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.

Quick answer

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. If you’re someone who:

Has longevity in your family
Worries about running out of money
Would sleep better with a guaranteed floor

Then a product like the Lifetime Income Fund addresses a real concern.

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 $26,900/year.

This means the “annuity” you most need to provide for is the gap above NZ Super — not your total income. A smaller allocation to a Lifetime-style product may cover that gap efficiently.

Who Should Consider an Annuity-Style Product?

Profile	Consider?
Healthy, 65–70, worried about running out of money	Yes — longevity risk is real
Large KiwiSaver balance, no investment experience	Yes — simplifies income management
Comfortable with self-managed drawdown	Probably not necessary
Poor health, shorter life expectancy	Less compelling — annuities are priced on average longevity
Need flexibility to manage a variable estate	No — annuities reduce estate value

Alternatives to Annuities in NZ

If an annuity-style product doesn’t suit, alternatives for 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

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