12 April 2016
Quick questions with Lifetime's CEO
New Zealand organisation, Lifetime Income, is changing the retirement income game across the country for hard working New Zealanders.
The product - Lifetime Income Fund, is ensuring protection of New Zealander’s existing capital as well as consistent regular income payments. Based on similar proven schemes across the US, UK, Europe and Asia, the underlying product structure is based on the term ‘variable annuity with lifetime withdrawal benefits’. In the US over 2 trillion dollars are invested in similar retirement income products.
Former Chief Executive of Accident Compensation Corporation (ACC), and former Chief Executive of AXA New Zealand, Lifetime Income founder, Ralph Stewart says it was during these roles that he noticed the significant gap.
It became blindingly obvious that New Zealand was preoccupied with saving for retirement and doing nothing about converting savings into income when they reached retirement.
With over 30 years in the financial sector, Ralph Stewart took this discovered niche and developed Lifetime Income out of The New Zealand Income Group (NZIG) founded in Feb 2013.
We took this opportunity to ask a few questions about the product.
How did your financial product "Lifetime Income Fund" come about?
KiwiSaver has been a game changer in NZ financial services - over 500,000 KiwiSavers will reach 65 over the next 12 years with accumulated savings of $36 billion. If these funds are to be used for what they were intended "supporting life in retirement" there needs to be a vibrant retirement income market in NZ.
In addition there is 18% of the population in retirement today relying on their savings to support their quality of life in retirement. They are facing a new economic environment which has halved and halved again the rate of interest they will receive. They have very, very few investment alternatives to support them in retirement.
What are the problems or challenges "Lifetime Income Fund" aims to solve? We overcome the big 4 financial risks in retirement:
1. Sequencing Risk
We help people preserve their retirement income when they are approaching retirement. In other words those people aged 60-65 probably have the highest savings balance they will ever have. They are unprotected from market movement and could suffer from significantly less retirement income if they suffered a market failure when they were say 64.
We remove this doubt by securing a minimum level of income they can count on in the future.
2. Market Risk
Income levels rising and falling as markets (interest rates) move up and down. We provide a single known level of income paid fortnightly after tax.
3. Liquidity Risk
Historically products like ours required investors to surrender their capital, in other words they purchased a retirement income buy buying it with their savings. Once purchased their saving were gone in return for a regular income. Our product allows investors to draw up to 20% of their savings for an unforeseen event in retirement or to withdraw all their savings less the income they have received at any time.
4. Longevity Risk
The risk of living longer than your savings does. At given levels of income we guarantee a regular income for life.
Who is the Lifetime Income Fund right for?
Any one approaching or in retirement who is using their savings to supplement their retirement income.
What inspired Lifetime Income Fund?
A genuine opportunity to improve the quality of life in retirement and in turn build a great business based on a great endeavour - a better retirement.
Why should someone think about Lifetime Income Fund?
While we are both new and innovative in NZ, the underlying concept is proven throughout the OECD, and locally Lifetime is the only provider of retirement income solutions that is Licensed by the Reserve Bank of NZ, authorised by the Financial Markets Authority, operates under the Public Trust and has a Board made up of some of the most experienced financial professionals in NZ (Including NZ's former Retirement commissioner of 10 years as Chair).
For more information about Lifetime and its products visit lifetimeincome.co.nz.