CommInsure, the insurance arm of Commonwealth Bank, has made key enhancements to its annuities offering as it focuses on growth of the market.
“We’re enhancing our service offering and educating advisers and investors about the benefits that annuities can provide, particularly for those seeking regular income streams in retirement,” said George Lytas, CommInsure’s Head of Annuities.
“We see significant opportunities for Australia’s annuities market, particularly as retirees are living longer and demand for guaranteed retirement income products is growing,” said Mr Lytas.
Historically, Australia has had a comparatively low investment in annuities of 5 per cent compared to countries such as Switzerland (80 per cent), UK (75 per cent), Chile (70 per cent) and Denmark (50 percent)1. Recent research indicates that advisers’ intention to use annuities in Australia has increased to 59 per cent this year, compared to 49 per cent in 20142.
“We believe the annuities market in Australia will grow as awareness builds about the benefits that annuities can provide in addressing longevity risk in retirement.
“The 2015 Intergenerational Report showed that a retiree at age 70 today can expect to live for another 17 years for a male and another 19 years for a female. Many people don’t account for the fact that their retirement savings need to potentially last to age 90 or beyond,” Mr Lytas said.
“Allocated pensions perform well for many retirees however as they live longer, their allocated pension balance may not last the distance. Recent research shows that a combination of an allocated pension and a lifetime or deferred annuity can often provide superior outcomes to an allocated pension alone3.
“We believe annuities can act as the ideal form of insurance in retirement, guaranteeing that no matter how your other investments have performed, or how quickly you have used up your retirement savings, you still have a guaranteed income to support you,” Mr Lytas said.
CommInsure has updated the Product Disclosure Statement (PDS) for its annuity products, providing a new online application form for advisers to complete through its online quoting tool, CALQ4. The PDS also offers a new reinvestment option for clients.
Other key enhancements include reducing the new minimum investment amount for CommInsure annuities to $10k (from $20k) and offering competitive rates across its full range of annuities including short term, long term and lifetime income annuities.