Stewart stresses NZ Income Guarantee not an annuity product, however it does provide people with a guaranteed income in retirement.

He says someone who puts $100,000 into the product is essentially topping up their state pension, NZ Super, by 25%.

“Traditional annuities are no longer relevant for investors and providers,” he says. “They require investors to surrender their capital, receive fixed interest returns, pay relatively high fees, suffer tax imposts and in most cases have no future liquidity. For providers the capital requirements are high and the margins low.”

“Lifetime Income products are completely different always leaving the capital under the ownership of the investor, earning returns based on the performance of an underlying portfolio of balanced passive funds, offering liquidity for the investor or the estate at any times and paying regular income for life free of tax.”

The key hurdles NZIG face are getting a binding ruling from Inland Revenue, becoming a licenced life insurance company and finding the capital to get going.

Stewart says IRD have agreed that the withdrawals form this product should not be taxable, however will not issue the final ruling until the have reviewed the final offer documents.

Once those are available he expects the ruling will be issued.

Stewart has been working with the Reserve Bank on getting a licence and says good progress is now being made. Currently the central bank is developing a set of appropriate solvency provisions for these products, which it plans to release to the market.

Stewart says he is talking to parties becoming investors so it has the necessary capital to met solvency requirements and has strong expressions of interest.