Annuities in NZ: why the market is thin and what to do instead

An annuity turns a lump sum into a guaranteed income for as long as you live. In many countries it is a standard way to spend retirement savings. In New Zealand it is not: the Retirement Commission reports that the last traditional annuity provider left the market in 2013 for lack of demand, and a later product closed by the end of 2020. Its 2025 review still describes "limited availability" of annuities. The main reason is that most New Zealanders already have one. NZ Super is an annuity: income for life, linked to prices and wages. To buy the single living alone rate of $555.15 a week from 65 to 95 you would need about $808,000 at the 2.5% return New Zealand assumes after 65. Rules checked 12 November 2026.

What an annuity is

With a lifetime annuity, you hand a lump sum to an insurer. In return the insurer pays you a set income, usually monthly, for the rest of your life. If you live to 100, the insurer keeps paying. If you die at 70, the insurer keeps what is left, unless you bought a guarantee period or money-back feature.

The appeal is protection against longevity risk, the risk of outliving your savings. The insurer can promise this because it pools many people: those who die early pay for those who live long.

There are variations:

• Level or inflation-linked: a level annuity pays the same dollars every year, so it buys less over time; an inflation-linked one starts lower but keeps its buying power.
• Deferred annuity: you pay now and income starts later, for example at 85. It insures only the far end of life, so it is cheaper.
• Pooled or non-guaranteed: members share longevity risk among themselves, and payments rise or fall with how long the group lives.

The Retirement Commission's 2022 decumulation paper notes that there are "currently no deferred annuities offered in New Zealand, and no non-guaranteed annuities either".

The New Zealand annuity market

The Retirement Commission's "Decumulation: Policy Insights" (30 June 2022) sets out the history:

• Demand for annuities fell during the 1990s and 2000s.
• The last provider of traditional annuities "exited the market in 2013 as there was no demand for the product".
• In February 2016 a variable annuity product was launched by Lifetime Retirement Group. By the end of 2020 the fund had closed, with factors including "the low interest rate environment, additional capital requirements from the RBNZ, and COVID-19 related uncertainties".

The Commission's 2025 Review of Retirement Income Policies (page 67) says "the limited availability of decumulation products, such as annuities, managed drawdowns and equity release schemes, has left a gap in the market". It names Lifetime Income as offering "one of the few managed drawdown products in New Zealand that provides personalised withdrawal rates". A managed drawdown product is not an annuity: your money stays invested in your name and the income is not guaranteed for life.

We have not checked what individual companies offer today. If you are offered a product described as a lifetime income, ask whether the income is guaranteed for life, who guarantees it, and what happens to your money if you die early.

Why so few annuities here

The Retirement Commission gives several reasons, most of them shared with other countries:

1. NZ Super does the job already. The 2022 paper says New Zealanders "already have access to a government provided annuity in the form of NZ Super. It provides inflation, investment and longevity protection", and is "universal, gender neutral, and non-work tested".
2. A small market. The paper and the 2025 review both point to "the small size of the New Zealand market".
3. Adverse selection. People who expect to live a long time are the most likely to buy, so insurers price for long lives, which makes annuities look poor value to everyone else. The paper says the small market and voluntary saving make this "more of a concern in New Zealand".
4. Small balances. In 2022 KiwiSaver had "existed for only 15 years", so most balances are modest. The paper notes an annuity on today's balances "would provide very low guaranteed income".
5. People like flexibility. Internationally, demand for annuities is "extremely low" unless the law requires them, which the paper calls the "annuity puzzle". When the United Kingdom removed its requirement to buy an annuity, new contracts fell by 70%.

In the 2025 review (page 68), the Commission summarises research by O'Connell that "argues against introducing a government-backed annuity market, citing scale and cost limitations", and favours drawdown from invested savings such as KiwiSaver instead. Its recommendation 8 is "a nationally consistent decumulation framework" built on rules of thumb, not annuities.

NZ Super as an annuity: what it is worth

A useful way to see NZ Super is to ask what lump sum you would need to buy the same income yourself. We worked it out with our engine: the lump sum at 65 that would pay NZ Super's net weekly rate (at the M tax code, from 1 April 2026), the same in today's dollars every year, to 90 or 95, earning 2.5% a year after fees and tax with 2% inflation. The 9 in 10 column allows for market swings (a 6% yearly swing, our assumption).

And NZ Super is better than these figures suggest, because it does not stop at 95, it carries no market risk, and the law ties it to wages as well as prices: the couple rate must be at least 66% of the net average wage. Our inflation guide explains the indexing.

That is why our calculators treat NZ Super as the foundation and your savings as the top-up. Check your rate with the NZ Super calculator.

Getting annuity-like income without an annuity

Without an annuity, you carry the longevity risk yourself, so you need to plan for a long life. For comparison, here is what savings pay on their own, same amount each week in today's dollars from 65:

Ways to get some of an annuity's security:

• Plan to a late age. Planning to 95 rather than 90 costs about 16% of your weekly draw at fixed returns, but covers the long lives that are now common. Our life expectancy guide has the odds.
• Use a rule that adjusts. A fixed percentage never empties the account, and guardrails trims pay when savings fall well behind plan, so it lasted to 95 in 99% of our markets; the pay adjusts instead.
• Keep a late-life reserve. Set aside part of your savings, untouched, for your late 80s and 90s. It works like a home-made deferred annuity, without the pooling.
• Remember your home. Home equity can be a reserve for late life, through downsizing or a reverse mortgage.

When an annuity might suit

Where a genuine lifetime annuity is available, it tends to suit people who:

• have spending well above NZ Super, with fixed costs they must meet for life;
• are in good health with a family history of long lives;
• would rather have certainty than leave an estate;
• do not want to manage investments as they get older.

It tends not to suit people for whom NZ Super already covers most spending, people in poor health, or people who may need a lump sum later, for example for care. Buying an annuity is usually irreversible.

Because the New Zealand market is so thin, compare any offer carefully against simply drawing down a fund. This is general information, not financial advice; talk to a licensed financial adviser before buying any retirement income product.

Questions

Can you buy an annuity in New Zealand?

Options are very limited. The Retirement Commission says the last traditional annuity provider left in 2013 and a later variable annuity closed by the end of 2020. Its 2025 review describes "limited availability" of annuities and names managed drawdown products as the nearest alternative.

Is NZ Super an annuity?

In effect, yes. The Retirement Commission calls it "a government provided annuity": it pays for life, rises with prices and wages, and carries no market risk. On our figures it would cost about $808,000 to buy the single living alone rate from 65 to 95.

Is a managed drawdown fund the same as an annuity?

No. In a managed drawdown your money stays invested in your name and the income can change or run out. An annuity is an insurer's promise to pay you for life.

Will the government start an annuity scheme?

No such plan is law. The Retirement Commission's 2025 review recommends a decumulation framework based on rules of thumb, and summarises research arguing against a government-backed annuity market.