BlackRock takes stake in Generation Life parent company

BlackRock will acquire a minority stake in Generation Development Group (ASX: GDG), forming a strategic partnership with its retirement income subsidiary Generation Life to "set a new standard for managing longevity and sequencing risk."

Joint working groups between BlackRock and Generation Life are already active but new retirement income solutions are expected to be launched over the coming year.

The partnership comes amid the government's focus on the Retirement Income Covenant and the ongoing issue of many retirees being wary to spend their savings due to a fear of outliving their capital. This cautiousness results in under-spending in retirement and increased financial insecurity among older Australians, Generation Life said.

GDP has also recently entered the ASX 200, which was announce in a quarterly update that reported record inflows across its managed accounts and investment bonds businesses.

BlackRock's head of Australasia Jason Collins said the firm's investment in GDG will provide the best of its global retirement expertise and technology to the local marketplace through a proven innovator.

"By combining Generation Life's technical expertise and product structuring capabilities with BlackRock's scale in technology and investment management, this strategic alliance enables BlackRock to contribute to the development of the retirement income sector in Australia at a time of increased client and policymaker focus," Collins said.

Generation Development Group chief executive Grant Hackett, meanwhile, said that BlackRock's investment will strengthen commitment to reshaping retirement income through innovation, continuing to build market-leading solutions, while also creating value for financial advisers and shareholders.

"This strategic alliance validates our proven track record and builds on the strong momentum Generation Life has achieved in recent years as we continue to expand our capabilities and grow our presence in the financial advice and retirement income sector," Hackett said.

Generation Life noted that Australia ranks fourth in the world for life expectancy, and that Australians over 50 now control 69% of the nation's $4.2 trillion in superannuation assets.

Nevertheless, it pointed out that around 84% of Australian retirement savings are in account-based pensions with minimal longevity protection.

Generation Life touted that the partnership marks a transformative step in its group's growth strategy, following its acquisitions of Lonsec last year and, more recently, Evidentia.