New Superannuation Income Stream Rules

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, has released draft superannuation income stream regulations and a draft explanatory statement for public consultation.

The regulations continue the implementation of the Government’s superannuation reforms and introduce a new set of design rules for lifetime superannuation income stream products that will enable retirees to better manage consumption and longevity risk in retirement. The regulations are intended to cover a range of innovative income stream products including deferred products, investment-linked pensions and annuities and group self-annuitised products.

Closing date for submissions: 12 April 2017

The purpose of Schedule 1 to the Regulations is to introduce a new set of design rules for lifetime superannuation income stream products that will enable retirees to better manage consumption and longevity risk in retirement. The new rules are intended to cover a range of innovative income stream products including deferred products, investment-linked pensions and annuities and group self-annuitised products. The overarching goal of the rules is to provide flexibility in the design of income stream products to meet consumer preferences while ensuring income is provided throughout retirement. Superannuation funds and life insurance companies will receive a tax exemption on income from assets supporting these new income stream products provided they are currently payable, or in the case of deferred products, held for an individual that has reached retirement.

A contract for the provision of an annuity benefit, or the rules for the provision of a pension benefit (the governing conditions) will need to meet four key elements of the standards in subregulation 1.06A(2). These elements are:

  • A requirement that benefit payments not commence until a primary beneficiary has retired, has a terminal medical condition, is permanently incapacitated or has attained the age of 65.
  • A requirement that benefit payments, of at least annual frequency, be made throughout a beneficiary’s lifetime following the cessation of any payment deferral period.
  • A rule ensuring that, after benefit payments start, there is no unreasonable deferral of payments from the income stream.
  • Restrictions on amounts that can be commuted to a lump sum or for rollover purposes based on a declining capital access schedule commencing from the retirement phase.

Item 18 of Schedule 1 inserts a formula that will restrict the maximum commutation amount that can be accessed after 14 days from the retirement phase start day, on a declining straight line basis over the primary beneficiary’s life expectancy. The maximum commutation amount will be worked out by dividing the ‘access amount’ by the primary beneficiary’s life expectancy on the retirement phase start day and then multiplying this by the remaining life expectancy less one year at time of commutation. Life expectancy will be rounded down to a whole number of years. The maximum commutation amount will also be reduced by the sum of all amounts previously commuted from the income stream prior to the time of the commutation.

Item 11 of Schedule 1 will insert a definition to determine the value of the ‘access amount’ on the retirement phase start day for the income stream or at a point in time after the retirement phase start day. The access amount will be the maximum amount payable on commutation of an interest on the retirement phase start day as determined by an annuity contract or pension rules. Any instalment amounts paid for an interest in a deferred superannuation income stream after the retirement phase start day will then be added to the access amount at the point in time that an instalment is paid.

Living longer means it’s time Australians embraced annuities

From The Conversation.

Few people are likely to be interested in buying an expensive financial product which offers little return, particularly when that return is based on their life expectancy. But annuities, which provide a series of regular payments until the death of the annuitant in return for a lump sum investment, deserve closer attention.

Despite the benefits of annuitisation, there is considerable evidence of annuity aversion among individuals. This has led to what economists call the “annuity puzzle”. It’s like this: let’s agree there are some benefits, we won’t buy it anyway.

Retirees don’t always succeed in ensuring their retirement income lasts the distance. Image sourced from

The good…

Life annuities provide longevity insurance, which is another way of saying they guarantee the annuitant an income until death. Managing longevity risk is an integral part of any retirement system. The recent Financial System Inquiry (FSI) regards longevity protection as a “major weakness” of Australia’s retirement income system.

The most popular retirement product, Account-Based Pensions (ABPs), provides flexibility and liquidity but leaves individuals with longevity, inflation and investment risks. The FSI recommends that superannuation trustees pre-select a comprehensive income product for retirement (CIPR) that has minimum features determined by the government. This product will help members receive a regular income and manage longevity risk. This is the main job of annuities.

One important feature of annuities is the return of capital (ROC). Investors are guaranteed up to 100% return of capital in the first 15 years of annuity purchase. If the investor dies in this period and does not have a joint owner or nominated person to receive payments when they die, a lump sum payment is made to her estate.

The Bad…

The idea of losing liquidity by locking up capital in annuities does not make the product very appealing. Also, the lower rate of return compared to investing directly in financial markets or alternative financial products is a reason why Australians shun annuities.

