DTCC I&RS Service Feature/Rider Standardization

Transcription

1 CATEGORY Meeting Name: Facilitator Scribe Date & Time: Location: DESCRIPTION DTCC I&RS Service Feature/Rider Standardization Jon Volpe Jon Volpe, DTCC July 2, :00 pm -4:00 pm Conference Call Highlighted names were in attendance for this meeting NAME GROUP Karen Mottley ACORD Mike Bender AEGON/TransAmerica Fran Forslund Craig Williams Allianz Zack Nyberg Becki Carnahan Jon Volpe DTCC Jeanann Smith Craig Gurien Natalie Wood Lisa O Neill Sandy Hampel Ebix Rob n Stanley Edward Jones Michele Flowers Judy Smith Forethought Jennifer Yerly Genworth Damon Gladman Huntington Susanne Kennedy ING Andrew Amrhein Jackson National Rene Fedewa Dan Falco John Hancock Stephen Galinet Lincoln Rob Hosier Carol Steele Merrill Lynch Mike Grund MetLife Joe Wengler Morgan Stanley Lawrence Goldstein Donnie Atis Gary Carmichael Nationwide Henry Nerida Doug Hile Bill Gibson Matt Sullivan New York Life 1

2 Frank Norton Danny Smith Jeanette Blenkel Chad Ross Nancy MacFarlane Marianne Jasmin Holly Draycott Joe Hall Tom Tofil Nancy Pica Stephen Terry Brian Houwman Carissa Dove Ryan Barbiaux Kim Henke Lisa Schroeder Janey Levans Shelley Wallace Kathi Carter Sathya Srinivasan Dan Surber Wendell Tobiason Gail Kontowicz Pam Simonds Tonya Williams Colleen Shea Jim Gilmore Sarah Teague Ginger Fisher Pacific Life Principal Prudential Raymond James Riversource RW Baird Stifel SunAmerica Symetra Thomson Reuters Vertex Wells Fargo July 2, 2014 We completed the review and update of the POV Contract Value Qualifiers with the exception of the following 3 codes. We hope to finalize these on next week s call. Allianz will look to clarify the GDB description. Once these are complete we will share the changes with the Review Board. Thanks. RPB Remaining Protected Balance - Lifetime of Rider Active The remain of the rider (3601) - GW 2

3 RPC Remaining Protected Balance - Current Benefit Year Active The protect year (imme (3601) - GW GDB Guaranteed Death Benefit To be used enhanced. the Gross D should be r June 18, 2014 We continued updating Contract Value Qualifier definitions. Below is what has been updated to date. We will continue with the rest of the qualifier definitions on Wednesday, July 2. 3

