Actuary unveils retirement solution

Financial Synergy founder and chairman David Orford has launched a new venture and retirement product offering to operate alongside the regular income stream of an account-based pension.

Orford started Optimum Pensions to address Australians’ longevity risk and has developed a white-label lifetime income stream solution, Real Lifetime Pension.

The product has been designed for superannuation funds to offer members alongside existing retirement products.

Orford said longevity risk was the least understood risk by most working Australians, adding men lived on average 19 years and women 22 years longer than the typical retirement age, which was currently 65.

The goal of the Real Lifetime Pension is to provide those retiring with an almost inflation-based income to maintain their standard of living.

“There are several dimensions to this objective, including adequacy, broad protection against inflation, and longevity risk,” Orford said.

The product is designed to operate alongside the regular income stream of an account-based pension, with the same or similar investment choices people already have, and it is intended to provide better returns than those provided by traditional annuities.

The pension is paid for life, regardless of how long the retiree lives. Orford said it was underwritten by one of the world’s largest reinsurers.

The design also includes the option of having the product revert to a partner or spouse after death, while minimum payment periods and insurance can be added. This would reduce the pension income, but would ensure people could have 100 per cent of their initial investment returned should they want that.

“The combination of the account-based pension, a Real Lifetime Pension and the age pension can provide a person with a better level of income for their life rather than face the prospect of running out of their savings and mostly or only relying on the age pension,” Orford said.

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