirements is supervised by the Australian Prudential Regulation Authority (APRA) to ensure we are able to meet our obligations to investors now, and in the future.

We are also required to hold enough capital within each statutory fund to withstand a significant shock event. So even if an unfortunate financial event occurs like a significant share market or property crash, your client's annuity payments out of that statutory fund will still be made.

We have a number of measures in place and actions we will take if our capital falls below the minimum amount required to ensure the security of annuity payments. APRA is also authorised to take action if our capital falls below the minimum amount required in order to safeguard the interests of our annuity customers.

Challenger Life makes investments subject to Investment restrictions in the Life Insurance Act. Money is invested into cash, shares, government and corporate bonds, property investments, infrastructure investments and other assets. These investments are chosen to match the primary objectives of the fund – consistent returns, and to match cash flow in with payments out to annuity customers. Read our latest annual review for more information.