Rilas: one step closer to law

The bill to streamline regulatory paperwork for index-linked annuities approved by the US Senate is now waiting a vote in the House of Congress.

the products themselves, and the information available to issuers in determining what information to require.

The Registration for Index Linked Annuities Act is now ‘held at the desk’ in Congress, which approved its own version of the bill in July 2022. Once the House passes the Senate version, the bill will be sent to President Biden to be enacted into law. The Senate version of the Rila Act was originally introduced in November 2021.

‘With this bipartisan legislation, Congress makes it easier for Americans to prepare for retirement and gives them greater access to innovative annuity products that guarantee lifetime income while offering some protections from market volatility,’ said Lawrence Holzberg (pictured), president of the National Association of Insurance and Financial Advisors (Naifa).

The US Senate approved legislation on 6 December to reduce market barriers for the sale of registered index linked annuities (Rilas).

Currently, Rilas must register under ‘catch all’ forms, which often require information that isn’t relevant to Rilas. The bill is intended to simplify and shorten the Rila registration process and increase their market supply.

Once the bill is passed, the SEC will have 180 days to create a new registration form customised to the needs of Rilas. The new tailored template will take into account the sophistication of people who purchase these products, the complexity of

The Insured Retirement Institute has supported both versions of the bill. In July, after the Financial Services Committee passed the House version, the IRI said in a statement that demand for Rilas is growing aggressively, but the supply is ‘curtailed by the onerous form requirements’ that would be simplified by the Rila Act.

The IRI has called on the House to pass the Senate’s version of the bill which ‘would direct the SEC to promulgate a new form to replace the largely inapplicable forms annuity issuers currently are required to use when filing Rilas with the Commission’.

‘The current forms used to file Rilas are ones designed for use in connection with Initial Public Offerings or other ‘catch-all’ forms not germane to insurance products,’ stated the IRI.

According to Naifa, Rilas offer a good option for some consumers who want to benefit from market growth while reducing their exposure to market losses.

‘These are long-term, tax-deferred investments that are often well-suited for investors who are preparing for retirement, especially those who are retired or are nearing retirement and wish to reduce the impact of market downturns,’ said Holzberg.

The Rila Act will be included in the Secure Act 2.0 - an ‘omnibus appropriations legislation’ which includes a number of retirement provisions in a wider legislative package.

Rilas are one of the fastest growing wrappers in the structured products market with sales standing at US$10.6 billion in the third quarter of 2022, up 14% from the previous year. In the first nine months of 2022, Rila sales were US$31 billion.