LEGISLATION WOULD OPEN DOOR TO RETIREMENT PRODUCT INNOVATION

Posted on May 22, 2020

Excessive, Unnecessary Information Disclosure Impedes Access to Products

WASHINGTON, D.C.  – A significant barrier to innovative retirement income products will be lowered if Congress enacts legislation to require the Securities and Exchange Commission (SEC) to revise its rules and reduce the regulatory barriers to the development and offering of innovative annuity products.

Bipartisan legislation introduced today, the Registration for Index Linked Annuities (RILA) Act, by Sen. Tina Smith (D-Minn.), Sen. Thom Tillis (R-N.C.), Rep. Dean Phillips (D-Minn.) and Rep. Steve Stivers (R-Ohio) directs the SEC to devise a new form for annuity issuers to use when filing registered index-linked annuities (RILAs). Under current SEC rules, these and other innovative new products must be registered using forms that are designed primarily for equity offerings and therefore require extensive information that is not relevant to prospective annuity purchasers. These forms also require disclosure of financial information prepared in accordance with generally accepted accounting principles (“GAAP”), which many insurers are not otherwise required to produce.

The Insured Retirement Institute (IRI) supports this bill, which will address the misalignment between the current registration forms used for RILAs and the information needed by investors who might benefit from purchasing these products. This was among several priorities included in IRI’s 2020 Federal Retirement Security Blueprint, which was released earlier this year.

A registered index-linked annuity can bring balance to retirement portfolios by allowing participation in market growth while reducing exposure to market loss, helping savers reach retirement goals.

“The current rules and process used to register RILAs stymies innovation, creates a barrier to entry into this growing market for insurers that do not produce GAAP financials, and impedes consumer comprehension and choice with excessive and confusing information,” said Wayne Chopus, IRI President and CEO. “A new registration form more closely tailored to the particular products being offered would ensure that consumers have access to the pertinent information they need to make an informed investment decision.”

He added, “This regulatory structure ultimately impairs consumer choice without any corresponding benefit to consumers or the SEC. The modernized approach contemplated by this legislation will encourage innovation and ensure investors can easily find the information they need about RILAs and other innovative products without having to wade through irrelevant, excessive, and confusing disclosure documents.”   

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Contact: Dan Zielinski