Annuitising is also seen as an irreversible choice in most cases and therefore investors are careful when to commit to it. This decision is delayed further when individuals have bequest or capital preservation needs, making full annuitisation an unlikely choice for most retirees. Today’s annuity with ROC to some extent caters for some of these concerns, but some of these drawbacks continue to loom large in the minds of investors.

An alternative

Let’s consider deferred annuities instead. A deferred annuity is a financial security for which the annuitant makes a premium payment to the insurer. In return, the insurer agrees to make regular income payments to the insured for a period of time. However, unlike regular annuities, the first payment is deferred until an agreed future date, i.e. the deferred annuity does not make any payments until after the deferred period is passed.

They are cheaper compared to regular annuities, yet provide the necessary longevity insurance. Deferred Life Annuities (DLAs) continue payments until the death of the annuitant. DLAs have been acknowledged in 14 submissions to the Financial System Inquiry and received widespread support from industry bodies and associations encouraging its uptake. Legislative barriers, however, prevent the development of such a product in Australia.

The major risk to the annuitant purchasing deferred annuities is that she may not survive the deferred period, forfeiting her annuity premium. The Return on Capital concept could be employed to help overcome this. There is also a degree of counter-party risk involved since the life company might become insolvent before retirees’ income payouts begin.

What if we didn’t need life insurance companies to provide this longevity insurance? Could the big superannuation funds provide the income retirees need? They certainly could, by taking some lessons from the deferred annuities concept to build a Group Self-Deferred Annuity (GSDA). A certain percentage or amount of retiree’s wealth (depending on size of balance at retirement) goes to the superannuation fund’s “deferred investment pool” at retirement. This serves as premium for the deferred annuity. The retiree still holds liquidity and controls remaining wealth and has opportunity for higher consumption even before the annuity payments begin. Remaining wealth may be subject to account based pension regulations ensuring minimum drawdowns.

According to such a structure, the annuity begins to pay out at age 80 or 85 years and the retiree’s income level will be a function of the premium invested, investment performance and mortality assumptions. With this approach, superannuation funds would be able to provide the much needed longevity insurance without resorting to complex products outside of superannuation. The “deferred investment pool” would undoubtedly require meticulous management as it would serve retirees beyond the deferred age.

If the retiree died before reaching the income payment stage, a discounted amount of her premium may be returned to her estate. The upside to surviving the deferral period is that the retiree may receive high mortality credits; additional return above the risk-free rate of return on the annuity income. Mortality credits stem from the redistribution of pooled wealth among surviving participants from retirees who die in the payment period.

While we seek to have a comprehensive income product in retirement, there are several starting points. A Group Self-Deferred Annuity is one option.

Author: Research Fellow, Griffith Centre for Personal Finance and Superannuation (GCPFS) at Griffith University

ASIC Says Life Insurance Industry Needs Higher Standards

ASIC today released their review of activity in the Life Insurance Industry, and finds that consumers interests are not always given priority. The $44bn industry touches superannuation, annuities, and other elements, as shown in a diagram reproduced from the report. We have previously highlighted the issues around annuities. They found that high upfront commissions are more strongly correlated with non-compliant advice, and we think that it is another case, like FOFA of product sales being dressed up as advice.


An ASIC review of life insurance advice has found that the industry needs to improve the quality of advice and ensure that the interests of consumers are given priority. ASIC’s review of more than 200 advice files from large, medium and small Australian financial services (AFS) licensees found that 63% were compliant. However, more than one third (37%) of the advice consumers received failed to comply with the laws relating to appropriate advice and prioritising the needs of the client. ‘This is an unacceptable level of failure, and the life insurance industry is now on notice to lift standards and professionalism. Both insurers and advice firms need to work on delivering a consistently better service for consumers’, ASIC Deputy Chairman Peter Kell said.

‘Life insurance is a key product through which consumers manage risk for themselves and their families. It is therefore important that both the products and the advice meet the consumer’s requirements. ‘There is both a need and a demand for quality life insurance advice, and our report provides examples of advisers delivering a service that meets the needs of their clients. However, this result must be achieved on a more consistent basis’, Mr Kell said. ASIC’s report sets out the various commission models that are used to remunerate advisers in the life insurance sector. The report found that high upfront commissions are more strongly correlated with non-compliant advice, including in situations where the recommendation is to switch products.

