House Again Asks SEC for an Index-Linked Annuity Filing Form

What You Need to Know

The Appropriations Committee asks for the form in a comment in its $2.1 billion 2023 funding recommendation for SEC salaries and expenses.
The SEC uses its own fee revenue to pay its bills.
The House approved H.R. 8294, the package that includes the 2023 SEC funding request, by a 220-207 vote Wednesday.

The House Appropriations Committee is still trying to persuade the Securities and Exchange Commission to make things easier for issuers of registered index-linked annuities.

The committee has added a provision asking the SEC to create a filing form just for RILA issuers in a comment on its SEC funding recommendations for federal fiscal 2023.

“The committee is concerned that the current registration process for registered index linked annuities (RILAs) is cumbersome and requires significant information not needed for other registered insurance products,” the committee says in the comment, which appears on page 104 in a committee report on part of H.R. 8294, the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2023 package. “The committee encourages the SEC to create a tailored filing form for RILAs.”

What It Means

House members are still trying to help RILA issuers — and they are still calling the products RILAs.

Players in the RILA market have called the products buffer annuities, structured annuities and variable indexed annuities.

A committee at the National Association of Insurance Commissioners has been calling the products index-linked variable annuities.

The House Appropriations Committee’s loyalty to the term “RILA” may increase the odds that most people will eventually call the products RILAs.

What Is a RILA?

The SEC classifies a RILA as a variable annuity, meaning that a RILA can expose the holder to the risk of investment-related loss of account value.

Insurers have relied mainly on investment funds that resemble mutual funds to power traditional variable annuities’ investment menus.

For RILA issuers, the main tools for powering the investment options menu are derivatives contracts tied to the performance of investment indexes.

The Filing Issue

Today, RILA issuers must register their products using the same kinds of S-1 and S-3 forms that companies use to take companies such as Apple and Amazon public.

The Insured Retirement Institute and other life and annuity industry groups have argued that requiring a life insurer to file an S-1 for every RILA product it offers is overkill.

H.R. 8294

H.R. 8294 is a six-bill “minibus” package that expresses the House view of appropriations for the SEC and other federal agencies for fiscal 2023.

The federal 2023 fiscal year starts Oct. 1.

Members of the House voted 220-207 to approve the bill Wednesday.

The House Appropriations Committee recommended that the SEC get $2.1 billion in appropriations to pay salaries and other expenses in fiscal 2023. The SEC uses filing fee revenue and other fee revenue to pay its own bills.

The Senate will now get a chance to shape the package.

Even most of the financial services provisions in the package relate to matters other than the SEC.

Rep. Rosa DeLauro, D-Conn., chairman of the House Appropriations Committee, said on the House floor that the package would give the IRS resources to crack down on big corporations and the wealthy, expand homeownership support programs and boost single-family home loan programs.

“Instead of catering to big corporations and the wealthy, we uphold our commitment with this legislation that helps lower the cost of living, creates American jobs, gives working families a better shot and supports small businesses,” DeLauro said.