About the guarantee

For financial adviser use only

A Challenger annuity provides you with guaranteed income payments for a fixed term, or for life. But how does the guarantee work?

Challenger annuities are guaranteed 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 a customer invests into an annuity with Challenger, their money is placed into a secure fund, along with money received from other annuity customers. Challenger also contributes money into this fund, which is known as the statutory fund. All regular payments to our annuity customers are made from the statutory fund.

How is the money invested?

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.

How can I know the investment is in safe hands?

Challenger is regulated under the Life Insurance Act and the prudential standards made under it. Compliance with these regulations is supervised by APRA to ensure we are able to meet our obligations to customers 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 and future payments are still guaranteed.

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.

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