Lifetime boss hopes momentum will grow

It is taking longer than expected for some advisers and clients to come to grips with the Lifetime Retirement Income offer, its managing director and founder says.

Thursday, March 24th 2016, 6:00AM

by Susan Edmunds

Ralph Stewart, of the Retirement Income Group, launched Lifetime, a new guaranteed variable annuity product, at the end of January.

The minimum investment is $100,000 and the maximum is $1 million.

Those who start taking an income from the fund aged 65 to 69 can expect 5 per cent, after tax, of that $100,000 for life.

Aged 70 to 74, the return is 5.5 per cent, for those 75 to 79 it is 6 per cent and between 80 and 85, it is 6.5 per cent.

The payments are drawn from capital each year. Investment earnings bulk up the capital base.

Stewart said there were 22 potential investors in the pipeline who had the product recommended to them by their advisers. If they all placed investments with Lifetime within the next six to eight weeks, the fund would be on budget, he said.

He said the client base was made up of people who realised that NZ Super was not enough to sustain their lifestyles, savvy investors who wanted to buy interest rates forward on the understanding they could take their money back if conditions changed in the meantime, and people who were moving into rest homes and wanted to ensure they had enough money to cover the ongoing cost of care.

“It’s taking longer to learn than anticipated,” Stewart said. “It has a lot of moving parts and people want to know before they recommend it. For some there is a lot to learn.”

But he said the RIG team was run off its feet regardless and the sign-up process should speed up as people became more comfortable with the product. “It is accelerating week on week.”

There are now 146 advisers who are foundation members and have completed agency agreements and AML reporting.

Stewart said it was to be expected that institutional sales would take longer to filter through. “We didn’t budget for any institutional sales in the first year but we may surprise ourselves.”

When investors’ capital runs out, the payments continue, funded by RIG-operated insurer Lifetime Income, to which investors pay a 1.35 per cent per year premium.

Tags: annuities Lifetime Retirement Income Group