Adviser FAQs

Challenger’s annuities will pay your clients a regular income for life, or for a chosen investment term. They can be used as the foundation of their retirement plan.

Generally, anyone aged 18 years and older (aged 60 years and older if clients are using their super to invest) can invest in a Challenger annuity.

Depending on the type of annuity, an annuity can provide your clients with the following benefits:

• regular payments for a fixed term, or for life;
• potential improved Age Pension outcomes such as an increase or the ability to access the Age Pension for the first time when investing in a lifetime annuity;
• protection from key retirement risks like outliving retirement income;
• flexibility to withdraw and be paid a lump sum if their circumstances change over life expectancy or term; 
• cash flow certainty that can help maintain their standard of living and provide peace of mind; and
• control over estate planning.

Some client concerns that annuities can help solve for may include the risk of outliving their retirement income and becoming completely reliant on the Age Pension, the impact of market conditions on the value of their investments, investing in a low rate environment and the risk that over time inflation will increase the cost of living. 

While Challenger annuities are designed to be held for life or the full investment term, there may be flexibility to access a lump sum if your clients’ circumstances change. Please refer to the relevant Product Disclosure Statement (PDS) for more information.

Challenger annuities provide your clients with the comfort of knowing that we can generally pay any lump sum death benefits or continue regular payments to their nominated beneficiary(ies) or estate upon their death within a known withdrawal period. The options available will vary depending on the type of annuity and whether it’s purchased with super or ordinary money. Please refer to the relevant Product Disclosure Statement (PDS) for more information.

We understand that this is a question that your clients may have concerning their choice of where to invest their hard-earned money in retirement.
 
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.

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 do not 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 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 client’s 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). 

Challenger makes investments subject to restrictions outlined by 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 FY20 annual review for more information.

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 are 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.