4 AV Actuarial Present Value The present value of any additional guaranteed benefits that will be provided under the contract. If federal law or regulation excludes the AV from the Required Minimum Distribution calculation, the AV value should not be reported or a value of 0 should be sent. Applicable to contracts with a qualification type that are required by federal law to take a RMD. CR Total Contract Amount Gross contract value at valuation date, before loans, fees or any other charges. For life policies and applicable annuities the amount includes any applicable rider cash value. DE Net Death Benefit Policy gross death benefit on all coverages minus any indebtedness and other applicable charges, fees, or costs due. The total value to be paid to the beneficiary at the time of death. GD Gross Death Benefit Policy gross death benefit on all coverages before the removal of any indebtness and any other applicable charges, fees or costs due. OE Face Value Base amount of life insurance coverage underwritten. OT Original Investment Value The initial paid premium. Not used for Life Insurance. RM Required Minimum Distribution Basis Value The year-end value (YE) plus the actuarial present value (AV) of any additional guaranteed benefits that will be provided under the contract. If federal law or regulation excludes AV from the Required Minimum Distribution calculation, the YE value should equal the RM value. Applicable to contracts with a qualification type that are required by federal law to take a RMD. PR Single Premium Total premium for a single-premium policy. RS Fixed Reserve Fixed Premium Amount or Fixed Premium Amount minus any payments issued on a policy, recalculated periodically. It is the estimated value set aside to account for the fixed value of the contract. For Life only. SU Surrender Value Amount available in cash upon cancellation of an annuity or insurance product. Gross policy value minus indebtedness, surrender charges, and any applicable charges due on the valuation date and plus any applicable credits and adjustments. TP Total Premium Gross amount of premium since inception (before premium loads and not reduced by any subsequent withdrawals). TW TZ Total Withdrawal Pre-TEFRA Cost Total gross amount a contract owner withdrew from their policy. This should not include rider charges and administrative fees. Premium applied to cost basis before August 14, Not used by Life Insurance. VO Post-TEFRA Cost Premium applied to cost basis on or after August 14, Not used by Life Insurance. YE Year-End Value The year-end contract value. LA Loan Amount Any policy indebtedness due to an outstanding loan and interest accrued but not yet charged. YD Policy YTD Premium (for Life Values) Premium paid since last policy anniversary date. CV Commuted Value Applicable on contracts where commuted value is calculated and the owner can choose to terminate the contract. (Used for Annuities in the payout phase.) CB Cost Basis For life insurance policies, this means the cumulative premiums paid. Certain disbursements from the policy (generally withdrawals, but not loans) are counted as negative premiums, and reduce the cost basis. For annuity contracts the portion of the accumulated value on which income tax has already been paid. Cost basis is often a factor in determining tax liability upon full or partial liquidation of an asset. AM Annuitized Amount The amount from the deferred contract that was used to fund the income stream. NV Income Value The fair market value of an immediate income annuity, deferred income annuity, or the annuitized portion of a deferred annuity. The Income Value is equivalent to the present value of the remaining benefits using a standardized methodology and approach as of the date indicated. The Income Value is not a cash or surrender value, cannot be withdrawn, and does not represent a commuted value.. Please refer to the RIIA Income Value Q&A document for more details. CMP Compensation Base Value The equivalent value of an annuitized contract as if it were still in the accumulation (deferred) phase. Used to determine trail compensation to the broker/sales agent. PIB Projected Guaranteed Income Base Amount Active Projected Guaranteed Income Base, assuming no withdrawals or subsequent purchase payments. Premium taxes and surrender charges may reduce this amount. Projected Annuitization Value. Used in conjunction with SF#204 Guarantee Minimum Income Benefit (GMIB). PMI Projected Guaranteed Monthly Income Amount Active Projected Guaranteed Monthly Income Base, assuming no withdrawals or subsequent purchase payments. Premium taxes and surrender charges may reduce this amount. Projected Monthly Payout Value. Used in conjunction with SF#204 Guarantee Minimum Income Benefit (GMIB). PPB Protected Payment Base Amount Active The amount of the rider that is protected for withdrawals. Can be used in conjunction with SF#336 - Guaranteed Minimum Withdrawal Benefit (GMWB) and SF#215 - Guaranteed Minimum Withdrawal for Life Benefit (GWLB) PPA Protected Payment Amount Active The amount available for this contract year, less withdrawals taken during this same contract year, based on the pre-set percentage of the Protected Payment Base Amount. Can be used in conjunction with SF#336 - Guaranteed Minimum Withdrawal Benefit (GMWB) and SF#215 - Guaranteed Minimum Withdrawal for Life Benefit (GWLB) June 11,

5 We continued updating Contract Value Qualifier definitions. Below is what has been updated to date. We will continue with the rest of the qualifier definitions next week. Actuarial Present Value Total Contract Amount The present value of any additional guaranteed benefits that will be provided under the contract. If federal law or regulation excludes the AV from the Required Minimum Distribution calculation, the AV value should not be reported or a value of 0 should be sent. Applicable to contracts with a qualification type that are required by federal law to take a RMD. Gross contract value at valuation date, before loans, fees or any other charges. For life policies and applicable annuities the amount includes any applicable rider cash value. Net Death Benefit Gross Death Benefit Policy gross death benefit on all coverages minus any indebtedness and other applicable charges, fees, or costs due. The total value to be paid to the beneficiary at the time of death. Policy gross death benefit on all coverages before the removal of any indebtness and any other applicable charges, fees or costs due. Face Value Original Investment Value Required Minimum Distribution Basis Value Single Premium Fixed Reserve Surrender Value Total Premium Total Withdrawal Pre-TEFRA Cost Post-TEFRA Cost Year-End Value Loan Amount Policy YTD Premium (for Life Values) Base amount of life insurance coverage underwritten. The initial paid premium. Not used for Life Insurance. The year-end value (YE) plus the actuarial present value (AV) of any additional guaranteed benefits that will be provided under the contract. If federal law or regulation excludes AV from the Required Minimum Distribution calculation, the YE value should equal the RM value. Applicable to contracts with a qualification type that are required by federal law to take a RMD. Total premium for a single-premium policy. Fixed Premium Amount or Fixed Premium Amount minus any payments issued on a policy, recalculated periodically. It is the estimated value set aside to account for the fixed value of the contract. For Life only. Amount available in cash upon cancellation of an annuity or insurance product. Gross policy value minus indebtedness, surrender charges, and any applicable charges due on the valuation date and plus any applicable credits and adjustments. Gross amount of premium since inception (before premium loads and not reduced by any subsequent withdrawals). Total gross amount a contract owner withdrew from their policy. This should not include rider charges and administrative fees. Premium applied to cost basis before August 14, Not used by Life Insurance. Premium applied to cost basis on or after August 14, Not used by Life Insurance. The year-end contract value. Any policy indebtedness due to an outstanding loan and interest accrued but not yet charged. Premium paid since last policy anniversary date. June 4, 2014 The group started reviewing the definitions of the current Contract Value Qualifiers. Below is what was reviewed. The highlighted items were modified. Please determine if the Total Contract Amount is includes rider cash values for annuities. Please be prepared to discuss the remaining Contract Value Qualifiers next week. 5

