Fidelity Life has reopened its annuity product to a select group of clients.
Milton Jennings, Fidelity chief, confirmed the insurance firm had rebooted the lifetime annuities product – closed to new business in 2014 – after being approached by a “wholesale type client”.
“We were asked to quote [for an annuities product] someone representing a group of clients,” Jennings said.
It is understood the request came from a group defined benefit superannuation schemes looking to wind up prior to the implementation of new Financial Markets Conduct Act (FMC) regulations next year.
Under the FMC all employer super schemes will need to comply with tough new regulations with many – particularly smaller funds – rethinking their viability.
While defined contribution schemes can easily wind-up, or fold into a master trust, defined benefit (DB) schemes – which include lifetime income promises to members – face a tougher challenge when closing down.
DB schemes must either gain the consent of all members to cash in their funds, or transfer their liabilities to an annuity provider before winding up.
According to actuarial consulting firm Melville Jessup Weaver (MJW), of the 101 employer super schemes with less than $50 million in funds under management registered last year, more than 70 were DB schemes.
However, Jennings said despite the recent approach to reopen the product, Fidelity was not actively marketing its annuities to super funds.
“And there’s no demand for it in the retail space,” he said.
Meanwhile, Jennings declined to confirm or deny rumours Fidelity would assume greater responsibility for servicing members of the Grosvenor KiwiSaver scheme.
“I can’t comment on that,” he said. “Fidelity is a shareholder of Grosvenor and we continue to work closely with them.”
Grosvenor took over the Fidelity KiwiSaver scheme in 2013, completing the merger last year. The deal bulked up the roughly 30,000-member Grosvenor scheme to about 100,000 members while more than doubling funds under management to over $600 million.
Post the merger, Grosvenor was selected as a default KiwiSaver provider.