CFS retail platforms first to offer annuities


By Julie May

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Colonial First State (CFS) will make annuities available through its FirstWrap and FirstChoice platforms mid-next year in what the company said would be an Australian first.

CFS, which announced the move yesterday, said the annuity products that would be made available via the platforms would be provided by Challenger and CommInsure, which together comprised more than 70 per cent of the Australian annuity market.

“Financial advisers will now be able to more conveniently and efficiently combine CFS’s account-based pension with an annuity product, providing a more comprehensive retirement solution for clients,” CFS said in a statement.

“Importantly, the features, benefits and rates of annuity products accessible via the FirstWrap and FirstChoice platforms will be the same as those for stand-alone annuity products.”

CFS executive general manager Linda Elkins said annuities had particular advantages for retirees.

“An increasingly popular approach to portfolio construction has become part-annuitisation or ‘income layering’, which is about providing a specific level of longer-term income from a number of complementary retirement products,” Elkins said.

CFS said recent research compiled by Investment Trends showed an increase in adviser demand, with almost 40 per cent of advisers saying they intended to use some type of annuity in the next 12 months.

“We recognise advisers are considering increasing their use of annuities on behalf of their clients, and our platforms can make the process of managing clients’ retirement savings in the one place a much better experience,” Elkins said.

“We conducted extensive market research as well as in-depth qualitative research with a wide range of financial advisers from across the country, which confirmed advisers are looking for more efficient ways to deliver advice to their clients, particularly in retirement.”

Bringing annuities onto the platforms would reduce the amount of paperwork required and provide a more complete platform solution, she said.

In addition to adviser demand, CFS said it wanted to move in that direction because of the growing retirement focus from both industry and government.

It said that was largely motivated by the increasing number of retirees and pressure on the sustainability of the age pension, in addition to longevity risk being a major challenge for retirees.

Challenger chief executive Brian Benari told financialobserver in September that the group planned to make its annuities available on platforms in what would be an Australian first.

“We see this as an exciting development for our business,” Benari said at the time.

“More people are looking to use an annuity as part of their asset allocation. More people want part of their allocation in a reliable stream.”

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