6 Actuarial Present Value Total Contract Amount The present value of any additional guaranteed benefits that will be provided under the contract as it is used for RMD reporting for annuities. Applies to qualified contracts only. Gross contract value at valuation date, before loans, fees or any other charges. Used for annuity and life. For life policies (and annuity???) the amount includes any applicable rider cash value. Net Death Benefit Gross Death Benefit Policy gross death benefit on all coverages minus any indebtedness and other applicable charges, fees, or costs due. The total value to be paid to the beneficiary at the time of death. Policy gross death benefit on all coverages before the removal of any indebtness and any other applicable charges, fees or costs due. Face Value Base amount of life insurance coverage underwritten. Original Investment Value Required Minimum Distribution Basis Value The initial paid premium. Not used for Life Insurance. The year-end value (YE) plus the actuarial present value (AV) of any additional guaranteed benefits that will be provided under the contract. Under the current tax regulations, if the AV is less than 20% of the YE value, then the RM value should equal the YE value. Applies to qualified contracts only. May 28, 2014 If you recall since we decided to move all rider values to the 13/02 record, we started discussing the implementation of these proposed mandatory changes and there was a disconnect. Carriers expressed the need to keep these changes optional at first and then at a future date implement the mandatory change. Removing rider value codes from the 13/15 record would make this mandatory. Distributors feel these changes need to be implemented all at once or they can t support it. Carriers said if it was done all at once they probably wouldn t be able to do it until The proposed changes include adding 5 rider sub type fields to the end of the 13/02 record and allowing only arrangement values to be populated on the 13/15 record. Please see the attached record layout. On yesterday s call the group decided to implement these changes including mandatory changes in the March 2016 Enhancement Release. A new recurring meeting invite will be sent so we can discuss adding codes and improving code definitions. 6

7 April 9, 2014 Meeting Minutes Contrary to what was discussed last meeting there is now concern with the feasibility of reporting rider values on the 13/02 Contract Value record. In particular when there are multiple death benefit riders. Other suggestions were mentioned: o Adding multiple rider value fields to the 13/15 Service Feature record o Adding a new 13/16 record with rider values A survey will be sent to gauge interest in these options At this point keeping the status quo is not an option March 26, 2014 Meeting Minutes The group finished reviewing the uses cases and determined it is feasible to report the rider values on the 13/02 record. We need to ensure commitment because as part of the proposed change Rider Value Sub Type fields will be added to the 13/02 Contract Value record. Next steps include reviewing and modifying Contract Value Qualifiers and Rider Value Qualifiers. March 19, 2014 Meeting Minutes TransAmerica provided use cases which exemplified how the 13/02 and 13/15 would be populated if contract and rider values were only reported on the 13/02 record. The spreadsheet contained 4 examples and we were able to discuss 2 of them before we ran out of time. The first example (#1 on the spreadsheet) was of a contract with a Step Up Death Benefit, a Standard GWLB Rider and a Systematic 7

8 Payout Arrangement. Everyone agreed with the population of the fields and felt this would work in the new format we that is being proposed. The second example (#4 on the spreadsheet) was of a contract with multiple death benefits. This scenario proved a little more challenging. There is concern that in this particular example the death benefits could be misconstrued by the distributors and may have difficulty properly reflecting the values on the client statement. We need to continue discussing example #4 next week. We need to keep in mind that while we may solve the problem of have consistently reported contract and rider values we need to make sure the solution doesn t create different unintended reporting issues. Please find the updated examples attached to this . The next meeting is Wednesday, March 26, March 4, 2014 Meeting Minutes We continued discussing the rider values being added to the 13/02 record and including the sub type value field as well on the 13/02. The sub type value field would still be needed on the 13/15 record. The value field on the 13/15 would only be used for Arrangement amounts. TransAmerica and PacLife will put together use cases to exemplify how the 13/02 and the 13/15 should be populated with our new proposed layout. Wells Fargo discussed new Contract Value Qualifier codes. Please review these prior to the next meeting. If there are no comments then these will be presented to the Review Board for inclusion in the March 2015 enhancement release. There will be no meeting next week. The next meeting will be Wednesday, March 19. 8

