States Move to Lower Minimum Annuity Interest Rates Best Wire (06/02/03) ; Panko, Ron
Research from ACLI indicates that about 31 states and the District of Columbia have enacted legislation to lower the minimum nonforfeiture interest rates they pay on fixed-annuity contracts and fixed accounts within variable annuities, while six other states have adopted a new National Association of Insurance Commissioners model index. Eleven more have legislation pending. Most states set the minimum guaranteed rates for insurers at 3 percent in the 1970s, and ACLI spokesman Jack Dolan says that legislators did not think that prevailing rates would drop below 3 percent. But low prevailing rates on money-market accounts, the 10-year Treasury bond, and the Federal Reserve's lowered discount rate have pressured annuity writers' fixed account profit margins.