On September 29, 2023, the SEC proposed significant form and rule amendments to establish a tailored registration form for index-linked annuities, as directed by Congress under the Registered Index-Linked Annuities Act of 2022 (RILA Act). Unlike variable annuity contracts, for which the SEC has adopted specific registration statement forms (i.e., Forms N-3 and N-4), insurance companies currently register offerings of registered index-linked annuities (RILAs) on registration statements on Securities Act of 1933 Forms S-1 or S-3. The market for RILAs has grown significantly in recent years. The SEC’s proposal would require RILA issuers to register offerings on amended Form N-4, the form used by most variable annuities, with proposed amendments designed to provide investors with disclosure tailored to RILAs, while building on the SEC’s layered disclosure framework. Other proposed amendments to Form N-4 would apply to all issuers that use that form. 

Highlights of the SEC's proposal include the following:

• Form N-4 would be amended to facilitate enhanced investor understanding of the features of RILAs and variable annuities. Proposed changes, which would apply to all users of Form N-4, include moving the Key Information Table (KIT) to follow disclosures of general information about the contract, reworking the KIT to follow a question-and-answer format, enhancing disclosure requirements regarding the consequences of early withdrawals, and broadening the range of required KIT disclosures about contract restrictions.  
• Form N-4 would be amended to require various disclosures specific to the features and risks of RILAs. These changes would include requirements for tailored disclosure about early withdrawal charges; contract adjustments; “implicit ongoing fees” relating to cap rates, participation rates and other upside limitations; risks relating to index-linked options; and the reservation of rights by the sponsoring insurance company to add or remove index-linked options, change the features of index-linked options and substitute the index of an index-linked option during its crediting period, as well as disclosure regarding the index crediting methodology.
• RILAs would also have an option to use a summary prospectus, subject to certain conditions.

Comments on the proposal are due 30 days after publication in the Federal Register or November 28, 2023, whichever is later. The SEC also invited retail investors to provide feedback on annuities and RILAs by submitting a “Feedback Flyer,” a link to which is provided in the press release announcing the proposal. 

The SEC’s proposing release is available here, a related fact sheet is available here and the related press release is available here.