9 January 22, Meeting Minutes The group confirmed they feel adding fields to link the 13/02 rider value to the 13/15 rider information would be too complicated. We decided that by adding the rider sub type code fields to the 13/02 record distributors would be able to determine which rider is being referenced. This would allow for all values to be populated on the 13/02 Contract Value record and only Arrangement amounts should be populated in the value field on the 13/15 Service Feature record. On the next page below there is a mock-up of the 13/02. Next steps: Wells Fargo will submit improved code descriptions and new code list adds in conjunction with Merrill Lynch. Also a standard usage example will be created. These will be vetted with the group and then all changes will be presented at the March Review Board meeting The next meeting will either be February 5 or February 12 depending if there is any new information to review. There will be no meeting next week, January 29. On the next page is a mock-up of the 13/02 Contract Value record with the new sub type fields at the end. 9

10 Contract Valuation Record - Optional for PVF, PNF, PFF Main Menu Start End Length Type Field Name Description Item # Required Indicator Reject Code A/N Submitter's Code C = Carrier M 001 B = Broker A/N Record Type 13 M A/N Sequence Number 02 M A/N Contract Number Must match contract number on 01 record 3020 M N Contract Value Amount # C* A/N Contract Value Qualifier # C* A/N Filler O N Contract Value Amount # O A/N Contract Value Qualifier # OC A/N Filler O N Contract Value Amount #3 9(14)v O A/N Contract Value Qualifier # OC A/N Filler Space M N Contract Value Amount #4 9(14)v O A/N Contract Value Qualifier # OC A/N Filler Space M N Contract Value Amount #5 9(14)v O A/N Contract Value Qualifier # OC A/N Filler Space M N Contract Percentage Amount #1 9v9(9) 3103 C* A/N Contract Percentage Amount Qualifier #1 (See Code List) 3104 C* A/N Filler Space M N Contract Percentage Amount #2 9v9(9) 3103 O A/N Contract Percentage Amount Qualifier #2 (See Code List) 3104 OC A/N Filler Space M N Contract Percentage Amount #3 9v9(9) 3103 O A/N Contract Percentage Amount Qualifier #3 (See Code List) 3104 OC A/N Filler Space M A/N Contract Value #1 Sub Type (See Code List) 3611 O A/N Contract Value #2 Sub Type (See Code List) 3611 O A/N Contract Value #3 Sub Type (See Code List) 3611 O A/N Contract Value #4 Sub Type (See Code List) 3611 O A/N Contract Value #5 Sub Type (See Code List) 3611 O

11 January 15, Meeting Minutes The group spent most of the time discussing a way to link rider values on the 13/02 record to the rider information on the 13/15 record. However after lengthy discussion and suggestions the group could not come up with a consensus. Some in the group felt we were making it more complicated than it needs to be. After deciding that maybe a link between the 2 records may not work. Jon Volpe suggested changing the name of the Contract Value record to just the Value record and adding Service Feature subtype qualifier fields to the 13/02 so you could populate contract values and rider values and by using qualifiers you would not need to link to the 13/15. Below is an example: A/N Contract Number Must match contract number on 01 record 3020 M N Value Amount # C* A/N Value Qualifier #1 CR 3102 C* A/N Value #1 Sub Type O N Value Amount # O A/N Value Qualifier # OC A/N Value #2 Sub Type 4 O Value amount#1 is how a contract value would be populated and Value amount#2 is a rider value. This will be discussed internally at DTCC and we will discuss further with the group next week. January 8, Meeting Minutes The group discussed the scenario of adding multiple death benefit values to the 13/02. After discussion it was determined that it would be feasible to add multiple death benefit values without changing the current 13/02 layout. We also discussed a way to link a rider value on the 13/02 to the rider information on the 13/15. Initial discussion revolved around adding new fields to both records that would be populated with a 3 digit code. The same code would be populated to the corresponding value and information on each record. This needs to be discussed further. 11

