Retire Right 412 Annuities explained: how they work, Centrelink boosts & retirement income
Mar 18, 2026
Nathan Fradley, a financial adviser who specialises in complex retirement and wealth situations, breaks down how liquid lifetime annuities work and why governments incentivise them. Short takes cover guaranteed lifetime payments, Centrelink concessions, pricing and timing, indexation trade-offs, a $1m case study, who benefits, downsides like liquidity and provider risk, and strategies for layering annuities.
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Liquid Lifetime Annuities Return Capital Over Time
- Liquid lifetime annuities are income-for-life products designed to return capital gradually rather than being pure life-forfeit policies.
- They must retain a residual balance, can be reversionary to a spouse, and attract specific Centrelink concessions that incentivised their design.
Centrelink Discounts Make Annuities More Efficient
- The government discounts the assessed value of eligible annuities for Centrelink means testing to encourage buying lifetime income.
- Typically 60% of the purchase value is assessed until the year you turn 85, then it reduces to 30%, improving pension results for part-pension recipients.
Plan Retirement By Required Income Not Lump Sum
- Start retirement planning from your required income, not a target super balance, and layer income sources to meet that weekly or fortnightly need.
- Use annuities, account-based pensions, rental income and the age pension to build reliable income layers.
