There is a guarantee ‘fee’ (or premium) of 1.1 per cent per annum, plus an MER on the investment account of 1 per cent per annum. Clients can elect to stop paying premiums at any time, which Robertson said could be a sensible course of action if returns early in retirement were strong.

For an additional 0.5 per cent per annum, a ‘spouse option’ can be purchased which ensures that the ‘guaranteed lifetime income’ (ie that 4.5 per cent of the guarantee base per annum for an over-75 year old) remains in-force if the client is outlived by their spouse.

Overturning perhaps the most unattractive feature of traditional annuities, the investment account of the Macquarie Lifetime Income Guarantee can be accessed at any time, although a complete withdrawal of both the investment account and from payment of the annual premium would attract an exit fee of 2 per cent. Robertson said ensured the associated hedging fees were not spread inequitably across the entire customer base of the product.

Another advantage over annuities was that this product did not rely on pooling to achieve critical mass, Robertson said, with the policy effectively boiling down to an individual paying Macquarie to guarantee them an income for life.

He added that buying one of the Macquarie policies would actually enhance clients’ eligibility for the Government age pension,  because its structuring encouraged retirees to spend more early in retirement (through the guaranteed presence of the ‘lifestyle bonus’ in the first five years) which subsequently put them in a better position regarding the assets test for the pension.

Robertson said the technology behind the Lifetime Income Guarantee allowed it to be used by any platform or industry fund, and he said white-labelling the product as a post-retirement investment option for funds was a possibility.




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