Challenger is to delay the launch of its deferred lifetime annuity (DLA), after the government said it wanted a review of all post-retirement products before awarding them tax breaks.
Earlier this year the Labor government had announced that the income from DLAs would receive a concessional tax break from July 1, 2014.
Challenger had planned to launch a product to coincide with this date, but will now await the outcome of the review.
The Treasury has stated it will “soon consider the unnecessary barriers to the development of longevity insurance products, as part of a broader review of the regulatory arrangements for retirement income streams”.
Challenger is putting a positive spin on the review, seeing it as being of greater potential benefit.
A Challenger spokesperson said: “We are buoyed by this announcement and other feedback from our recent discussions with government, because broader reforms around encouraging income streams in retirement (rather than lump sums) could have much greater benefit to us than the DLA reforms alone.
“Super industry peak body ASFA, for example, has been lobbying hard for soft compulsion of income streams through the taxation system.”
For some the delay is a source of frustration.
Andrew Boal, managing director of Towers Watson Australia, said while a review of the regulatory barriers to new retirement income products was promising, DLA’s were needed in the market now.
“The ‘baby boomers’ started reaching age 65 in 2011, so we should not delay the implementation of new retirement income products for too long. We do need to keep things moving.”
Prior to the election, the treasurer Joe Hockey stated his commitment to developing a bigger annuity market in Australia.