‘The industry as a whole needs to consider how remuneration and compliance practices can better support good quality outcomes for consumers’, Mr Kell said. Affordability of insurance is an important issue for consumers, and ASIC’s report includes cases where clients were recommended insurance cover that was likely to be very difficult to afford given their financial circumstances. ASIC’s report confirmed that the high rate at which life insurance policies are lapsing warrants consideration by the life insurance industry to ensure that industry practices are sustainable.

ASIC has made a number of recommendations for insurers, AFS licensees, advisers and their professional associations, including a focus on how to ensure client interests are met and balancing the issue of affordability versus cover. Mr Kell said, ‘ASIC is committed to working with the industry to address the problems we’ve identified and to improve outcomes for consumers.’ Following the surveillance work and the conduct that has been uncovered ASIC has commenced follow-up investigations in certain cases which are ongoing. ‘Where inappropriate advice was provided we are considering enforcement action or other regulatory action’, Mr Kell said.

However, DFA believes that this is part of a wider issue with consumer advice in Financial Services. The problem is the various elements within a consumer’s financial portfolio will fall under different regulatory environments, which are just not consistent. If its mortgage related, then the advice is centred on whether the loan is suitable or not (no best client interest here) and commissions are rife ; if its financial planning related, the FOFA, offers some safeguards, and also significant gaps around general advice, as we discussed recently. Now life insurance is another problematic area. It is time for some joined up thinking. A consumer will require financial service advice across multiple products including loans and investments, but all part of a single financial portfolio. There should be consist consumer-centric processes, irrespective of the products being touted. We applaud ASIC for again championing the interests of the consumer, but there is so much more to be done.

The solution is simple. Separate advice from product sales (a.k.a general advice). Exclude any incentive payments for those providing advice. Clearly disclose any product fees (including trading and transaction fees). Job done.


Government To Review Retirement Income Rules

The Treasury today announced a review seeking feedback on the types of products which would be appropriate for people approaching or in retirement with a focus on ensuring they do not out live their savings.

The Government’s superannuation election commitments include reviewing:

  • the regulatory barriers restricting the availability of relevant and appropriate income stream products in the Australian market; and
  • the minimum payment amounts for account-based pensions, to assess their appropriateness in light of current financial market conditions.

Given their interactions, this discussion paper Review of retirement income stream regulation forms the basis for consultation on both reviews.

In addition, on 14 December 2013, the Government announced it would not proceed with the previous government’s unlegislated measure to facilitate the provision of deferred lifetime annuities and that it would instead consider the proposal as part of the review of the regulatory arrangements for retirement income streams. This paper also provides a basis for consultation on extending concessional tax treatment to deferred lifetime annuities.

The Government welcomes views on this discussion paper, and written submissions will be accepted until 5 September 2014.

We believe there is opportunity to create new products and services, provided they are fairly priced and transparent. In our review of the demand for annuity products in Australia, we found that many were concerned about these issues, and of course the UK just moved from a mandatory annuity structure to allowing retirees complete freedom to save and spend as they please. They had a major mess previously. DFA believes that households should not be forced to take a particular solution, but products correctly structured and priced would be of significant help. We know from our household surveys that many are not saving sufficient to support their expected life in retirement. Indeed many had no clear expectation of how long they might live, and what they might need to have invested.

Super Fees Are Way Too High In Australia

In an interesting speech yesterday Dr David Gruen Executive Director Macroeconomic Group presented some startling data to the assembled company at the CEDA State of the Nation 2014 event. Citing the Gratton Institute report he said “in 2013, Australian superannuation fees ranged from approximately 0.7 per cent to 2.4 per cent of mean fund size, with fees averaging around $726 per year for a member with a balance of $50,000”. But more significantly, he also cited some international comparative data from the OECD “Although international comparisons are difficult, in 2011, Australia’s average superannuation fees were around three times those in the UK. In aggregate, Australians spend around $20 billion annually, or over 1 per cent of GDP, on superannuation fees”.

