AMP throws its retirement income product into the mix

AMP has just launched a suite of retirement income products designed to provide retirees with an income stream for life.

The MyNorth Lifetime Income account provides a retirement income stream for life and the MyNorth Deferred Lifetime Income account is a tax-free accumulation account for customers who have satisfied a condition of capital release but are deferring drawing down an income.

There is also the MyNorth Lifetime Super account, an accumulation account that lets customers plan and save for retirement while locking in asset test benefits.

Like Industry Moves discussed here last month, the products can provide income for life by reducing the amount of capital available at death or exit of the product.

"As an industry we've needed to do better to help Australians take full advantage of their hard-earned retirement savings, with too many fearful their savings won't last long enough," AMP's director of platforms, Edwina Maloney, said.

AMP says the products are like life insurance but in reverse. Investors are paid an annual bonus that rises the longer they live, and the premium is paid from the client's account when they die or exit the product.

The income is facilitated via the annual bonus, which is underwritten by TAL, and a market-linked product. Investors, via their advisers, also have a choice of investments in which to invest their retirement savings.

AMP says the products are a market first but they are not too dissimilar to what Optimum Pensions has done with Generation Life.

"The different options also allow advisers and their customers to begin planning for retirement earlier, draw higher rates of retirement income and take advantage of superior tax and Centrelink strategies," AMP general manager retirement solutions, Ben Hillier, said.

Investors in the account can still qualify for a 40 per cent upfront discount on the age pension assets test and be eligible for a part pension.

But AMP also says in its Target Market Determination(TMD) that, because the accounts have capital restrictions (in order to give lifetime income), they are designed to be used in conjunction with other pension accounts that do not have such restrictions.

"These Lifetime accounts are generally unsuitable for 100 per cent of a client's retirement savings unless they have access to other investments without capital access restrictions, such as savings outside of super or investments belonging to a spouse," the TMD says.

The products have already won Plan for Life's award for longevity cover (MyNorth Lifetime Income) and the MyNorth Deferred Lifetime Income won best Deferred Lifetime Investment Linked cover.