The Retirement Income Group should have its annuity-style product officially on the market well before year’s end, according to founder, Ralph Stewart.
Stewart said after a hectic round of capital-raising – including a last-ditch attempt via ‘crowdfunding’ website Equitise – the company met its funding target.
“We were 110 per cent oversubscribed. Our target was $2.25 million and we raised $2.5 million,” he said. “Total capital now is $4.5 million, of which $3.5 million is regulatory and $1 million in working capital.”
Stewart said the next step would be to apply to the Reserve Bank of New Zealand (RBNZ) to approve its product offering.
“We’ve got the product documents ready to go,” he said.
In April the RBNZ formally approved a regulatory structure for variable annuity (VA) products – essentially a life policy linked to a managed investment – including solvency standards.
In addition to meeting the solvency standard, the RBNZ says VA providers must: link to a separate statutory fund; have an up-to-date risk management strategy, and; hire an independent actuary.
The investment component of the product will be managed on a passive basis by Vanguard with Harbour Asset Management also understood to be involved.
Stewart started building the variable annuity business in 2013, hoping to tap into a potential demand for guaranteed income products from the bulge generation of New Zealanders retiring over the next two decades.
He said a growing number of people were also forecast to retire with large lump sums generated in KiwiSaver schemes.