The Ralph Stewart-founded Lifetime Income Group has hit about $100 million under management following a landmark deal with Foundation Life.
Under an agreement approved by the Reserve Bank of New Zealand (RBNZ) earlier this month, Foundation Life – which took over the Tower legacy life insurance book in 2014 – would transfer up to $35 million of annuity and unit-linked business to Lifetime.
Stewart said the transfer involved about 1,000 underlying clients who held annuity and unit-linked policies formerly held under the Tower brand.
Tower sold its legacy book to Foundation Life in 2014 for an “aggregate value” of $36 million, according to the Foundation website. The group boasts about $700 million in assets, most of which is managed by Fisher Funds as an institutional mandate.
Foundation Life is owned by a nominee company headquartered in Melbourne.
According to Stewart, with the Foundation Life assets Lifetime would have “circa $100 million” with a number of other wholesale and retail distribution deals in the pipeline.
Last week one of those agreements emerged with the Simplicity KiwiSaver scheme launching a version of the Lifetime product under its banner.
Sam Stubbs, Simplicity founder, said with the addition of the Lifetime ‘variable annuity’ fund offered a “cradle to the grave” option within KiwiSaver for the first time.
“The [Lifetime] product is ideal for KiwiSaver,” Stubbs said.
Established as a new fund within Simplicity, the Guaranteed Income Fund invests into a slightly-modified version of the scheme’s balanced fund with a 1.3 per cent annual fee paid to Lifetime to fund the income guarantee.
Like Simplicity, Lifetime also invests primarily into Vanguard index products, however, Stubbs said the KiwiSaver product worked about 75 basis points cheaper.
He said the Simplicity Guaranteed Income fund would probably take some time to build scale, requiring “more understanding” than the vanilla investment options currently in the KiwiSaver scheme.
Stubbs said the fund would suit members over 60 who were concerned about market volatility cutting in to their savings as they approached retirement.
While members past age 65 could continue using the product under the KiwiSaver umbrella, new investors could not sign up for the Simplicity fund post that age.
“We’re talking to MBIE [the Ministry of Business, Innovation and Employment] and the IRD [Inland Revenue Department] about changing that rule,” he said. “Now that the kickstart payment is gone, there’s no reason why people past 65 can’t join KiwiSaver.”
Simplicity has an exclusive deal to distribute the Lifetime product in KiwiSaver, subject to commercial terms.
Stewart said Lifetime was also in talks with a number of traditional superannuation schemes about offering the guaranteed income option.