The Australian Prudential Regulation Authority (APRA) has confirmed it will proceed with a public consultation on capital settings for annuity products, aimed at supporting life insurers to increase the availability of retirement products for retirees. The consultation will propose changes to how the ‘illiquidity premium’ is calculated in LPS 112 Capital Adequacy: Measurement of Capital, which would lower life insurers’ capital requirements for annuity products where certain risk controls are in place. APRA expects to release the proposal in the second quarter of 2025, inviting feedback from industry and other stakeholders.
Australian Prudential Regulation Authority 2025-02-27
Australian Prudential Regulation Authority to consult on lowering capital requirements for annuity products by changing illiquidity premium calculations
The Australian Prudential Regulation Authority (APRA) will initiate a public consultation on capital settings for annuity products to enhance retirement product availability. The consultation will propose changes to the 'illiquidity premium' calculation in LPS 112 Capital Adequacy, potentially reducing capital requirements for annuity products with specific risk controls. APRA plans to release the proposal in the second quarter of 2025 for industry and stakeholder feedback.