The Australian Prudential Regulation Authority (APRA) has confirmed it will proceed with a public consultation on capital settings for annuity products. This aligns with APRA's goal to support life insurers to increase the availability of retirement products for retirees, as outlined in its Corporate Plan 2024-25.
The key change proposed will be the approach to calculating the 'illiquidity premium' in LPS 112 Capital Adequacy: Measurement of Capital. This would lower life insurer capital requirements for annuity products, provided certain risk controls are in place.
The proposal will be released in the second quarter of 2025, inviting feedback from industry and broader stakeholder groups.
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