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Our Solutions

Our Solutions

Australian retirees need new solutions to longevity risk other than those currently offered in the retirement market.
The Optimum Pensions Real Lifetime Pension comprehensively addresses this risk.

A new Lifetime Pension

The Real Lifetime Pension is an innovative retirement solution that can offer higher income over time than traditional lifetime annuities.

Setting the Scene – Australian Retirement Landscape

Recent legislation changes by the Australian Government have removed barriers to innovative retirement income products and paved the way for an increased quality of retirement.

Real Lifetime Pension

The Real Lifetime Pension is a new concept in retirement income solutions for Australia, specifically developed by our team to address longevity risk and provide greater peace of mind for all Australians to have an enhanced post-retirement lifestyle.

Setting the Scene – Australian Retirement Landscape

Recent legislation changes by the Australian Government have removed barriers to innovative retirement income products and paved the way for an increased quality of retirement.

Australian retirees are ready for new solutions to longevity risk other than those offered currently in the market. However conventional lifetime annuity products offer only modest annuity payments and are subject to additional costs, such as those related to the death of a member and spouse.

We believe Australian retirees have a need for:

Income that increases with inflation

Access to cash – for emergencies and holidays

Death benefit – in order to protect their dependents after the last death of a retiree and their spouse.

With support from the Australian Government, the future landscape for retirement income products is now set to develop.

This will see retirees planning to receive an income that can be a combination of:

An Account Based Pension – which provides access to cash and a death benefit

An Immediate lifetime pension

A deferred lifetime pension – which can provide income for the remainder of a person’s lifetime after the deferred period plus death benefit during the deferred period.

The Aged Pension

The opportunity and challenge for super funds

The key need for retirees is to confidently provide for their desired standard of living while managing the risks involved in their choice of retirement income stream products. The time is right for superannuation fund trustees and executives to take this issue seriously by allocating resources to rapidly adapt their offerings to meet the best interest of their retired members.

We believe the market for lifetime income streams in retirees’ portfolios will grow strongly due to the efficiency and effectiveness of the new breed of products.

Lifetime income streams are the only product to provide longevity (and thus income or lifestyle) protection as well as peace of mind. There is an increased realisation that life expectations are understated AND have been increasing relatively rapidly in historical terms.

Lower Fees

The Real Lifetime Pension allows the superannuation fund to offer a retirement income solution with lower fees than comparable products currently available. It does this by using the fund’s existing investment management and administration resources, and existing infrastructure and services already used by the fund.

Higher Performance

The Real Lifetime Pension is an investment-linked immediate or deferred lifetime pension, with choice of investment options allowing it to invest in higher performing assets than a conventional annuity. This offers higher (up to 30% more) pension income than conventional lifetime annuities and avoids the sequencing and asset/liability mis-matching risk normally incurred by the pension provider.

Used in isolation or in combination with an account-based pension it offers income for life, helping to solve the financial needs when living a long life. It allows members to choose and switch between investment options at any time, including those that have a suitable exposure to long term growth assets, and can therefore maintain income in real terms over the long term. Additionally, it also avoids the need to lock in low yields for life, which is a concern advisers have with traditional lifetime annuity products.

Reduce Risk

The Real Lifetime Pension allows superannuation funds to transfer 100% of the longevity risk to a global reinsurer.

Greater FUM for Superannuation Funds

The Real Lifetime Pension allows retirement assets to be kept within the member’s current superannuation fund – and not transferred into competitor superannuation funds or life insurers. It also allows the fund to better engage with their members for life, extending their membership of the superannuation fund and retaining the Funds Under Management.

Keeping Ahead of Inflation

Depending on the investment options chosen by the member, lower fees and higher returns might allow the Real Lifetime Pension to broadly keep up with and stay ahead of inflation over long periods. We’ve also designed optional individual smoothing and reserving strategies to help offset shortfalls in income when they occur.

Switching Investment Options

The Real Lifetime Pension permits members to choose investment options with a suitable exposure to long term growth assets, providing greater inflation protection and to switch between available options. Depending on how this might be used, it could provide some down-side protection and increased upside capture of investment performance

Flexible Offering

The Real Lifetime Pension is offered as both an immediate pension payable to the member and any spouse or partner, with a choice of minimum payment periods (to ensure that a large part of the investment can be returned on an unexpected early death) and a deferred pension with a choice of death benefits before the pension starts.

Also, members may effect a “Money Back” option which ensures that on the event of a member’s and their partner’s deaths, and after taking the pensions paid to date into account, their beneficiaries will receive at least 100% of the initial purchase price.

Real Lifetime Pension

The Real Lifetime Pension is a new concept in retirement income solutions for Australia, specifically developed by our team to address longevity risk and provide greater peace of mind for all Australians to have an enhanced post-retirement lifestyle.

Lower Fees

The Real Lifetime Pension allows the superannuation fund to offer a retirement income solution with lower fees than comparable products currently available. It does this by using the fund’s existing investment management and administration resources, and existing infrastructure and services already used by the fund.

Higher Performance

The Real Lifetime Pension is an investment-linked immediate or deferred lifetime pension, with choice of investment options allowing it to invest in higher performing assets than a conventional annuity. This offers higher (up to 30% more) pension income than conventional lifetime annuities and avoids the sequencing and asset/liability mis-matching risk normally incurred by the pension provider.

Used in isolation or in combination with an account-based pension it offers income for life, helping to solve the financial needs when living a long life. It allows members to choose and switch between investment options at any time, including those that have a suitable exposure to long term growth assets, and can therefore maintain income in real terms over the long term. Additionally, it also avoids the need to lock in low yields for life, which is a concern advisers have with traditional lifetime annuity products.

Reduce Risk

The Real Lifetime Pension allows superannuation funds to transfer 100% of the longevity risk to a global reinsurer.

Greater FUM for Superannuation Funds

The Real Lifetime Pension allows retirement assets to be kept within the member’s current superannuation fund – and not transferred into competitor superannuation funds or life insurers. It also allows the fund to better engage with their members for life, extending their membership of the superannuation fund and retaining the Funds Under Management.

Keeping Ahead of Inflation

Depending on the investment options chosen by the member, lower fees and higher returns might allow the Real Lifetime Pension to broadly keep up with and stay ahead of inflation over long periods. We’ve also designed optional individual smoothing and reserving strategies to help offset shortfalls in income when they occur.

Switching Investment Options

The Real Lifetime Pension permits members to choose investment options with a suitable exposure to long term growth assets, providing greater inflation protection and to switch between available options. Depending on how this might be used, it could provide some down-side protection and increased upside capture of investment performance

Flexible Offering

The Real Lifetime Pension is offered as both an immediate pension payable to the member and any spouse or partner, with a choice of minimum payment periods (to ensure that a large part of the investment can be returned on an unexpected early death) and a deferred pension with a choice of death benefits before the pension starts.

Also, members may effect a “Money Back” option which ensures that on the event of a member’s and their partner’s deaths, and after taking the pensions paid to date into account, their beneficiaries will receive at least 100% of the initial purchase price.

Optimum Pensions' new Real Lifetime Pension allows superannuation funds to help their members to manage longevity risk while achieving higher performance than current lifetime annuities in the market.

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