The Australian Prudential Regulation Authority will hold a public consultation in the second quarter of this year on capital settings for annuity products.

It says the consultation aligns with its goal to help life insurers increase the availability of retirement products, as outlined in its 2024-25 corporate plan.

The regulator says its key proposed changes relate to the current way of calculating “illiquidity premium” in the prudential capital adequacy standard for life insurers.

“This would lower life insurer capital requirements for annuity products, provided certain risk controls are in place.”

The Council of Australian Life Insurers has backed the consultation, which follows a roundtable with APRA last July.

“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,” CEO Christine Cupitt said.

“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.

“CALI looks forward to continued discussions with APRA and active participation in the public consultation.”