If you’re after a little more certainty in your super, a Guaranteed Term Annuity could be the way to go.
You use funds from your super account, or personal savings, to buy a guaranteed income for a fixed period of time. Because the rate of return is fixed from the outset, you’re not at the mercy of share market movements or interest rate fluctuations.
Depending on how you choose to set up your annuity, your initial capital will be returned at the end of the agreed term, or gradually as regular payments throughout the term.
When you set up your annuity, you get to choose:
- How much you invest (the minimum’s $10,000)
- Your investment term – anything from 1 to 50 years
- How often your income payments are made – monthly, quarterly, half-yearly or annually
- If you would like your capital returned at the end of the term, or progressively during the term of the investment. If you would like all your capital returned during the investment, you can elect to have your payments indexed to inflation or by a fixed percentage.
- How much of your initial capital investment is returned at the end of the term – all of it, none of it, or a proportion.
Some features and criteria to keep in mind
- Your annuity earnings rate is set when you purchase the annuity
- The minimum initial investment is $10,000
- You can only use money from your super to buy an annuity if you’re over 60, and you must be over 18 to use non-super money
- Once the annuity’s set up, you can’t make further contributions
- Your income is guaranteed for the selected term, regardless of what’s happening in financial markets
- Once you’ve bought a Guaranteed Term Annuity, you can’t make any changes to the frequency of payments, or make partial withdrawals. And if you choose to exit the annuity before the end of the investment term, you may receive less than you invested.
In Australia, annuities can only be offered by life insurance companies. We don’t have the necessary licences to issue our own annuity product, but we think it’s important to offer the product to our members, so we’ve teamed up with Challenger to offer a special earning rate to QSuper members.
If you’re interested in purchasing a Guaranteed Term Annuity, or you just want to find out more about how it works, get in touch with us on 1300 360 750.
Keep in mind that we’re not licensed to provide financial advice about this product, so you should consider getting your own financial advice before you make a decision. One option is QInvest3, they can provide personalised financial advice about whether the Guaranteed Term Annuity is right for you. You can contact them on 1800 643 893 or visit the QInvest website.
1. Just quickly, we need to let you know that this product is issued by Challenger Life Company Limited (ABN 44 072 486 938, AFSL 234670) (Challenger). You should consider if the product is appropriate for you by reading the product disclosure statement (PDS) before deciding whether to acquire this product. You can download a copy of the product disclosure statement from challenger.com.au/guaranteedtermannuity or call QInvest on 1800 643 893 and we’ll send you a copy. The QSuper Board isn’t licensed to provide financial product advice about this product so you should consider getting financial advice before you make a decision about this product.
2. The “How annuities works” animation is provided by Challenger Life Company Limited ABN 44 072 486 938, AFSL 234670 (Challenger), the issuer of the Guaranteed Term Annuity (Annuity). It is intended to be general information only and not financial product advice and has been prepared without taking into account any person's objectives, financial situation or needs. Each person should, therefore, consider its appropriateness having regard to these matters and the information in the product disclosure statement (PDS) for the Annuity before deciding whether to acquire or continue to hold an Annuity. Challenger's obligation to make guaranteed payments under the Annuity is a contractual obligation and is subject to the terms and conditions of the Annuity and the Life Insurance Act 1995 (Act). The payment obligation of Challenger is limited to the available assets of Challenger's Statutory Fund No 2, except in otherwise provided by the Act. If you acquire or hold an Annuity, Challenger will receive the fees and other benefits (if any), which are disclosed in the PDS for the product. Challenger and its employees do not receive any specific remuneration for any advice provided to you. However, financial advisers may receive fees or commissions if they provide advice to you or arrange for you to invest with us. Some or all of Challenger group companies and their directors may benefit from fees, commissions and other benefits received by another group company.
3. Advice fees apply.