APRA proposes scrapping one size fits all annuities approach - Financial Newswire

APRA proposes changes to capital framework for annuity products

On 12 June 2025, the Australian Prudential Regulation Authority (APRA) issued a consultation paper on modifying the capital framework for annuities. In summary the proposals redesign the illiquidity premium in Prudential Standard LPS 112 Capital Adequacy: Measurement of Capital (LPS 112). Specifically, APRA proposes to allow a bigger liquidity premium where cash flows from assets backing annuities are more closely matched to liabilities. Under t…

APRA proposes scrapping one size fits all annuities approach - Financial Newswire

The Australian Prudential Regulation Authority is proposing to scrap the one size fits all illiquidity premium which applies to annuities as part of suite of measures to make annuities products more affordable. The regulator has issued a discussion paper which acknowledges the issues which have hamstrung development of longevity products in Australia including relatively high capital requirements and a framework which is insufficiently risk sens…