The Senate approved the Index-Dexed Annuities Act by vote yesterday. The bill would direct the SEC to create a new filing form modified to meet the needs of RILAs.
Currently, RILAs must register under “catch all” forms, which are lengthy and primarily for initial security offerings. As such, these forms often require information that is not relevant to RILAs. The bill aims to simplify and shorten the RILA registration process and increase their market offerings.
A RILA is an annuity product whose returns are linked to an index, but which contain upper and lower limits that both protect the participant from sharp market falls and also limit the upside potential during times of market growth.
The Senate version of the RILA bill was originally introduced in November 2021 and was sponsored by Senator Tina Smith, D-Minnesota. The Senate version contains minor definitional differences with the Chamber version that do not affect the content of the legislation. The House bill passed the House Financial Services Committee in July, but has yet to receive a vote.
Senator Smith’s office did not respond to a request for comment.
If the bill passes during the current Congress, which ends Jan. 3, the SEC will have 180 days to create a custom form for RILAs that takes into account the sophistication of people buying RILAs, the complexity of RILAs themselves and the information issuers have to determine what information they need.
The House version of the bill was initially proposed by D-North Carolina Representative Alma Adams in July 2021. Adams’ office also did not respond to a request for comment.
The Insured Retirement Institute 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 supply is limited by the onerous form requirements that would be greatly simplified by the RILA bill.
In an IRI press release emailed today in response to the Senate’s version, the group wrote that the bill would “direct the SEC to promulgate a new form to replace the largely inapplicable forms that annuity issuers currently have to use when submitting RILAs to the Commission.”
The IRI statement added, “the current forms used to file RILAs are designed for use in connection with Initial Public Offerings or other ‘catch-all’ forms not relevant to insurance products.”
The IRI called on the House to pass the Senate version of the bill.