Now, looking at the international comparative data, available from the OECD Pension Funds Database, we find Australia is not only more expensive than the UK, but most other countries where super, or a pension equivalent exists, and good data is available. The OECD data is a ratio of expenses to assets, rather than fees. We see that Australia is consistently more expensive than other countries, other than Spain and Slovenia. New Zealand is lower, than Australia, slightly. Does the difference reflect the size of our superannuation industry, because whilst we have per capita, the largest super pools, we do not seem to be reaping scale benefits. Why is this? Could it have something to do with the industry concentration in the sector?

SuperFeesOECDDr Gruen goes on to say:

A microeconomic reform that permanently reduced costs across the economy by a few tenths of 1 per cent of GDP would be considered a significant and worthwhile reform. Significant reductions in superannuation fees would have widespread benefits for society as a whole.

This problem is a global one. In 2009, the Squam Lake Working Group – probably the most prestigious group of finance academics ever assembled, with representatives from a variety of different viewpoints, including Frederic Mishkin from Colombia University, Nobel Prize winner Robert Shiller, John Cochrane from the Chicago School and Raghuram Rajan, now the Governor of the Reserve Bank of India – had this to say:

‘High-fee funds argue that their fees are justified by superior performance. A large body of academic research challenges that argument. On average, high fees are simply a net drain to investors. While some investors might gain by selecting successful high-fee funds, the negative-sum nature of the process implies that other investors must lose even more. Most employees saving for retirement are poorly placed to compete in this game. They should not be forbidden from doing so, but disclosure of high fees and a “surgeon general’s warning” are appropriate.’6

The impact on fees of recent initiatives is unclear at this stage. In particular, the introduction of MySuper and Superstream should make the sector more efficient and push down costs — and there is some evidence that this is occurring. Nevertheless, there needs to be policy consideration of further options to increase competition and drive down costs. Given the stakes, this is an important area for the Financial System Inquiry to examine.

Finally, he makes an important point about the need to provide for income in retirement, rather than simply wealth accumulation, and a call for product innovation in this area.

The key focus of superannuation should be on the provision of retirement income, rather than primarily on wealth accumulation. As more Australians move into retirement, it will become increasingly important for the industry to provide the range of products that people need to manage the financial aspects of their retirement.

It will be increasingly important for the private sector to help manage longevity risk through income stream products such as insurance or pooled products. Most life insurance products do not address longevity risk and the individual immediate annuity market in Australia is small. At issue is the availability of a range of products that balance risk transfer and affordability and the identification of any industry, taxation or regulatory impediments to developing cost effective products that enable individuals to manage longevity risk.

Longevity risk therefore is an important issue, presenting an opportunity for innovation by the superannuation industry. It is also an important issue to get right given the rapidly rising numbers of retirees. In particular, we do not want longevity risk ‘solutions’ that lock retirees into inappropriately high fees and fail to provide sufficient incentives for the superannuation industry to become more efficient.

Our research into the Australian Annuities industry, which we summarised in an earlier post, highlighted that many households were not aware of how much they would need in retirement, were unaware of the average life expectancy, and that annuities were seen as a potentially risky, high cost and inflexible solution:

We asked about their attitudes to annuities. Most said they did not understand them, thought they would get ripped off, and were a poor choice because they wanted to keep control. They also made the point that governments might change the rules on them, and in any case nearly 80% said they would rely on government pensions to see them through.

The bottom line is that not many households are interested at the moment. Younger households might be, but of course later in life. So the demand side of the equation suggests that annuities will not be the product of choice for many anytime soon.

The broader issue of a mismatch between savings and income expectations, and future life expectancy is a bigger and more serious issue, as the government will not be able to afford to extend support to the every growing ranks of baby boomers who have exhausted their superannuation savings. This looks like a significant issue which requires significant changes in education and perhaps policy.

It will be interesting to see what transpires from the Financial System Inquiry, and whether we see further product innovation develop, alongside pressure to reduce fees. Given the big banks have a significant footprint in superannuation, we can expect opposition to fee reduction, and if fees do fall significantly, then pressure on profitability of the majors. Finally, it is worth noting that this speech was posted on the Treasury website!

The UK Pension Revolution

Changes announced this week during the budget speech will have  a major impact on the UK pension and annuity industry. In the past, people in the UK approaching retirement were forced to convert their hard-saved pension pots into an annuity, converting at a value which could be impacted by market conditions at the time, and the impact of various fees.

