About annuities

Types of annuities

Annuity investment terms can be as short as one year, as long as 50 years or even for your lifetime.

Fixed term annuities

When you retire, the bills keep coming in but a regular paycheque doesn't. Fixed term annuities have a fixed start date and end date that is typically chosen by you. The minimum term is one year and the maximum term is 50 years. Your annuity payments are made for the duration of the term and stop at the end of the term. You can choose to have your capital returned at the end of the agreed term, or gradually during the term as part of the regular payments.

Lifetime annuities

Each generation has lived longer than the previous generation. Lifetime annuities are designed to provide payments for the rest of your life. Payments start when the investment begins and last for your lifetime, even if you live much longer than you expect. 

Lifetime annuities can help alleviate the worry that you will outlive your retirement savings. Challenger's lifetime annuities have the added benefit of a guarantee (or withdrawal) period, to provide you access to your capital if required.

Complying annuities

A lesser used type of annuity is a complying annuity. Complying annuities are either 50% or 100% exempt from the Assets Test for social security purposes. A small number of investors purchasing an annuity with superannuation monies rolled over from a self-managed super fund that is currently paying an Assets Test Exempt (complying) income stream may be eligible for a complying annuity. If you think you may qualify for a complying annuity we recommend you speak to your financial adviser.

Deferred lifetime annuities

A deferred lifetime annuity is a lifetime annuity where the payments do not start immediately. For example, the product might be purchased at age 65 with payments commencing at, say, age 85 and continuing for life, even if you live beyond 100.

Deferred lifetime annuities (DLAs) are not currently offered in Australia, although they can be purchased in other countries. For more information on DLAs, see our Policy debate page.