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A guaranteed annuity is an investment that guarantees you a regular income for a particular term or for the rest of your life.

Product snapshot

Knowing exactly how much income you’ll receive, and how long it will last, can be a great comfort. And your guaranteed annuity income won’t be vulnerable to fluctuations in the financial markets.

The annuity provider takes on all the market risk and provides you with guaranteed regular payments for a particular term.

As part of your retirement portfolio, a guaranteed annuity could be a great option, providing you with a reliable, steady source of income over a period.

A guaranteed annuity might be right for you if you’re looking for a guaranteed regular income for a fixed term or for your lifetime, regardless of market changes. It also lets you select from a range of flexible income options, including:
 

  • Fixed term or lifetime options
  • Indexation at either a fixed percentage or CPI-linked income payments
  • Your income payment frequency
  • Investing with super or non-super monies
  • The choice of having some or all of your capital returned at the end of the term
  • The ability to withdraw funds, and nominate a reversionary (where available) or beneficiary.


If you want to find out more about guaranteed annuities and how they could fit into your retirement plan, please If you want to find out more about guaranteed annuities and how they could fit into your retirement plan, please speak to a financial adviser if you have one, or call us on 13 13 36. 

  • An account-based pension, also known as an allocated pension, is purchased with money from your super that is invested by the trustee on your behalf. Withdrawals from the account are paid to you as an income.

    The balance of your account will go up or down according to the performance of the investments in the account and the amount you withdraw. Unlike an annuity, the return on your investment is generally not guaranteed.

  • An annuity guarantees you a regular income over a set period of time or for the rest of your life. You can buy one using a lump sum from your super or savings outside of super.

    Just how much income you’ll receive is determined by how much you invest, the term of the annuity, how much residual capital you want at the end of the term, (if any) and the interest rate at the time you invest along with any other product options you select.

    Product features available will vary depending on the product and issuer. If you want to find out more about guaranteed annuities and how they could fit your retirement plan, please speak to a financial adviser if you have one, or call us on 13 13 36

  • The two annuity product providers in the Australian market are CommInsure and Challenger Life.

    CommInsure and Challenger’s guaranteed annuities offer flexibility across a range of terms and lifetime policies, including fixed percentage increase or CPI-linked payment options.


    There are two types of guaranteed annuities available to you:

    • Fixed term – these pay a guaranteed income for a defined period of time
    • Lifetime – these pay a guaranteed income for the remainder of your life.
       

    This table provides a general comparison of fixed term and lifetime annuities.

     

    Fixed term annuity Lifetime annuity

    Term

    Minimum of one year with terms up to 50 years offered by some providers.

    Pays you an income for the rest of your life and the life of your reversionary, if nominated.

    Minimum investment

    Usually $10,000.

    Usually $10,000.

    Payment frequency

    Monthly, quarterly, half-yearly or yearly.

    Monthly, quarterly, half-yearly or yearly.

    Indexation

    CPI or a fixed amount up to 8%, depending on the provider.

    CPI or a fixed amount up to 8%, depending on the provider.

    Return of capital

    0% – 100% of your capital can be repaid at the end of your investment term.

    Capital is returned in the income payments. Some lifetime annuities allow you to make a withdrawal during a withdrawal period.

    The product features available will vary depending on the product and issuer. If you want to find out more about guaranteed annuities and how they could fit into your retirement plan, please speak to a financial adviser if you have one, or call us on 13 13 36.

    They’ll help you work out how to structure your retirement funds, including maximising any social security payments you may be entitled to, so you can enjoy the retirement you deserve.
     

Disclaimer
Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) is the issuer of super, pension and investment products. This document may include general advice but does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) carefully and assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision. A PDS for Colonial First State’s products are available at colonialfirststate.com.au or by calling us on 13 13 36.