For many Australian couples, planning for a financially secure retirement means looking beyond the basics of superannuation and the Age Pension. In 2025, with longevity on the rise and policy settings evolving, the Joint Life with Last Survivor Annuity has become an increasingly attractive option. This innovative annuity type ensures income continues for both partners, no matter who lives longer—a feature especially relevant as more couples seek lasting peace of mind in their later years.
What is a Joint Life with Last Survivor Annuity?
A Joint Life with Last Survivor Annuity is a financial product designed to pay a guaranteed income stream for as long as either member of a couple is alive. Unlike standard annuities, which cease payments upon the death of the sole annuitant, this arrangement provides income security for both partners—potentially spanning decades.
- Payments continue until both partners have passed away, no matter who dies first.
- Income amounts can be fixed or indexed to inflation, depending on the product.
- Some products offer reversionary benefits, allowing the income to continue at a reduced rate for the survivor.
For example, if John and Mary purchase a Joint Life with Last Survivor Annuity and John passes away first, Mary continues to receive the agreed income stream for the remainder of her life. This can be a crucial safeguard, especially for couples with significant age differences or varying health outlooks.
Why 2025 is a Pivotal Year for Annuities
This year has seen renewed government and industry focus on retirement income stream products. The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have continued to encourage the development of more robust lifetime income solutions in line with the Retirement Income Covenant.
Recent policy developments in 2025 include:
- Superannuation fund trustees are now required to offer members access to retirement income strategies—including annuities—that suit their individual longevity and income needs.
- Age Pension means testing rules have been updated to be more annuity-friendly, with a portion of annuity payments potentially exempt from the assets and income tests, making them more accessible for retirees seeking to maximise their pension eligibility.
- Inflation-indexed options are more widely available, providing protection against the cost-of-living increases seen in recent years.
These regulatory changes have sparked competition among providers, resulting in better features, improved rates, and more flexible survivor benefits for new annuity contracts in 2025.
Who Should Consider a Joint Life with Last Survivor Annuity?
This annuity structure is particularly well-suited to:
- Married or de facto couples looking to guarantee income for the longer of their two lives.
- Couples with uneven superannuation balances, ensuring the lower-balance partner is not left without income.
- Partners with significant age or health differences, where one may outlive the other by many years.
- Retirees aiming to optimise their Age Pension entitlements while locking in a base level of secure, predictable income.
For example, consider Anne (67) and Tom (73), both recently retired. Tom’s superannuation is considerably higher than Anne’s. By purchasing a Joint Life with Last Survivor Annuity with reversionary payments, Anne is protected from financial hardship should she outlive Tom, and their combined assets are structured to maximise their Age Pension eligibility under the 2025 rules.
Key Features and Considerations in 2025
Before committing to a Joint Life with Last Survivor Annuity, couples should consider:
- Payment Structure: Will the survivor receive 100% or a reduced percentage of the original income? Many 2025 products offer flexible survivor rates.
- Inflation Protection: Indexation features can help maintain purchasing power amid rising living costs.
- Commutation/Withdrawal Options: Some new annuities allow partial withdrawals or surrender during the early years, though this may affect returns.
- Centrelink Impact: The means test treatment of annuity income and capital has improved, but couples should seek up-to-date advice on how a new annuity will affect their Age Pension in 2025.
- Provider Stability: Only consider APRA-regulated providers with a strong claims-paying track record.
It’s also important to shop around. The annuity market in 2025 is increasingly competitive, with new entrants and established insurers alike offering tailored solutions for couples. Compare rates, features, and survivor benefit options to find the best fit for your needs.
Real-World Example: The Smiths’ Secure Retirement
In early 2025, Bill (68) and Linda Smith (66) decided to invest part of their super into a Joint Life with Last Survivor Annuity, choosing an inflation-linked product with a 75% reversionary payment. When Bill passed away in 2034, Linda continued to receive 75% of their original income, helping her maintain a comfortable lifestyle and reduce her reliance on the Age Pension. The Smiths’ forward planning meant financial security for both, no matter how long they lived.
Conclusion
As Australian couples face longer retirements and shifting policy settings, a Joint Life with Last Survivor Annuity stands out as a powerful tool for delivering stable, lifelong income. With enhanced product features and favourable treatment under 2025 pension rules, it’s worth exploring if you want peace of mind for both partners. Take the time to compare providers and tailor your annuity to your unique situation—you’ll be rewarded with confidence and security for the years ahead.
