Chant West first mover on rating lifetime products

Zenith Research-owned Chant West has emerged as the first ratings house to announce it will be assessing the quality of lifetime products such as annuities.

Chant West announced its move last week and is expected to be followed by other research and ratings companies.

The move comes as superannuation funds are being encouraged to deliver on their obligations to the Retirement Incomes Covenant.

Chant West said its new ratings would  use unique criteria to assess the features, fees, investments and services provided, including criteria that compare the projected outcomes of each product with the account-based pensions.

A small number of super funds currently provide lifetime products but Chant West expects more will be released in the next two to three years, driven by strong encouragement from Treasury and the regulators.

Ian Fryer, Chant West General Manager, said that now is the right time to provide advisers with research on lifetime products that use criteria focussed on the reason why these products exist – to provide an income for life – and assess how well these products do just that.

“The assessment of these products has taken some time, as we needed to develop a robust projection model that dealt with the range of benefits and features provided. Our projection model enables us to assess how the outcomes provided through these products compare to an account-based pension, and also assess how well these products deliver lifetime income compared with other products,” Fryer said.

“There is an important focus on what the provider does to help super fund members access the product. This criteria differs depending on whether the product is primarily distributed through advisers (where we focus on services provided to advisers to use the lifetime product efficiently) or whether it is purchased by members from their fund without personal advice (where we focus on the guidance available and advice services provided by the fund to help members understand how these products work),” Fryer said.

While the lifetime product ratings is a new service, Chant West has been assessing these products for over 13 years as part of its annual Super Fund Awards, with a dedicated ‘Best Fund: Lifetime Product’ category.

The lifetime product research reports are available through group partner, Zenith Investment Partners’ Mosaic adviser portal as well as through each lifetime product provider.