As previously posted, I ran a quote for a deferred (for 40 years) lifetime annuity with Challenger the week before my 61st birthday. At the time the quote was to receive monthly payments of $4,625.51 (on my $10,000 investment) cpi-indexed after the 40 year deferral period (so would commence the month before I turned 101. There was a notice that the quotation was only valid until my birthday (the following week), so I made sure to submit the application online and did the electronic document signing online, so it was all submitted the week before the 'deadline'.
However, even though the $10,000 rollover from my superannuation account was processed and I received a welcome letter from Challenger with details on how to setup my online account password, when I logged in there was no investment product listed. So I phoned the customer service and was initially told that the processing had been delayed as the admin team needed to confirm the 40 year deferral period with the client (me) or my advisor (also me) and for some reason couldn't contact me (even though they had sent me several emails for the application confirmation etc.).
I then received another email stating the payments could not be deferred 40 years, but could only be made immediately (either monthly, bi-annually, or annually), which made no sense as I had applied for a deferred annuity, not an immediate annuity. So another call to customer service. This time they said that according to the PDS the maximum deferral period could not commence annuity payments more than one year after you turn 100. But I pointed out that I had actually submitted everything electronically the week before my 61st birthday, so the first payment should have occurred within the year after I turn 100 (which is just within the limit specified in the PDS). I suggested that perhaps the problem was simply that when they got around to processing the application it was after my birthday, so the first payment date was after the allowed maximum - in which case I was happy to change the deferral period to 39 years.
I was supposed to receive a call-back to confirm the situation that afternoon (last Tuesday) but never received a call, so today I had to call Challenger again to chase up what was going on. This time they confirmed that the application had now been processed (on 4 Jan) with a deferral period of 39 years. I checked what the payment amount would be, as it reduces slightly for each year less deferral. It turned out that the new monthly payment amount was now only $3,722.92 (or $44,675.04 pa) indexed to cpi, which is a massive reduction from the figure I had been quoted for the 40 year deferral.
I suspect that not only was the payment amount reduced due to the deferral period changing from 40 years to 39 years, but that they also calculated a reduced amount due to my now being 1 year 'older', and also the annuity amount may have changed due to rising interest rates/cpi etc.
Overall, the fact that they didn't process my application in a timely manner reduced my annual annuity amount by $10,801pa. The only reason I'm not more annoyed by this is the fact that it is very unlikely that I will live long enough to start receiving any annuity payments, so I've basically thrown away $10,000 on a long-shot bet that I might live past 100 ;)
Oh well, at least it will give me something to whinge about on my 100th birthday.
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