FAQs

Challenger annuities are provided 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 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 significant share market shock event.

Challenger Life is subject to detailed legislative and regulatory requirements designed to ensure that your investment is kept safe. APRA actively 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. 

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.

Our products have no investment management fees (although you may agree to pay fees to your adviser for their services). 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 customers, 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 provided by Challenger Life, a Life Company regulated by the Australian Prudential Regulation Authority (APRA). 

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 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 significant shock events. So even if an unfortunate financial event occurs like a significant share market or property crash, your 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 will also take action if our capital falls below the minimum amount required in order to safeguard the interests of our annuity customers.

When you invest in a Challenger annuity your capital investment goes into a fund along with the capital received from other annuity customers. This is called a statutory fund. Challenger makes investments from this fund 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 latest annual review for more information.

A guaranteed death benefit is payable for the duration of your life expectancy, up to a maximum of 27 years. The death benefit equals 100% of the amount invested for the first half of the death benefit period (rounded down to a whole year) and we don’t reduce the death benefit for any income that has already been paid to you.

See the relevant Product Disclosure Statement for more information.

There’s flexibility to cancel the investment at any time during your life expectancy, up to a maximum of 27 years (rounded down to a whole year), so you have access to a lump sum if you ever need it. The maximum withdrawal value starts at 100% of the amount invested and steadily reduces to nil.

The actual withdrawal value we pay you is impacted by movements in interest rates and an allowance for the cost to us of breaking the investment. That is why it is only possible to determine the withdrawal value at the time of withdrawal.

See the Product Disclosure Statement for more information.

No. Challenger annuities are designed to help provide a foundation of guaranteed regular income for your retirement portfolio. Investing some of your retirement savings or super in a Challenger lifetime annuity will give you a monthly 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 Challenger lifetime annuity may immediately increase your Age Pension because only a portion of your investment is counted under the assets test. Any benefit will depend on whether you are assessed under the assets or income test.

For market-linked lifetime annuities, monthly payments will move up or down annually adjusting to the changes in your chosen market-linked indexation payment option. In periods of strong market performance, any Age Pension benefits may reduce to reflect the higher income received.

Speak with your financial adviser before making any financial decisions.

For annuities purchased with superannuation money, income payments and lump sum withdrawals are generally tax-free if you are age 60 or over.

For annuities purchased with your retirement savings (outside super), income payments and lump sum withdrawals may have some taxable income. Challenger provides an annual PAYG statement which has all the details you need to complete your tax return.

For tax treatment of death benefits see the FAQ ‘Are annuities taxable to beneficiaries?’.

For annuities purchased with superannuation money, if a death benefit is paid to a dependant (as defined in law), for example a spouse or child under 18, it will be paid tax-free. However, if paid to a non-dependant, for example adult children, they may have some tax payable.

Find out more about tax on super death benefits.

For annuities purchased with money from your savings outside superannuation , death benefits may have some tax payable. Challenger provides a PAYG statement which has all the details you need to do your tax return as a beneficiary.

Yes. The rate is set at the start of your term. Payments will not change unless you choose to have them increased annually as part of your annuity terms.

Yes. This investment is designed to be held for a term you agree at the start of your investment.

Yes

Yes. Your payments are guaranteed by Challenger Life under the terms of the annuity.

Yes. When held for the term, your total investment amount is guaranteed by Challenger Life and will be repaid at the end of the term or throughout the term as regular payments, if that’s what you choose.

No. Your payments are fixed for the term and are guaranteed by Challenger Life, regardless of how share markets perform.

Yes. You can receive your payments monthly, quarterly, half-yearly or yearly.

No. Once your annuity starts, you cannot change the amount of your regular payments. If you have chosen to have your payments increase in line with CPI, your payments will increase when these do.

Yes. The investment is designed to be held to maturity, so there will be a penalty if you withdraw early.

Yes, if you choose. You can choose to have your investment amount repaid to you at the end of the term. Alternatively, you can choose to have some or all of your investment paid throughout the term as regular payments.

Yes. 1 year.

No. Your annuity payments are based on the lump sum you invest with us at the start. However, if you would like to invest in another term annuity, this is of course possible (minimum investment is $10,000).

Yes. You are able to re-invest at maturity, unless all of your capital has been returned to you through your payments during the term.

Yes. The minimum investment is $10,000.

You can nominate one or more beneficiaries to receive the remaining benefits of your investment. If you invested jointly, the benefits will pass on to the surviving owner. If you do not make a nomination the remaining benefits will be paid to your estate.

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.

