Established in 1985 and listed on the Australian Securities Exchange (ASX:CGF) in 1987, Challenger Limited (Challenger) is an investment management firm. Challenger is focused on providing our customers with financial security for retirement. We do this by investing to create wealth in the accumulation phase of superannuation, and by converting accumulated wealth into safe and reliable income streams for retirees. Find out more at www.challenger.com.au
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The transfer balance cap has required some large SMSFs to transfer pension money back to accumulation, and the two pools must be treated carefully to maintain the full benefits from superannuation.
With the availability of large pools of retirees, the law of large numbers will start to see a predictable distribution of lifespans around the mean, allowing for longevity risk products. An important development.
The National Seniors Australia (NSA) survey reveals that retirees want access to regular and stable income, even at the expense of lower returns. The need to preserve capital reduces tolerance of losses.
Life expectancies have increased dramatically since the nineties, but the uncertainty is forcing retirees to live too frugally. The super industry is switching its attention to the drawdown phase to find better solutions.
Loss aversion means some people avoid annuities because a premature death may lead to a loss of capital, but lifetime annuities with death benefits aim to address this problem.
In retirement, it is the level of spending rather than investment returns which is the primary determinant of retirement outcomes, and there is a significant difference in spending patterns in later years.
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Commonly, aged care advice is focussed on the resident’s position at the time of entry, however changes whilst a resident is in care can give rise to new advice opportunities.
To better manage tax outcomes, SMSF trustees must see ‘exempt pension income’ not simply as a tax calculation but something to plan for well in advance of retirement.