The insurance arm of Lifetime Retirement Income has reportedly stopped accepting new members as it struggles to meet the solvency threshold imposed by the Reserve Bank of New Zealand (RBNZ).
According to a report by Radio NZ, Lifetime Income Limited, was ordered by the reserve bank to strengthen its finances, but its parent firm was unable to raise the money needed.
Ralph Stewart, the fund’s managing director, said the operating environment has drastically changed from when the company started operating in 2016.
“Very low interest rates, the uncertainty of COVID-19 and extreme market volatility have contributed to the RBNZ requiring additional regulatory capital to be held by the fund's insurer Lifetime Income Limited,” he told Radio NZ.
RBNZ has given Lifetime Income until June 30 to raise $10 million. However, a capital raise last year was only able to bring in $5 million.
This forced the insurer to stop taking in new customers, Stewart said, who stressed that business remains as usual for existing customers.
"Regular income payments continue as normal and customers can still access their full account balances as required,” he said.
The report added that the Financial Markets Authority is discussing the matter with both RBNZ and Lifetime, but it refused to comment whether it was doing the same with other firms with similar issues.
