Stronger scrutiny of the life insurance sector by the Reserve Bank has forced a retirement fund to suspend new memberships.
Lifetime Retirement Income manages over $250 million worth of assets, and because of the uncertain economic outlook, its insurer Lifetime Income Limited, was ordered to strengthen its finances.
However, its parent company - Retirement Income Group - could not raise the cash.
Lifetime fund managing director Ralph Stewart said since the fund launched in 2016, the operating environment had changed.
"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."
The insurer must raise $10m by 30 June.
A capital raise last year, yielded only $5m.
Stewart said until it could find a way forward, it was prudent not to take on new customers.
"While the fund is closed to new business, it is operating normally, with the fund investing primarily in a mix of conservative and balanced funds managed by Vanguard and Harbour Asset Management and in cash and cash equivalents.
"Regular income payments continue as normal and customers can still access their full account balances as required."
He did not say what would happen to the fund if the insurer could not find the money.
Lifetime Income Limited has a B rating issued by standards agency A.M. Best. Three other insurers have the same rating however the RBNZ would not say if any other firms had been asked to increase buffers, or if any had been unable to meet the solvency standards.
The Financial Markets Authority said it has been engaging with Lifetime and RBNZ on the matter, but would not confirm if it was talking to any other investment concerns about similar issues.