Collateral

FAQs

Do you have a question about Challenger or our products? We've listed the most common questions we receive from our customers below.

Questions about Challenger

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 a significant shock event. 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 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.

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). 

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 of 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.


Questions about lifetime annuities

Challenger lifetime annuities have a long death benefit period where a lump sum is payable to your estate or nominated beneficiaries. The death benefit is up to 100% of the amount invested. The maximum amount that could be received by your estate or beneficiaries depends on the time which has passed since you invested in the annuity up to the date of your death. You have the flexibility to remove this feature in return for higher regular payments.

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 withdrawal period based on your life expectancy where you can ask to be repaid a lump sum amount if your circumstances change.

See the Product Disclosure Statement for more information.

Annuities are designed to complement your existing retirement income. Generally, you would invest only a portion of your super or retirement savings in order to receive regular 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 or linked to changes in the RBA cash rate, 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. 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.


Questions about term annuities

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. 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.
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.
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
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.
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.

Questions about the Age Pension

The Age Pension has an income free area for singles ($4,680 p.a.) and couples ($8,320 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.

If eligible, then the first $300 per fortnight you earn as employment income is not counted towards the income test, which is called the work bonus.

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.
Currently the Age Pension age is 66.5, however this will gradually increase to 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 ($54,990 p.a.) and couples ($84,167.20 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.

Questions about super

You may be able to claim a tax deduction for personal contributions that you make to a super fund, upon meeting certain conditions. You must provide a Notice of Intent form which could be obtained from the Australian Taxation Office (ATO) or your super fund within the required timeframe and receive an acknowledgement from your fund.

More information is available from this ATO webpage.

There are aged based restrictions on contributing to superannuation. Generally, you can contribute within allowable limits before you turn 67. Once you turn 67, you can usually contribute to superannuation before you turn 75 as long as you satisfy the ‘work test’ which is defined as 40 hours of work, including self-employment over a consecutive 30-day period.

Alternatively, you may be eligible to use a one-off work test exemption if your total super balance is less than $300,000 and retired in the previous financial year.

Once you turn 75, generally, you can’t make voluntary contributions to superannuation, however you can continue to receive Superannuation Guarantee or other compulsory contributions from your employer.

You may also be eligible to contribute up to $300,000 upon selling your home after age 65 and meeting further conditions.

More information is available from this ATO webpage.


Non-concessional contributions are usually made to your super fund from savings outside of superannuation. These are contributions for which you don’t claim a tax deduction and are not taxed when they are contributed into the fund.

More information is available from this ATO webpage.

There are limits in terms of how much you can contribute to superannuation without paying additional tax. These limits depend on your age, your total super balance and the type of contribution you make.

Currently, the limit on concessional contributions, which includes salary sacrifice, contributions for which you claim a tax deduction and any other employer contribution is $27,500 per annum. You may be eligible for a higher concessional contributions cap if you  haven’t used the concessional contributions cap in full starting from 1 July 2018 and your total super balance is less than $500,000.

Currently, the limit on non-concessional contributions is $100,000 on an annual basis. These are usually made from your savings outside of superannuation. You may be eligible to contribute three times the annual non-concessional contribution limit in one year, referred to as bring-forward arrangement, if you meet certain conditions.

More information is available from this ATO webpage.

To access your superannuation, you generally need to have reached a minimum age referred to as preservation age (55-60 depending on your date of birth) and be retired or reach age 65. You could also access your super under a transition to retirement arrangement, where you could access up to 10% of your super in a financial year upon reaching your preservation age.

You may also be eligible to access your super early if you meet certain other conditions such as disability, severe financial hardship and compassionate grounds.

More information is available from this ATO webpage.

Generally, you need to be retired to access super. There may be situations where you can access super but continue to work. Common situations where you can access your super and continue to work are:

  • Accessing super at age 65 and continuing to work
  • Terminating an employment arrangement on or after age 60 which meets the definition of retirement and continuing to work in a new arrangement
  • Retiring but then having a change of intention in the future where you start working

As long as you are eligible to withdraw your super (generally on retirement after preservation age), you can generally then use those funds for whatever purpose you desire, including starting a new business.

The earnings of your super fund are not included in your taxable income.

Generally, payments (lump sum or regular income) you receive from a taxed super fund (such as a retail, industry, corporate or a SMSF) are not included in your taxable income if you are 60 or over.

However, payments you receive from an untaxed super fund (such as certain public sector super schemes) may be included in your taxable income.

As long as you are eligible to withdraw your super (generally on retirement after preservation age), you can generally then use those funds for whatever purpose you desire, including paying off debt.

You can usually leave your superannuation to your dependents such as spouse, child of any age, anyone who is financially dependent on you or anyone with whom you are considered to be living in an interdependency relationship. You can do this by nominating these beneficiaries directly through your super fund.

You can also leave your superannuation to your estate and making provisions in your will regarding who you want to benefit from your superannuation.

More information is available from this ATO webpage.

Super generally belongs to the owner of the account and cannot be ordinarily transferred to your spouse. However, there are two common situations where you could transfer to your spouse:

  • By withdrawing from your super when eligible and contributing the withdrawn amount to your spouse as long as they are eligible to receive the amount
  • If you have made concessional contributions to your super, you may be able to split 85% of those contributions to your spouse

For more information on contribution splitting, please refer to this ATO webpage.

Questions about TMDs

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.

Other FAQs

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 (June quarter 2021, national)

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), Low Income Tax Offset (LITO) and Low and Middle Income Tax Offset (LMITO), 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.