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Life Health > Annuities > Variable Annuities

House Financial Services Committee OKs Annuity Bill

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What You Need to Know

  • RILA contract issuers have had to use the same SEC registration process used to take a company public.
  • Rep. Alma Adams, D-N.C., introduced the bill.
  • Adams has 18 Republican co-sponsors and 17 Democratic co-sponsors.
  • The Senate companion bill, S. 3198, was introduced by a Democrat and has a Republican co-sponsor.

The House Financial Services Committee has approved a bill that could lead to a big increase in the number of registered index-linked annuities on the market.

Committee members approved H.R. 4865, the Registration for Index-Linked Annuities Acton Thursday by a unanimous vote.

The bill would direct the Securities and Exchange Commission to develop a registration form designed for RILA products within 18 months after enactment of the act.

The Insured Retirement Institute has been one of the most visible supporters of the bill. IRI President Wayne Chopus said the committee’s vote on the bill is a step toward giving consumers more access to innovative retirement savings products.

“IRI will now work to bring this bipartisan measure to the House floor quickly,” Chopus said.

What It Means

If the bill becomes law and works as drafters expect, it would increase the number of small RILA issuers and the number of specialized RILA products introduced by big insurers by slashing registration costs.

Your clients would see a bigger menu of products that offer a limited amount of protection against investment market losses, rather than no protection or full principal protection.

The Background

The SEC now requires RILA issuers to register the products using the same S-1 and S-3 forms that might be used to take a company such as Brighthouse Financial public.

If the SEC did not develop a special RILA registration form within 18 months after the enactment date, an issuer could register RILA products using the Form N-4 form, which the SEC has developed for separate accounts organized as unit investment trusts.

IRI has been asking the SEC and Congress for a simpler RILA registration process for years.

The Bill

H.R. 4865 would apply only to RILA products developed by state-regulated insurers that are not investment companies.

The bill defines a RILA contract as an annuity that is an SEC-regulated annuity, with returns based on the performance of a specified benchmark index or rate, and which may be subject to a market value adjustment if amounts are withdrawn before the end of the pricing period in which the market value adjustment applies.

If the SEC failed to develop a RILA registration form within 18 months after the enactment date, then life insurers could register their RILA products using the same Form N-4 that companies now use to register separate accounts organized as unit investment trusts.

The Legislative Details

Rep. Alma Adams, D-N.C., introduced the bill.

She has 18 Republican co-sponsors and 17 Democratic co-sponsors.

Sen. Tina Smith, D-Minn., has introduced S. 3198, the H.R. 4865 companion bill. That bill has a Republican co-sponsor — Sen. Thomas Tillis, R-N.C.

Pictured: Wayne Chopus. (Photo: IRI)