tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, November 1st, 10:39AM

Investments

rss
Investment News

Why we are exiting annuities: Milton Jennings

Fidelity Life chief executive Milton Jennings outlines the company's experiences with annuities products in New Zealand.

Wednesday, December 11th 2013, 12:00AM

by Ralph Stewart

By the end of this year, there will be no New Zealand providers offering annuities, and one academic says it’s a serious problem.

The current sole provider, Fidelity Life, is to stop offering annuities due to lack of demand and increasing regulatory pressure.

Chief executive Milton Jennings told the Future of Super conference in Auckland yesterday that the company had only given out 12 quotes over the past year – and the one annuity product sold was to a 95-year-old planning to try to outlive the company’s longevity predictions.

“There’s low demand for annuities in the New Zealand market.”

He said that was driven partly by tax disincentives on the product and partly because people did not think they needed another pension on top of NZ Super. Additional requirements from the FMA, including the need to rewrite the investment statement and prospectus for the product, as well as another disclaimer for directors to sign their name to, made annuities not worthwhile for the company, he said.

“Over the last 20 years, life insurance companies have lost millions on annuities, because when they sold them in the 1990s, they did not factor in mortality or the very low interest rates we’ve experienced.”
Investors wanted more flexibility, he said. Most providers put most of the annuity investment into long-dated bonds. “Do we want instead to invest in the New Zealand sharemarket? Or  do we want to invest overseas or in the Auckland property market?”

Ralph Stewart is a director of NZ Income.

« 2014: Facing Different Risks and RewardsHamish Douglass Unplugged - Latest Video from Adviser Briefing - August 2012 »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend

Good Returns Investment Centre is brought to you by:

Subscribe Now

Keep up to date with the latest investment news
Subscribe to our newsletter today

Edison Investment Research
  • October_terminations_(1).pdf">Termination of coverage - Henderson Eurotrust
    31 October 2024
    Termination of coverage
    Edison Investment Research is terminating coverage on Henderson Eurotrust (HNE). Please note you should no longer rely on any previous research or estimates...
  • Baker Steel Resources Trust
    30 October 2024
    Key takeaways from the Cemos site visit
    We recently visited the Tarfaya cement grinding line of Cemos Group, one of the two largest holdings of Baker Steel Resources Trust (BSRT), which made...
  • Canadian General Investments
    30 October 2024
    Potential for Canadian outperformance
    Canadian General Investments (CGI) is managed by Greg Eckel at Morgan Meighen & Associates (MMA). He believes that investors could be rewarded by an allocation...
© 2024 Edison Investment Research.

View more research papers »

Today's Best Bank Rates
Rabobank 5.25  
Based on a $50,000 deposit
More Rates »
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com