Effective April 2015, those over 55 will have much greater choice as to how they handle their pensions. They may take an annuity if they want, but they could also draw-down a cash amount, and up to 25% of the amount tax free. They can run their pension fund more like a bank account, and draw down what they want when.  Moreover, there will be free face to face advice for pensioners from pension providers to assist them in making the right pension decision. The age at which pensions can be drawn will be increased, but only slowly, moving to age 57 in 2028.

George Osborne, the Chancellor said:

“People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances. Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, any time they want. Let me be clear. No one will have to buy an annuity.”

As we reported, recent UK reports showed that annuities were both costly and inflexible, and that many investors were not aware of other choices.

These moves are likely to shake up the annuity market, potentially reducing demand, and creating more pressure for greater transparency on fees and returns. There have already been reports of people who were on the verge of taking annuities stopping the process and utilising their option to withdraw during their cooling off period,  and those holding annuities asking about changing them.

At the heart of the issue is a debate about whether people with pensions can be trusted not to splash the cash they have saved, and look to the government later for support, or whether individuals should have both choice and responsibility. Or, in other words, whose money is it? Given there were tax concessions on contributions, some still argue that the government should have some say on what happens to the money, but the Chancellor’s shock move should be welcomed as a victory for those who save for their old age.



Australian Annuities, The State of Play – Is There A Demand?

Today we start to look at annuities in Australia. This follows on from our look at the UK’s Annuity Mess recently. In Australia the annuity market appears undeveloped, but in the light of regulatory change, rising superannuation balances and self-managed superannuation, we review the likely prospects. Initially we will look at the demand side and outline the results from our recent household surveys, and later we will also look at the current market context and supply issues.

We started by looking at households retirement needs and plans.  Here are the results by age bands across Australia. We won’t cover the significant state differences here. We started by asking them how long they hoped and expected to be in retirement. Most were in the range 25-30 years.

OZAnnuitySur5We then asked how much monthly income, they thought they will need in retirement. (We did not test whether this was sufficient, taking into account rising costs of living and healthcare bills – that’s a story for another day)

OZAnnuitySur2We then asked them how much they thought they would need as a capital sum to invest to deliver the monthly return they wanted, assuming no other sources of income.

OZAnnuitySur4We built an annuity calculator, which enabled us to show households the consequences of their answers. For example, here is the plot of the result for those 60+. The blue area shows the savings balance (RHS), and the yellow line the monthly income (LHS).

OZAnnuity5We built assumptions into the modelling, that income should be inflated by 3% each year (keeping pace with inflation) and that net growth will be at 4%. In this scenario, the investment would only fund 15 years. If we re-run the scenario with 8% growth, the picture improves, to cover 21 years. Both shorter than the expected length of life.

OZAnnuity5aThe worst case answers came from those aged 20-30. Their investment pot would only last about seven years. Householders who participated in our surveys were astonished by how the mathematics worked, but were clearly unable to equate income and savings over time.

OZAnnuity1We conclude that many households have a poor grasp of the economics of retirement. They need to save more than they think they do. This is because current life expectations are extended, and the effects of inflation and returns compound. Education is required.

So would an annuity, which guarantees a payment flow over time be attractive to them?

We asked about their attitudes to annuities. Most said they did not understand them, thought they would get ripped off, and were a poor choice because they wanted to keep control. They also made the point that governments might change the rules on them, and in any case nearly 80% said they would rely on government pensions to see them through.

OZAnnuitySur3We also asked the more direct question, would households consider annuities (once we explained what they were!)

OZAnnuitySur1The bottom line is that not many households are interested at the moment. Younger households might be, but of course later in life. So the demand side of the equation suggests that annuities will not be the product of choice for many anytime soon.

The broader issue of a mismatch between savings and income expectations, and future life expectancy is a bigger and more serious issue, as the government will not be able to afford to extend support to the every growing ranks of baby boomers who have exhausted their superannuation savings. This looks like a significant issue which requires significant changes in education and perhaps policy.

Later we will look at the supply side issues relating to Australian annuities.


The UK’s Annuity Mess

The UK Financial Services Regulator, the Financial Conduct Authority (FCA) just published their thematic review of the UK annuities market. The FCA has described the UK annuity industry as “disorderly.” Australian savers would do well to be aware of the findings as there are some potentially more widely applicable and important lessons. Today we discuss the UK findings, later we will look at the Australian situation.

