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The ‘correcting’ and steepening of the yield curve over the last three months, combined with a new aware­ness from the Government and retirees of the market risk to which they have been exposed, will help make annuities “the product for the times”, hopes the chief executive of Challenger’s life busi­ness, Richard Howes. Last month, Challenger bolstered the rates on its annuities, such that a 15-year product with ‘nil residual capital value’ – that is, one where all the initial capital is progressively returned over the term – will pay 6.5 per cent annual interest, plus the return of the principal. Challenger’s annuities are backed by a mix of investment grade corporate debt, infrastructure bonds and property.  

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The ‘correcting’ and steepening of the yield curve over the last three months, combined with a new aware­ness from the Government and retirees of the market risk to which they have been exposed, will help make annuities “the product for the times”, hopes the chief executive of Challenger’s life busi­ness, Richard Howes. Last month, Challenger bolstered the rates on its annuities, such that a 15-year product with ‘nil residual capital value’ – that is, one where all the initial capital is progressively returned over the term – will pay 6.5 per cent annual interest, plus the return of the principal. Challenger’s annuities are backed by a mix of investment grade corporate debt, infrastructure bonds and property.  

Read more