Harbour Asset Management has snared one of Australia’s most influential financial services figures to front a dual-city presentation in NZ next month.
Jeremy Cooper, whose 2010 review sparked major reforms of Australia’s superannuation system, has dates set in Wellington and Auckland this March to discuss what NZ could learn from the resurgent annuities market across the Tasman.
Currently retirement income chair of Australia’s largest annuity provider, the ASX-listed Challenger, Cooper will provide unique insight on what should be a major issue in NZ, according to Harbour chief, Andrew Bascand.
“Annuities are now mainstream in Australia but we’re just starting the dialogue here in NZ,” Bascand said.
He said the almost-extinct NZ annuities market was in dire need of a reboot given the growing number of retirees, some of whom have accrued large KiwiSaver balances, looking for stable retirement income options.
Bascand said the only comparable retirement income product in NZ – the Ralph Stewart-founded Lifetime Income ‘variable annuity’ – has reached about $50 million since launch two years ago.
“We think annuities should be a $5 billion market in NZ,” he said.
Harbour has no plans to launch its own annuity product – a feat that requires providers to take on capital risk through insurance structures – but Bascand said a healthy annuities market would be positive for NZ fund managers.
The Wellington-based boutique manages a NZ fixed income portfolio for the Lifetime group, for example, with other mandates likely to be on offer if a vibrant annuities industry developed here.
According to the Australian Prudential Regulation Authority (APRA), the annuity market hit about A$18.4 billion in 2016, up 7.6 per cent on the previous year. While annuities represented just under 14 per cent of Australian superannuation pensions over the 12 months to June 2016, the APRA data shows the market was trending upwards.
Challenger, which constitutes more than 60 per cent of the Australian annuities market, reported a 20 per cent jump in annuity sales (to $4 billion) over the 2017 financial year.
“This clearly demonstrates the ongoing demand for the security and stability that annuity products provide,” Challenger said in a release last October. “However, it was not just the growth in annuity sales that was impressive, but also the composition of sales with a strong contribution from long-dated and lifetime products. These accounted for 40% of sales, up from 17% in the previous year.”
The annuity and funds management firm (through its Fidante multi-boutique group) has also secured distribution deals with a range of institutions including AMP, BT, and Mitsui Sumitomo Primary Life Insurance Company in Japan.
Cooper, previously deputy chair of the Australian Securities and Investments Commission (ASIC), joined Challenger in 2010 after completing his landmark superannuation investigation.
The so-called ‘Cooper Review’ led to wide-sweeping changes to the Australian superannuation system including a centralised administration overhaul (dubbed SuperStream) and new, mandatory low-cost default offerings under the MySuper banner.
The Harbour-hosted event will see Cooper present in Wellington on March 1 (5-7pm) followed by a lunchtime gig in Auckland the next day.