On September 29, the U.S. Securities and Exchange Commission issued a proposed rule to implement the Registration for Index-Linked Annuities (RILA) Act, which directed the SEC to devise a new form for annuity issuers to use when filing registered index-linked annuities (RILAs). That legislation was enacted in December 2022 as part of the Consolidated Appropriations Act, 2023 which also included the Secure 2.0 Act.

The proposed rule will greatly benefit consumers as well as the insurance financial professionals who help them prepare for retirement and achieve financial security. The National Association of Insurance and Financial Advisors (NAIFA) strongly advocated on behalf of the federal legislation.

Registered index-linked annuity products 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.

The current SEC paperwork required to register RILAs is unnecessarily burdensome and confusing. It requires financial institutions to submit forms more often used for initial public offerings or other “catch-all” forms that require a great deal of extraneous information not relevant to RILAs and not readily available to insurance firms offering RILAs. This proposed rule will make it easier for companies to provide investors with more options.

Prospects: The SEC looks likely to implement the RILA Act although a specific timeframe could be delayed by a potential shutdown of the federal government. NAIFA will continue to work with partners and regulators to ensure proper implementation is achieved.

NAIFA Staff Contact: Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.