Compliance September 29, 2023

SEC Proposes New Rules for RILA Annuity Providers

The proposal directs RILA providers to use registration documents that better explain the annuity’s features and complexities.

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The Securities and Exchange Commission proposed amendments Friday that would permit registered index-linked annuities to register on Form N-4, a specialized form for variable annuities.

Under current rules, RILAs must register on more general forms not designed for them and containing information not relevant for investors interested in RILAs.

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RILAs are an annuity product tied to the performance of an investment index, and their performance is “bounded,” meaning returns are restrained in a growing market, but losses are also mitigated in a declining market to provide a predictable stream of income.

According to the SEC, it will allow RILAs to use a “tailored form” for registration and disclosure that will “highlight key information” about them. Specifically, the amendments would alter the Key Information Table on Form N-4 so that the RILA features are more effectively communicated to investors.

The Insured Retirement Institute has backed the proposal and came out with commentary today in support of the suggestions.

Jason Berkowitz, the IRI’s chief legal and regulatory affairs officer, highlighted an exception in the proposal that would permit RILAs to use simplified financial statements: “Notably, we are encouraged that under the proposal, RILA issuers would appear to be eligible for a limited exception, which is already available to variable annuity issuers, to use statutory financial statements rather than GAAP financials only if the insurer does not otherwise prepare GAAP financial statements. This is a particularly critical element of the proposal.”

The comment period will remain open for 60 days from today or 30 days following the proposal’s publication in the Federal Register, whichever is longer.

Products September 29, 2023

Ascensus Hits $1B AUA in PEPs, Showing Continued Adoption

The firm cites almost 650 employers in their pooled employer plans; meanwhile, Ameritas is launching a 403(b)-specific offering.

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Ascensus, the third largest retirement plan provider for plans with less than $10 million in assets, has more than $1 billion in assets under administration in its 30 pooled employer plan offerings, the firm announced Wednesday.

The assets come from almost 650 plan sponsors adopting the option as their retirement plan, and they average almost $2 million in assets per company, according to Ascensus.

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In some ways, PEP adoption has been gathering steam: Ascensus joins recordkeeper Aon PLC in reaching the threshold of more than $1 billion in assets, and Paychex Inc. reported a doubling of plan sponsors in its PEP over the past year to 25,000, though it declined to give assets under administration.

Yet the growth of listed PEPs has actually slowed in 2023, according to recent analysis by Robb Smith, president of RS Fiduciary Solutions, PEP-HUB and PEP-RFP. But plan sponsor use and asset growth have been burgeoning for some, as the much-discussed plan option continues to mature.

“We have seen a significant uptick in audited plans coming into our PEPs over the past 18 months,” Mindy O’Connor, head of retirement business development at Ascensus, said via email.

Adviser Partners

Ascensus’s PEP is offered to plan sponsors by partner advisories that include Creative Planning, UBS, Wealth Enhancement Group and others, according to the announcement.

“While Ascensus provides marketing and distribution support to our PEP partners, we closely collaborate to help millions save for a better future and take a synergistic approach in promoting growth of PEPs in the market,” O’Conner said.

PEPs, introduced with the Setting Every Community Up for Retirement Enhancement Act of 2019, are designed to take on the fiduciary and administrative burden for plan sponsors, as well as reducing cost, by leveraging a collective pool run by a pooled plan provider. Newport, owned by Ascensus, was one of the first PPPs to market in 2021.

“We’re delighted to achieve this milestone in our PEP partnerships, confirming our focus on growing this important offering,” Nick Good, Ascensus’s recently named president, said in a statement.

Newport acts as the PPP; 402(a) named fiduciary; 3(16) administrative fiduciary; trustee and custodian; recordkeeper and administrator; and participant servicer. Ascensus also offers 3(38) services and integration of other plan benefits, such as nonqualified savings programs. 

A PEP for 403(b)s

In a separate announcement Thursday, Ameritas retirement plans brought to market a pooled employer plan for 403(b) providers, giving what it called “the underserved nonprofit retirement plan market an option that is usually reserved for large companies.” The 403(b) PEP will offer nonprofits fiduciary oversight, compliance, administration, reporting and investment strategies, according to the company.

Ameritas will serve as the recordkeeper, LeafHouse as the 3(38) investment fiduciary and FiduciaryxChange as the PPP, according to the announcement.

“We can do the heavy lifting for nonprofits, giving a retirement plan option while they do what they do best,” Jim Kais, Ameritas executive vice president for retirement plans, said in a statement.

The firm brought a 401(k) PEP to market in June. In its announcement, the firm stressed the PEP as an option for both specialist 401(k) advisers and financial professionals to offer it to clients.

“What’s great about the new pooled employer plan from Ameritas is that both specialist advisors and generalist financial professionals can grow their practice while streamlining administration,” Scott Holechek, Ameritas institutional sales leader and pooled employer plan thought leader, said in a statement at the time. “With our flexible platform and managed account options, financial professionals can satisfy varying investment appetites and offer personalized plans.”

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