The SEC finalized a rule that will create a tailored registration form for registered index-linked annuities, or RILAs.
“Sales of RILAs reached approximately $47.4 billion in 2023 alone, more than quintupling since 2017,” SEC Chair Gary Gensler said in a news release July 1. “It is important that investors receive the information they need — in plain English — to make informed investment decisions. These amendments will improve the disclosure process for these complex products to benefit investors.”
RILAs are annuity contracts offered by insurance companies and sold to retail investors, in which investor returns are based in part on the performance of an index or other benchmark within a certain time frame, the news release said.
Under the rule, issuers of nonvariable annuities will be required to use Form N-4 for registering such offerings.
The SEC first proposed the rule back in September, after Congress passed legislation directing the agency to do so.
House lawmakers advanced a bill out of committee in July 2022 to create a new RILA form, after they expressed concern that the default registration form being used included too much unnecessary information. That bill eventually made its way into the year-end spending bill that Congress passed in December 2022, which also included the retirement security package SECURE 2.0.
Wayne Chopus, president and CEO of the Insured Retirement Institute, welcomed the rule.
“This rule will ensure that prospective purchasers can readily find the essential information they need to understand RILAs and their risks and benefits,” Chopus said in a statement July 1. “The changes made by this rule change should also eliminate barriers to entry and encourage more competition and innovation in this critical market segment.”