12 Wells Fargo will be submitting an enhancement request to a 2 new value qualifiers. We hope to get these requests to the Review Board for the March 4 th meeting. They will also be submitting improved definitions of a couple of existing qualifiers. Agenda for the next meeting on Wednesday, January 15 th at 3:30 pm: Discuss using new codes to link values and information Start clarifying code definitions and standard usage December 18, Meeting Minutes We went through the 13/15 Service Feature Record to determine which fields should be populated with rider information, arrangement information or both. It was decided that the Service Feature Value, Service Feature Value Qualifier and Service Feature Frequency should be used for arrangements only. The naming of the fields may be changed to reflect that they are for arrangements only. For example the Service Feature Value field may be changed to Service Feature-Arrangement Amount. All of the other fields were determined to be for both arrangements and riders. 12

13 Start End Length Type Field Name Description Item # Required Indicator Reject Code A/N Submitter's Code C = Carrier M 001 A/R B = Broker A/N Record Type 13 M 002 A/R A/N Sequence Number 15 M 013 A/R A/N Contract Number Must match contract number on 01 record 3020 M 014 A/R A/N Filler M N Service Feature-Arrangement Amount 9(12)v99-$ or 9v9(13)-% 3603 O 161 A A/N Service Feature Value Qualifier (See Code List) 3613 OC 287 A A/N Service Feature Frequency (See Code List) 3615 O 288 A A/N Filler M D Service Feature Start Date CCYYMMDD 3605 O 121 A/R D Service Feature Stop Date CCYYMMDD 3606 O 128 A/R A/N Service Feature Expense Type (See Code List) 3607 O 278 A/R N Service Feature Expense - Dollar Amt 9(12)v OC 279 A/R N Service Feature Expense - Percentage 9v9(9) 3609 OC 280 A/R A/N Service Feature Name 3602 O A/N Service Feature Product Code 3604 M 144 A/R A/N Service Feature Program Type (See Code List) 3614 M 289 A/R A/N Service Feature Type Code-1 (See Code List) 3611 M 290 A/R A/N Service Feature Sub-Type Code-1 (See Code List) 3612 M 291 A/R A/N Service Feature Type Code-2 (See Code List) 3611 O 290 A/R A/N Service Feature Sub-Type Code-2 (See Code List) 3612 O/C 291 A/R A/N Service Feature Type Code-3 (See Code List) 3611 O 290 A/R A/N Service Feature Sub-Type Code-3 (See Code List) 3612 O/C 291 A/R A/N Service Feature Type Code-4 (See Code List) 3611 O 290 A/R A/N Service Feature Sub-Type Code-4 (See Code List) 3612 O/C 291 A/R A/N Service Feature Type Code-5 (See Code List) 3611 O 290 A/R A/N Service Feature Sub-Type Code-5 (See Code List) 3612 O/C 291 A/R A/N Service Feature Type Code-6 (See Code List) 3611 O 290 A/R A/N Service Feature Sub-Type Code-6 (See Code List) 3612 O/C 291 A/R A/N Filler Space M A/N Reject Code 3001 As stated in previous meetings we will be looking to put rider values on the 13/02 Contract Value record. We need firms to put together use case scenarios for when there are multiple death benefits. How would you populate the 13/02 with rider values when there are multiple death benefits? 13

14 In addition we need firms to come up with ideas of ways to link the values on the 13/02 to the information on 13/15. Also in subsequent meetings we need to determine proper Rider Qualifier definitions. The next meeting is scheduled for Wednesday, January 8 at 3:30 pm. December 11, 2013 Meeting Minutes During last week s call we discussed a need to develop use cases to determine the best course of action standardize the usage of service features and riders. The proposed scenarios for the use cases would potentially include the following: 1) How you are currently populating the 13/02 and 13/15 2) Putting all values in the 13/02 3) Using the 13/15 for rider values only As part of this week s meeting to start developing the use cases we were going to list all of the different riders and service features along with their components (rates, dates, etc. However we started the meeting by reviewing a spreadsheet a distributor provided that showed how carriers are passing rider information today. It exemplified that information is not being sent the same way by all participants. Field and code definitions are being interpreted differently from firm to firm. It was determined this needs to be addressed as a second phase of this working group. As we were discussing this the conversation led to the following 3 items: 1) The need to report all values on the 13/02 Contract Value record. 2) Potentially renaming value field on the 13/15 Service Feature to Arrangement Amount and populating it with the arrangement amount only. 3) Creating a reference identifier that links the value on the 13/02 record to the 13/05 Service Feature record. Following are the next steps: Determine which fields on the 13/15 record should be populated with rider information and which fields should be populated with arrangement information. 14

15 Develop use cases for the reference ID used to link the 13/02 to the 13/15. Define standard usage of riders that have values. The next meeting is Wednesday, December 18 at 3:30 pm. 15