The Age Pension has an income free area for singles ($5,304 p.a.) and couples ($9,360 p.a. combined). Note this is for Centrelink assessable income which is often not the same as income earned.

For example, some assets are assessed using deeming, like cash, term deposits, shares, managed funds and account-based pensions, which is a calculated formula and not actual income earned.

Find out more about the Age Pension income test.

Your Age Pension income is not assessable for the Age Pension income test. The Age Pension is assessable however for tax and for aged care.

No, the Age Pension is taxable income (except the energy supplement and the non-taxable component of the pension supplement). However, due to the tax-free threshold and tax offsets you may be eligible for, you may not pay any tax even if you receive the full Age Pension. This will depend on your other taxable income.

The Age Pension age is 67. It is based on your date of birth.

Find out more about the Age Pension age.

There are various types of assets which are assessed for Age Pension, many of which are assessed at market value or account balance, such as cash, term deposits, shares, super and investment properties.

Some assets are exempt from the Age Pension assets test, for example your principal home, aged care accommodation lump sums and prepaid funeral expenses.

And some are assessed differently again, for example lifetime annuities. A Challenger lifetime annuity (Flexible Income option) may immediately increase your Age Pension because only a portion of your investment is counted under the assets test.

Find out more about the Age Pension assets test.

The Age Pension has an income cut-out threshold for singles ($63,351.60 p.a.) and couples ($96,865.60 p.a. combined). Note this is Centrelink assessable income which is not necessarily income earned.

If you have assessable income at or above your relevant threshold you will not receive the Age Pension.

Find out more about the Age Pension income test.

A Target Market Determination (TMD) is a document that describes who a product is designed to be appropriate for, how the product can be distributed, and when the TMD themselves should be reviewed. All of Challenger's retail products available for investment, except for closed retail products, will have an associated TMD. Like-for-like reinvestments and rollovers of our retail products aren’t subject to TMD requirements.

The Target Market Determination can be found here, along with the relevant Product Disclosure Statement for each retail product available to new investors.

Our Target Market Determination (TMD) outlines our intended customers for our products for whom the product is designed and appropriate (also known as the target market for the product). If you do not meet the target market outlined in the Target Market Determination, it is likely that the product would not be appropriate for you. 

Your financial adviser will consider with you whether you are within the target market for the product as outlined in the Target Market Determination. 

If you don’t have a financial adviser, you should consider whether you are within the target market described in the Target Market Determination along with the relevant Product Disclosure Statement (PDS), your objectives, financial situation and needs when determining whether a product is appropriate for you.

If you have questions regarding any of our products’ Target Market Determination, please discuss this with your financial adviser, or call our Investor Services team on 13 35 66 (Australia only) between 8.00am and 6.00pm (Sydney time) Monday to Friday. 

Our Target Market Determination outlines our intended customers for our products for whom the product is designed and appropriate for. It is important that the target market described within the Target Market Determination for the product is considered, along with the Product Disclosure Statement, your objectives, financial situation and needs to determine whether a product is appropriate for you. A financial adviser can help you with this.

You can obtain a copy of the relevant product’s Target Market Determination and Product Disclosure Statement on our website.

If you have questions regarding our products, please discuss this with your financial adviser, or call our Investor Services team on 13 35 66 (Australia only) between 8.00am and 6.00pm (Sydney time) Monday to Friday.

Our Target Market Determination outlines our intended customers for our products for whom the product is designed and appropriate for. If you’re not in the target market, it is likely that the product may not be appropriate for you. However, you may still wish to apply for the product after considering the target market described within the Target Market Determination. No product is restricted to customers who only fit the target market in the relevant TMD. You should also consider the Product Disclosure Statement, your objectives, financial situation and needs before deciding if this product is right for you. A financial adviser can help you with this.

This will be different for each individual or couple, however the Association of Superannuation Funds of Australia (ASFA) does provide a guide on how much super both single and couple retirees would need to achieve a comfortable lifestyle in retirement, assuming they draw down all of their capital and receive a part Age Pension. This is currently $545,000 for singles, and $640,000 for couples.

Find out more about the ASFA retirement standards.

This is personal tax advice and you should consider seeking help from an accountant or tax specialist to assist with this.

The tax-free threshold is $18,200, however you may be eligible for tax offsets like the Senior Australian Pensioners Tax Offset (SAPTO) and the Low Income Tax Offset (LITO) to help you reduce your tax payable (if any), possibly to nil.

Super income streams generally become tax-free when you turn 60, which can also help manage your taxable income.

Find out more about tax for seniors and retirees.