APRA proposes changes to capital framework for annuity products
The Australian Prudential Regulation Authority (APRA) has issued a consultation paper on modifying the capital framework for annuities. The proposed changes would allow reduced capital requirements for annuity products in return for enhanced risk management by life insurers, including closer matching of assets and liabilities. This should help life insurers to offer more competitively priced annuities without unduly increasing risks to policyholders.
The proposals respond to industry calls to better align APRA's requirements with those of other jurisdictions, creating a more favourable environment for the provision of annuity products. Over time this initiative has the potential to improve annuity offerings to Australian retirees.
APRA seeks feedback from industry participants and relevant stakeholders, welcoming written submissions in response to this paper by 25 July 2025.
The information paper is available on the APRA website at: Capital settings for longevity products.
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, mutuals, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding around $9 trillion in assets for Australian depositors, policyholders and superannuation fund members.