Australian wealth group Challenger says it backs the prudential regulator’s proposed changes to annuity capital settings.

Chair Duncan West told shareholders the reforms “will reduce cyclical risks to the capital position of life insurers, significantly improving the financial resilience of Challenger”.

The Australian Prudential Regulation Authority has started a second round of consultation on modifications to its capital framework for longevity products, including annuities.

Mr West said: “When it comes to retirement reform, the announcement of APRA’s proposed capital standards for longevity products are a real step forward.

“These amendments represent a positive shift for Australia’s retirement system. They will promote growth and innovation in the lifetime income market, increase the uptake of annuities and help the funding of long-term investment in Australia.

“On application, the changes will have an immediate positive impact on our capital requirements and, over time, significantly change the settings for our business including our asset allocation, risk appetite and financial metrics.”

The life industry has backed changes to capital settings for annuity products to increase the availability of retirement income streams as Australians live longer.

Mr West said: “We continue to be strong advocates of reforms and policy settings that contribute to a stronger retirement income system.”