The FCA review was essentially a literature study, focussing on consumer understanding, behaviour and engagement relating to pension annuity decision making. This is highly relevant, because over the last few years there has been a shift from defined benefit superannuation arrangements to defined contribution schemes. Essentially, in the private sector, this has shifted the risk from employers to employees. (As in Australia, most public sector employees appear to still have defined benefit schemes!)

The critical decision centres on if and when a superannuation saver should convert all or some of their savings, or pension pot, into an annuity product – which is one that pays an income for the remaining life of the saver, or a defined period. Challenger, one of the main Australian providers defines an annuity:

“An annuity is a simple, secure financial product which provides you with a series of regular payments in return for a lump-sum investment. The rate of return is fixed at the outset, regardless of share market movements or interest rate fluctuations. Capital can be returned at the end of the agreed term or gradually during the term of the annuity as part of the regular payments.

However, if you withdraw before the end of the term, as with some other investments, you will be subject to break costs, and may get back significantly less than you invested.”

ASIC’s Moneysmart web site says “You can buy an annuity (also known as lifetime or fixed-term pensions) from a super fund or life insurance company using your super or other savings.”

The UK research examined how consumers select an annuity, and the factors they might weigh up. The FCA highlight four areas of concern, leading to poor outcomes:

1. Poor Provider Selection

Potential investors may not be getting the best possible rate of return, because they simply buy an annuity from their their existing provider, without external advice or shopping around. Claims of inertia selling are being leveled at the industry. They included an interesting chart, showing how households search.


Those who do shop around use comparison web sites, and may get a better deal but, because of undisclosed commission arrangements, may not get the best deal, as some of  the comparison sites will favour results aligned to their commission arrangements.

2. Not Selecting the Right Product

Consumers are not necessarily selecting the type of annuity that will optimise income in retirement, protect a dependent spouse and protect against the effects of inflation. Fewer consumers with annuities are prepared to pay the price for inflation protection. Many consumers showed a strong preference among many to stick with a level, single life annuity which would yield the highest immediate income, but might not be the best fit option into the future. Industry practice has been seen to discourage consumers from considering different types of annuities and making an informed choice. Whilst more companies have begun offering “individual underwritten” deals, which provide higher annual incomes to pensioners expected to die early such as smokers; fewer providers were “actively competing” for regular annuities.

3. Are Annuities Good Value?

The assessment suggests that the value of annuities are not necessarily fair value, and in recent times with low interest rates, returns to savers have dropped significantly below  those indicated by current market conditions. They discuss whether providers are making inappropriate levels of profit. Small savings pots fared very badly with significant fees and poor returns common. There was virtually no market for pots below £5,000.

4. Should You Buy An Annuity At All?

Consumers may be buying annuities at too young an age, or there may be better alternatives than annuities all together. Many consumers do not appear to be aware of these issues. In addition, commissions are charged by advisors, and paid from the annuity savings balance, on an ongoing basis, reducing returns over time.

The net conclusion is that some people have lost as much as 10% of their income because of these factors. “Overall our results indicate that some parts of the annuities market are not working well for some consumers. We found that eight out of ten consumers who purchase their annuity from their existing provider could get a better deal on the open market.”

Specific barriers to getting the optimal results included:

  • Complexity – while the product itself can be thought of as relatively simple, the choices to be made when purchasing an annuity are not simple and the decision can be a scary one for some people, particularly for those for whom the accumulation phase has been one of default choices.
  • Fear – that the annuity provider may collapse and that one’s pension pot may disappear. Some may feel that their current pension provider is a safer option than choosing an unknown or new annuity provider.
  • Inertia – which can lead to people defaulting to what they believe to be the most common option or the easiest option. This may in part explain why consumers fail to exercise their right to shop around.
  • Reluctance – to spend time on shopping around or an assumption that the benefits gained from shopping around are less valuable than the time spent shopping around (or other costs of shopping around)

As a result of this, the Financial Conduct Authority has described the UK annuity industry as “disorderly”. It has commenced plans to escalate an inquiry, which could lead to price controls or force some companies to make disposals.

Later, we will look at annuities in Australia, where it is estimated that around 2% of payouts from superannuation in 2012 were annuities, (<200 new life annuities in 2012). 50% of funds were paid as lump sums on retirement, and invested outside superannuation. The rest was from phased superannuation account withdrawals.