A Challenger annuity gives you guaranteed regular income payable for life, or for a chosen investment term. But how do we cover our promises made to you?

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.

How is the money invested?

Challenger makes investments from the statutory 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.

How can I know my investment is in safe hands?

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.

To find out more, refer to the PDS of the product you are interested in.