Following the update of its annuities products which has reduced the new minimum investment amount for annuities from $20,000 to $10,000, CommInsure head of annuities George Lytas said annuities can provide protection for longevity risk in retirement.
“We believe annuities can act as the ideal form of insurance in retirement, guaranteeing that no matter how your other investments have performed, or how quickly you have used up your retirement savings, you still have a guaranteed income to support you,” Mr Lytas said.
He added that while the annuities market in Australia is quite low, he believes the market will grow as awareness builds about the benefits they can provide.
“The 2015 Intergenerational Report showed that a retiree at age 70 today can expect to live for another 17 years for a male and another 19 years for a female,” Mr Lytas said.
“Many people don’t account for the fact that their retirement savings need to potentially last to age 90 or beyond.
“Allocated pensions perform well for many retirees; however, as they live longer, their allocated pension balance may not last the distance,” he said.
“Recent research [by Colonial Fist State and Ernst & Young] shows that a combination of an allocated pension and a lifetime or deferred annuity can often provide superior outcomes to an allocated pension alone,” Mr Lytas added.
