Security
Your interest and capital payments are guaranteed, regardless of share market movements or interest rate fluctuations.
Inflation Protection
With some annuities, you can elect to index your payments so they keep pace with inflation or increase at a fixed indexation rate.
Flexible Terms and Payments
With annuities you can choose your investment term. It can be as short as one year, as long as 50 years or even for your lifetime. You can also select how often you get paid - monthly, quarterly, half-yearly or annually.
Source: Challenger
Lifetime Income
In the case of a lifetime annuity you can enjoy regular, dependable payments for the rest of your life or if you choose, the life of another person.
Tax Effectiveness
When an annuity is bought with money rolled over within the superannuation system by a person aged 60 or over, the regular payments are tax free.
Access to your money
If you would like to cancel your annuity, in most cases you will receive a withdrawal amount, but you may receive back less than you invested originally and less than you would have received had you held the annuity for its agreed term.
In a nutshell, a retiree hands over their money and Challenger makes regular payments over their entire life or an agreed upon term. Challenger makes a bucket load from managing the money and may also keep a portion of the funds when the retiree passes or the term is over.
I also wouldn’t be surprised if either Macquarie Bank or AMP lodge a takeover bid for this company. The stock is trading on a forward PE of about 12.2 times and paying a yield of approximately 3.35% fully franked (4.78% grossed up).
Challenger has just announced that their Annuity sales rose 22% to $3.4 billion last financial year with a net profit of $328 million.
Tap into this retiree boom and buy some Challenger today.
