We understand that this is a question that some people 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 guaranteed by Challenger Life rather than by Challenger Limited.
The assets of Challenger Life are held in a separate statutory fund. These assets are unaffected by the financial situation of Challenger Limited nor are they available to Challenger Limited or creditors.
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.
Challenger Life is subject to detailed legislative and regulatory requirements designed to ensure that your investment is kept safe. APRA continuously monitor our investments with the aim of ensuring that we can meet the promises that we have made to you both now and into the future.
When you invest in a Challenger annuity your 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 one in 200-year investment market shock event.
If at any time we do not 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.
Find out more about our guarantee.
Our products have no fees (although you may agree to pay fees to your adviser for their services). The amount we promise to pay you is what you will receive. This is important to note when comparing our products to other investments that may charge separate management and investment fees.
We invest the money you give us. 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 we make a profit. If we do not achieve investment returns that are sufficient to cover all promises made to our annuity customers, 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 annuity payments are not impacted by our share price and are guaranteed by Challenger Life, a Life Company regulated by the Australian Prudential Regulation Authority (APRA). Find out more about how we can make that guarantee to you.
Challenger makes investments subject to restrictions outlined by the Life Insurance Act. Money is invested into cash, shares, government and corporate bonds, convertible notes, debt instruments, property investments, infrastructure investments and other assets. Read our FY19 annual review for more information.
Challenger lifetime annuities pay a guaranteed death benefit if you die early. The death benefit is up to 100% of the amount you invest and is payable to the beneficiaries you nominate or to your estate. You can ask us to remove this feature in return for higher payments from your annuity, the choice is totally yours.
This gives you certainty and control over your estate planning outcomes. See the relevant Product Disclosure Statement for more information.
While Challenger lifetime annuities are designed to be held for life, there is a long period where you can access a lump sum if your circumstances change. You can ask us to remove this feature in return for higher payments from your annuity, the choice is totally yours. See the Product Disclosure Statement for more information.
You don’t have to invest all of your money into a Challenger lifetime annuity. You can invest only a portion of your super or retirement savings and receive a level of secure, guaranteed income for life. You can invest as little as $10,000.
Inflation measures the change in the cost of living over time. Payments from Challenger annuities can be linked to yearly inflation changes, helping you to continue to afford tomorrow what you can afford today.
A lifetime annuity (Flexible Income option) may immediately increase your Age Pension because only a portion of your investment is counted under the assets test. Speak with your financial adviser before making any financial decisions.
When comparing lifetime annuities to other investments it is important to compare them to similar secure investments and not to shares or other higher risk assets. Lifetime annuities give you income certainty, so they are likely to give you lower returns than higher risk investments where you may receive higher returns but you can also incur losses (for example if there were to be another Global Financial Crisis).
Challenger’s lifetime annuities are a smart defensive asset because they offer competitive payment rates. These payments can be linked to yearly inflation changes and are guaranteed for your lifetime regardless of how share markets perform.
Glossary of terms
Cut through the jargon with our handy glossary, explaining all the terms you’ll come across when researching your retirement income options.
Whether you need information on the Age Pension, or retirement issues, our helpful links will take you to the right place.
Download investor forms for our products to make changes to an existing policy.