Annuities in New Zealand 2026 — Are They Available and Are They Worth It?
Annuities — products that pay a guaranteed income for life — are central to retirement in many countries. In New Zealand, the market is thin, misunderstood, and increasingly relevant as more people face the challenge of making retirement savings last 25–30 years.
True annuities are largely unavailable in NZ — most major insurers left the market years ago. The main current product is the Lifetime Income Fund by Lifetime Retirement Income, which provides a guaranteed minimum income while keeping assets invested. It's not a traditional annuity but solves a similar problem: income for life. Whether it's right depends on your health, assets, and risk tolerance.
What Is an Annuity?
A traditional annuity is a financial product where you give an insurer a lump sum, and they pay you a regular income for life (or a fixed period). Key types:
- Lifetime annuity: Guaranteed income until death — you can’t outlive it
- Fixed-term annuity: Income for a set period (e.g., 10 years)
- Indexed annuity: Income rises with inflation
- Joint annuity: Continues paying to a surviving spouse after first death
The insurer takes the longevity risk — if you live to 95, they’re still paying. If you die at 68, they keep the remainder.
The NZ Annuity Market — Why It’s So Small
Traditional annuities require insurers to price very long-term liabilities — potentially 30+ years. In NZ:
- The market is small (population ~5 million), limiting the risk pooling that makes annuities efficient
- NZ interest rates are relatively volatile compared to major markets, making pricing harder
- Most large insurers (AMP, Sovereign, etc.) exited the annuity market years ago
- NZ Super already functions as a partial lifetime annuity — reducing the perceived need
As of 2026, there is no market of traditional lifetime annuities available to new NZ retirees from mainstream insurers.
The Lifetime Income Fund
The main product currently filling the annuity gap in NZ is the Lifetime Income Fund, offered by Lifetime Retirement Income.
How it works
- You invest a lump sum (minimum typically $50,000)
- Your money is invested in a diversified managed fund
- The fund provides a guaranteed minimum annual income — typically 5–6% of your original investment per year
- If the fund performs well, you may receive more than the minimum
- If the fund performs poorly or falls to zero, the guarantee ensures you continue receiving the minimum income until death
- The product includes a mortality subsidy element — longer-lived investors are cross-subsidised by shorter-lived ones (similar to an annuity)
Example
- Invest $500,000 at 65
- Guaranteed income: 5% = $25,000/year
- This income continues for life, regardless of market performance or fund value
What makes it different from self-managed drawdown
With self-managed drawdown, if markets crash and your portfolio depletes, your income stops. With Lifetime, the guaranteed floor means you cannot outlive the income — even if the underlying fund runs to zero.
Pros and Cons
Advantages
| Benefit | Detail |
|---|---|
| Guaranteed income for life | Can never outlive the payment |
| Removes sequencing risk | Market crash doesn’t eliminate income |
| Psychological peace | No annual worry about portfolio performance |
| NZ Super supplement | Adds predictable income above NZ Super floor |
| Capital remains invested | Unlike traditional annuity, money is still in assets |
Disadvantages
| Drawback | Detail |
|---|---|
| Capital is committed | Less flexibility than managing your own portfolio |
| Cost | Management fees reduce overall returns vs DIY |
| Inflation risk | Base guaranteed income may not be indexed to inflation |
| Estate value | If you die early, the fund balance may be low or structured differently than you expected |
| Market-linked returns variable | Only the minimum is guaranteed — total return depends on markets |
Longevity Risk — The Core Problem Annuities Solve
The fundamental retirement challenge is not knowing when you’ll die.
- If you die early: you didn’t need all your savings — not a financial problem
- If you live to 95: you need 30 years of income — and may have planned for only 20
The 4% rule handles this statistically, but it’s probabilistic, not certain. A guaranteed floor, such as the one in the Lifetime Income Fund, removes that uncertainty for the guaranteed part of your income, in exchange for the costs and reduced flexibility listed under Disadvantages above.
NZ Super as a Partial Annuity
It’s worth noting that NZ Super already functions as a lifetime annuity — it pays until death, is government-guaranteed, and inflation-adjusted annually. For most single retirees, NZ Super covers $28,868/year.
This means the “annuity” you most need to provide for is the gap above NZ Super, not your total income.
How Annuity-Style Features Relate to Different Situations
| Situation | Relevant feature |
|---|---|
| Healthy, 65–70, concerned about running out of money | The lifetime guarantee addresses longevity risk |
| Large KiwiSaver balance, no investment experience | Income is paid by the product rather than managed by you |
| Already using self-managed drawdown | Drawdown already provides income; the guarantee adds a floor at a cost in fees |
| Poor health, shorter life expectancy | Annuities are priced on average longevity |
| Need flexibility to manage a variable estate | Annuities reduce estate value |
Alternatives to Annuities in NZ
Other ways to fund lifetime income:
- Self-managed drawdown with a cash buffer — guide here
- Term deposits rolling over — predictable, but inflation erodes real return
- Rental property income — passive income, but illiquid and management-intensive
- Managed fund drawdown through your KiwiSaver provider or InvestNow
Where to check the latest data
Rates, fees and returns change often. Before deciding, check current figures yourself:
- Sorted Smart Investor: compares fees, returns and risk levels of KiwiSaver and managed funds.
- Disclose register: holds each fund's product disclosure statement and quarterly fund updates.
- Financial Service Providers Register: shows whether a provider is registered to offer financial services in New Zealand.
- The provider's own website: has its current rates, fees and full terms; these change more often than any comparison page.
Next Steps
- Get a Product Disclosure Statement (PDS) from Lifetime Retirement Income — understand exactly what the guarantee covers and its cost
- Model the guaranteed income vs your expected NZ Super and spending gap
- Compare total projected income (floor + variable) vs self-managed drawdown at 4%
- Get advice from a fee-only financial adviser who can compare options specific to your situation
→ Related: Retirement Drawdown NZ | How Much to Retire in NZ | Retirement Hub