Incomeforlife

[kiwitrev]

Anybody ran the ruler over this fund
https://www.lifetimeincome.co.nz/

[peat]

now this is really playing on those worried about their Maslow

(see OCA thread if reference is obscure)

1 mill will get you $32k p.a for the rest of your mortal days.

[Snow Leopard]

Looks like a rip-off to me.
The guarantee is very expensive as the return on your funds is actually less than 1%.

[kiwitrev]

Looks like a rip-off to me.
The guarantee is very expensive as the return on your funds is actually less than 1%.

Well known and respected people at the top

[peat]

Its chaired by Diana Crossan - former Retirement Commissioner of New Zealand,

and Martin Hawes - renowned financial planner - is a director and I doubt he would sully his reputation if it was a total rip-off ,thats not to say it isnt expensive.
Annuities are expensive but provide peace of mind.

[Snow Leopard]

Its chaired by Diana Crossan - former Retirement Commissioner of New Zealand,

and Martin Hawes - renowned financial planner - is a director and I doubt he would sully his reputation if it was a total rip-off ,thats not to say it isnt expensive.
Annuities are expensive but provide peace of mind.

I am sure that they will do okay out of it.

It is VERY poor value for money then. You guys happier now?

[Beagle]

Its chaired by Diana Crossan - former Retirement Commissioner of New Zealand,

and Martin Hawes - renowned financial planner - is a director and I doubt he would sully his reputation if it was a total rip-off ,thats not to say it isnt expensive.
Annuities are expensive but provide peace of mind.

Anything that taps directly into consumer's psyche regarding the foundational level's of Maslow's needs hierarchy will do well...for the people running and administering the operation. Put a million in as a 60 year old and they say it will give an insured income of $27,000 for life. The first question people should ask is how strong is the insurance company ? As soon as I read the word insured or guaranteed my eyes glaze over because these words are interpreted by many to think that they really are at no risk.

The second question they should ask is given that this level of income is mainly repayment of the sum invested and there could be nothing left for their kids to inherit wouldn't they be better to invest in a really well diversified portfolio of assets that would generate 2.7% return after tax and then their kids will likely inherit the full million or maybe more ?

With interest rates in unchartered waters it makes no sense to me to be buying an annuity because as Snowy has suggested despite interest rates an unprecedented lows, that won't stop the directors and trustees charging their normal fees and administration costs so the net return is appallingly low.

[Biscuit]

Yeah, that sucks. According to the figures I put into their calculator, if I put in 1.5M, and live to be 100, I'll get out 1.62M and the principal will be long gone - sorry about that kids! Can't see why anyone would go for that, but no doubt it will be a roaring success.

[lawson]

I don't think the principal would necessarily be gone. It's a product to help the financially less literate is my guess and it may be a good option for some. Especially once people are older perhaps not so well and not wanting to spend time dealing with their finances - as what you do as far as I can make out is you open an account that they put in a balanced fund - bonds & equities. They agree a draw down rate with you based on your account balance. If there's a good year and the amount you're paid is less than the return on the fund your balance goes up, your draw down goes up. You have an account balance at all times consisting of the original amount invested plus returns, less payments received and so can withdraw the balance at any time or your estate gets it at the end. So you put in a million and only live 5 years your estate isn't missing out.

The selling point of the whole thing as far as I can see is that they insure the downside so lets say you're supposed to get 32K but returns are bad that year you will still be paid it and your draw down will remain the same and they promise to keep paying it for as long as you live even if the money runs out. So it's a protection against outliving your savings but if you put in a million at 65, draw down 32K and average 3% returns each year and live to be 88 then you're estate should inherit what remains of your balance.

Not for everyone but an option that isn't really well catered to in the NZ space. Also as Beagle said very dependent on the trustworthiness & dependability of the companies involved I guess.

[artemis]

There is a gap in the market for annuities. There are many households where one person looks after most of the finances, and that can cause a big problem if the other person is left to do it alone. A regular assured income would provide peace of mind.

[Traderx]

Kia ora - full disclosure - I am an investor in the provider of this fund

They've done very well in building a company and new product segment from nothing in NZ. Annuities are new for NZers (previous market died out I believe related to previously unfavorable tax treatment).

Key thing to note this is at its heart an insurance product - insurance against market crash, insurance against interest rate decline, insurance against outliving your savings. For people who value those protections it may well be useful as part of a portfolio.

The product does allow for some capital preservation/appreciation if markets did very well in that you still have an exposure to your original assets (invested in a balanced asset allocation), however they are eaten away each year by the distributions, mgmt fee and insurance premium.

As an investor I've been extremely impressed by the manner in which the company conducts itself and thoroughness in all its activities.

FYI the "cheapest" way of getting exposure to this product is Simpliciity's version (lifetime still supply the insurance element)

https://simplicity.kiwi/kiwisaver/funds/guaranteed-income-fund/