Challenger looks to Australian pension funds for growth

By Alice Uribe

SYDNEY – Challenger Ltd. seeks to deepen its presence in the Australian pension fund industry as part of a substantial expansion of its institutional life insurance and annuities sales in fiscal 2021.

Managing Director Richard Howes said its main unit Challenger Life, Australia’s largest annuity provider, would face headwinds due to changing regulations in Australia’s pension system.

“There are great opportunities for us to work with superannuation funds, and our strategy of diversification in the Life sector has certainly been focused on growing our institutional business,” Howes told The Wall Street Journal.

Releasing its annual results on Tuesday, Challenger posted a record A $ 6.9 billion ($ 5.06 billion) in total life insurance sales, an increase of 35%, while sales national institutions rose 53% to AU $ 4.0 billion.

Australia’s A $ 3.1 trillion mandatory retirement system is the fifth in the world. In the 12 months leading up to June, the country’s pension savings rose 18% in value, its strongest result in 24 years, according to Chant West, a rating firm for the funds.

So far, innovation in pension products and services has been limited compared to the accumulation phase.

But the government’s plans for rules that create an obligation for trustees to have a strategy for their retired members and to implement that strategy present exciting opportunities for companies like Challenger, Mr. Howes said.

“Part of our client vision is to be a partner of choice for the big super funds. We have a lot of success and traction with a number of funds on this front,” he said.

Magellan Financial Group Ltd. told the Wall Street Journal in July that it also has the potential to deepen its relationship with Australian pension funds, saying some of the intellectual property associated with its retirement-focused FuturePay product may be of interest to the industry.

Mr Howes said there was room for many different types of retirement products in the Australian market.

“There is a growing emphasis on the unique nature of the retirement phase and it’s great that both in public policy and in terms of product development, retirees have better options to manage. their longevity risks and other risks in retirement, ”he said. .

Challenger’s strategy to facilitate financial security for the retirement of his clients is unlikely to change, Mr. Howes said, even after his planned departure from the company in March 2022, after nearly two decades with the company in a range of roles.

“My goal has always been to leave Place in a strong position with a solid foundation to support continued growth and success, and looking back on my recent tenure as CEO and more broadly the 18 years I have really had ‘impression that we have achieved this goal,’ he said.

Write to Alice Uribe at [email protected]