Bill Overview
Title: Registration for Index-Linked Annuities Act
Description: This bill requires the Securities and Exchange Commission (SEC) to create a new form for the registration of index-linked annuities to ensure that a purchaser can make a knowledgeable decision. The bill defines a registered index-linked annuity as an annuity that is deemed a security, that is registered with the SEC, and that is issued by an insurance company subject to state supervision. Furthermore, the returns of these annuities (1) are based on the performance of a specified benchmark index or rate, and (2) may be subject to a market value adjustment if amounts are withdrawn early.
Sponsors: Sen. Smith, Tina [D-MN]
Target Audience
Population: People purchasing index-linked annuities
Estimated Size: 2000000
- Index-linked annuities and similar financial products are sold in multiple countries, particularly in financially developed markets such as the United States, Canada, and several European nations.
- The global population purchasing annuities, including index-linked annuities, is concentrated in regions with mature financial markets.
- Globally, the financial literacy required to understand index-linked annuities is not common, which narrows the target population to those with substantial financial knowledge or those receiving financial advice.
- The legislation is focused on improving transparency and enabling informed decisions by purchasers of index-linked annuities, affecting those who are potential buyers, financial institutions providing these products, and insurance companies involved.
Reasoning
- To adequately represent the population of interest, the interviews include people with diverse socio-economic backgrounds and financial literacy levels.
- The policy targets U.S. individuals approaching or planning for retirement who are likely to invest in index-linked annuities.
- Not everyone in the U.S. will be directly affected by the policy, hence the inclusion of individuals with different levels of impact from none to high.
- The budget constraints and target population size are considered by selecting interviewees who are relevant to the policy's scope, focusing mainly on those who have a direct interest in or are likely to purchase index-linked annuities.
- The interviews address short-term and long-term effects by examining Cantril Wellbeing Scores across multiple years, reflecting immediate impacts and longer-term benefits or drawbacks of the policy.
Simulated Interviews
Retired Financial Advisor (New York, NY)
Age: 62 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 6/20
Statement of Opinion:
- I believe this policy is a step in the right direction. More transparency will certainly help someone like me who has a financial background, but it's crucial for those without one.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 8 | 5 |
Tech Industry Analyst (San Francisco, CA)
Age: 45 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- It seems like extra paperwork for the companies, but if it improves my understanding of what I'm buying, it's worth it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 6 |
| Year 20 | 8 | 5 |
Software Engineer (Austin, TX)
Age: 30 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- I don't think this affects me right now, but it's good to know more information will be available when I'm ready to consider these options.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 5 |
Small Business Owner (Miami, FL)
Age: 58 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 7/20
Statement of Opinion:
- Having better product information will definitely guide my investment choices. This law should benefit consumers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 6 |
| Year 20 | 8 | 5 |
Retired Accountant (Phoenix, AZ)
Age: 72 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- I feel more confident in my investments with this policy. It's reassuring to know the SEC is involved.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
Financial Planner (Seattle, WA)
Age: 55 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- This will help me provide better advice to my clients. Clearer regulations mean fewer product complexities.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 10 | 6 |
| Year 20 | 9 | 6 |
Marketing Specialist (Denver, CO)
Age: 39 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- I may look into these options later, and having more information up front is always better.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 5 |
Retired Engineer (Orlando, FL)
Age: 67 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- Any regulation that strengthens the security and transparency of my investments is welcomed.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 10 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 7 |
Corporate Lawyer (Chicago, IL)
Age: 50 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- As someone who values informed decisions, I appreciate any measure that provides clearer investment insights.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 10 | 7 |
| Year 20 | 9 | 6 |
Freelance Graphic Designer (Portland, OR)
Age: 34 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 13/20
Statement of Opinion:
- The policy doesn't affect me greatly now, but transparency sounds like a good principle.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $15000000 (Low: $10000000, High: $20000000)
Year 2: $12000000 (Low: $8000000, High: $18000000)
Year 3: $12000000 (Low: $8000000, High: $18000000)
Year 5: $11000000 (Low: $7000000, High: $16000000)
Year 10: $10000000 (Low: $6000000, High: $14000000)
Year 100: $10000000 (Low: $6000000, High: $14000000)
Key Considerations
- The SEC will incur initial setup costs to develop and periodically update the registration process.
- Long-term costs are likely to be associated with monitoring and enforcement.
- Cost savings could be realized from reduced litigation and regulatory enforcement needs.
- Potential indirect economic benefits exist due to increased consumer trust and transparency.