David Orford Launches New Venture

One of Australia’s most successful actuaries, David Orford, launches new venture and rolls out innovative longevity retirement solution, Real Lifetime Pension Superfunds now able to expand options for members with a new retirement product offering designed and tested by Optimum Pensions that directly addresses the least understood longevity risk.

MELBOURNE, 27 November 2017 – Optimum Pensions has been established by one of Australia’s most successful actuaries, David Orford, to comprehensively address Australians’ longevity risk. Assembling a team of experts and underwritten by the world’s third largest reinsurer, Optimum Pensions has developed a ground-breaking lifetime income stream solution to help Australians better meet their retirement needs. Today it announces the launch of the Real Lifetime Pension, a white-label offering designed for superannuation funds to offer members alongside existing retirement products.

The goal for a Real Lifetime Pension is to provide every retiring Australian with an almost inflation-based income to maintain their standard of living. According to Optimum Pension’s founder and managing director, David Orford: “There are several dimensions to this objective including adequacy, broad protection against inflation and longevity risk”.

He outlined: “Improvements in mortality have men living 19 years and women 22 years on average longer than the typical age of retirement, which is currently 65 years¹. Today more than 50 percent of retirees live longer, creating a significant risk each pensioner’s retirement funds may run out before they die. Longevity risk is the least understood risk by most working Australians”.

Designed to provide better returns than traditional annuities

A Real Lifetime Pension is designed to operate alongside the regular income stream of an Account Based Pension with the same or similar investment choices people already have. It is designed to provide better returns than those provided by traditional annuities. The Real Lifetime Pension is paid for life, no matter how long you live. This is made possible via re-insurance of the longevity risk with one of the world’s largest reinsurers.

The design also includes the option of having the Real Lifetime Pension revert to a partner or spouse after their death, ensuring the standards of living for the partner or spouse are broadly maintained. Minimum payment periods (and insurance) can be added, which reduces the pension income, but ensures people can have 100 percent of their initial investment returned should they so want.

Addressing the three key needs for retirement

Generally, at retirement Australians are seeking access to capital; an inflation-based regular income and the ability to leave an inheritance for their families.

“The combination of the Account Based Pension, a Real Lifetime Pension and the Age Pension can provide a person with a better level of income for their life rather than face the prospect of running out of their savings and mostly or only relying on the Age Pension,” Orford commented.

He concluded: “Australia is addressing the need for a broader retirement income solution for individuals within its policy framework. It is in Australia’s interest to ensure our world class superannuation savings system becomes a world-class retirement system. Lifetime income streams will play a crucial role in achieving this goal.”

Philanthropic goals for Australia’s retirement system

Optimum Pensions was launched in 2017 by David Orford. David was founder and chairman of Australia’s leading provider of superannuation administration software, Financial Synergy which was sold to IRESS in 2016.

With more than 50 years actuarial product development and consulting, together with a highly successful career in Australia’s superannuation industry, David today remains committed to helping Australians lead a comfortable retirement. Optimum Pensions is his latest venture to provide a superior solution to longevity risk.

In November 2017 David pledged $900,000 via the Orford Foundation to Melbourne Business School to fund a three-year research project on lifetime pensions and annuities. Additionally, Optimum Pensions is also funding research by the Actuaries Institute to determine mortality rates of super fund pensioners.

1. Australian Life Tables 2010 – 2012 (Australian Government Actuary)