The Australian Prudential Regulation Authority (APRA) is set to conduct a public consultation regarding annuity products, a move that has been met with approval from the Council of Australian Life Insurers (CALI).
The consultation will focus on ‘capital settings’ for annuities, specifically proposing changes to the way the ‘illiquidity premium’ is calculated. This adjustment is intended to reduce the capital requirements for life insurers, thereby facilitating the more extensive offering of annuity products to members.
CALI, representing its members, highlighted the relatively low uptake of annuities despite the significant number of Australians either approaching or already in retirement, estimated at around five million individuals.
“With Australians living longer, they are spending more time in retirement and need access to stable and secure solutions to help them manage their finances over their whole life. Australia’s life insurers stand ready to help,” said Christine Cupitt, CEO of CALI.
Cupitt further emphasized the importance of providing retirees with greater financial security and control: “No one wants to worry about outliving their savings. We want people to have a lot more choice and control over how they manage their finances once they stop working.”
The consultation aligns with the regulator’s objective, as outlined in its Corporate Plan 2024-25, to better support life insurers in offering diverse product options for retirees.
CALI has confirmed its active participation in the consultation process and anticipates the release of the final proposal in the second quarter of 2025.
