Lifetime was given a licence by the Reserve Bank last month to offer a variable annuity product in New Zealand.

It offers tax-paid lifetime income rates, fortnightly or monthly, of 5% for people aged between 65 and 69, 5.5% for people aged 70 to 74, 6% for those 75 to 79 and 6.5% for older investors.

If the income payments use up the money invested, the fund continues to pay out.

Jonathan York, of Bay Financial Partners, is one of the advisers who have signed up to distribute the product.

He said it would be another tool available to investors.

“Given the changing landscape and falling interest rates and bond yields, if retirees are looking for income, if they can get a steady income over the long term that starts at 5%, that’s a pretty good return.”

He said New Zealanders would still need to get used to the idea of annuities because they were not well understood. Before Lifetime, there was no one offering an annuity product.

Even in a higher interest rate environment they could work because investors could withdraw some of their capital base and put it to work elsewhere, he said.

But he said it would be important that investors understood the potential pitfalls of having too much of their capital tied up in it.

"We have to educate clients about the limitations and restrictions as well as the benefits," York said.