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Lifetime Income Solutions Task Force Meeting Minutes
Date: April 20, 2010
Location: OppenheimerFunds
2 World Financial Center
New York, NY
I. Background and Meeting Objectives
Larry began the meeting with background on the Task Force and its objectives, including a
review of the member companies on the Task Force and the specific individuals involved on the
“Provider Team,” which has been most active in the development work so far. He then reviewed
the scope of the initiative, milestones to date and outlined the objectives for the meeting. (See
attached PowerPoint presentation #1 for details.)
II. General Overview of Initiative and Data Layouts
Larry began with a review of the draft Data Layouts document by describing Part 1, the File
Layout Conventions and Data Sharing. He noted that the basic format is comparable to what The
Institute had created for the 403(b) Best Practices document. Mike Westohoven of Genworth
then provided a general overview of the three basic service models which would support the
current products – Record Keeper Traded Model (based on the mutual fund model for record
keeping and trading); the Provider Traded Model (based on a self directed brokerage concept for
record keeping and trading); and the Guarantee Administrator model (similar to the Record
Keeper Traded model except that the Guarantee Administrator manages a pool of reinsurers).
Mike then generally described the three types of core products: Guaranteed Minimum
Withdrawal Benefit (GMWB), Guaranteed Minimum Income Benefit (GMIB), and Deferred
Fixed Income Annuity. (See attached PowerPoint Presentation #1 for details).
Larry noted that the intent is to build the standards to the lowest common denominator, as was
done with the 403(b) document, so that it is more likely to be widely adopted by service
providers, regardless of their size or system capabilities.
III. Record Keeper Traded Service Model
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Len Steiner of Prudential reviewed the information workflow for the Record Keeper Traded
Service Model, describing the type and flow of data to be transmitted between the product
provider and the record keeper. One member raised the issue of whether the layout and
workflows are being designed to accommodate restrictions, such as waiting periods, because
record keepers would have to program for any specific rules. Larry and Len noted that we could
have a general restriction feed/file structure and different codes could be used for various
restrictions. Providers were asked to submit any specific restriction so they could be identified
and addressed in the layout. Another member suggested that the process should be kept simple
at this point since there was no significant demand and we shouldn’t make the process too
complex for the record keepers to program.
Len then outlined the integration roles of the record keeper and the provider for both GMWB and
GMIB products during the accumulation and income election phases of the products, illustrating
differences between minimum and full integration within the model. It was noted that record
keepers will have different opinions about the level of service integration and the models are
intended to accommodate different preferences. (See PowerPoint Presentation #2 for diagrams
and details).
Larry referenced the purpose and function of the “Provider Requirements Grid” (copy attached)
and walked through the various categories. He asked the providers to populate the grids. The
information will be consolidated and then used to determine the standards for each data field in
the layouts.
IV. Provider Traded Service Model
Michele Thurston of Great-West Retirement Services and Mike Oler of MetLife outlined the
workflow, service integration options and data layouts for Fixed Income and GMWB products
under the Provider Traded Service Model. (See PowerPoint Presentation #2 for diagrams and
details).
V. Guarantee Administrator Service Model
James Sprague and Jim Brackett of Milliman provided a similar workflow review of the
Guarantee Administrator Service Model. They also outlined the integration process for GMIB
and GMWB products during both the accumulation and income election phases. (See Power
Point Presentation #2 for diagrams and details). A question was raised about fiduciary issues and
James noted that the record keeper does not accept fiduciary risk in the Guarantee Administrator
model.
VI. Open Discussion and Wrap-Up
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In the subsequent discussion, one member suggested that we add a “Definition of Terms” or
glossary for the products and data elements. Another suggestion was made to consider
developing standard service agreement templates for each service model.
Two of the record keeper members indicated that they probably will not begin to build out any
systems until there is more demand for the products. Both indicated that if a large client(s) came
to them and requested a lifetime income product that they would probably build to the standards
to accommodate the request(s). Both also indicated that there is support for The SPARK Institute
initiative in order to set the stage for when there is more product demand.
In closing, Larry noted that it is important to get at least high level feedback from the record
keepers about the layout so far so that next steps could take that input into account. He then
outlined a list of items requiring follow up and the timeline (attached). Based on discussion and
comments about getting input from record keepers, the group recommended that more time
should be provided for under the proposed timeline. Larry noted that we need to balance the
importance of assuring that whatever we release to the public is technically sound and as
complete as possible with the interest in developing and releasing the standards as quickly as
reasonably possible.
Larry summarized the agreed upon next steps and deliverables as summarized below:• Identify any new product or data fields that need to be added (Full Task Force).• Update the service integration grids (Steiner and Thurston).• Develop a protocol and codes for common restrictions/rules (Providers).• Populate the data requirements grid (Providers).• Identify any questions about specific fields in the data records (Full Task Force). • Revisit variable vs. fixed length field file layout convention (Full Task Force).• Develop common terminology for various records/fields (Full Task Force).• Indentify any missing data elements for portability records.• Consider developing service agreement template (Full Task Force).• Consider whether additional fields for disclosure of product assumptions are needed or if that
can be handled separately outside of data feeds between parties.• Request record keeper feedback on potential usage of various elements and service
integration features (Goldbrum/Full Task Force).• Media Release – Include in future media release that the standards were developed based on
input from members and non-members, and consider their products and those they are
collectively aware of. Encourage input from non participating companies.
Larry said there would be a conference call the following day to debrief on issues raised during
the meeting and refine next steps. There being no further discussion, the meeting was adjourned.
Attendees
Rachel Kugelmass, ACS
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Jeff Eng, Alliance Bernstein
David Hayes, Delta Data Software
Bob Reiter, DST Systems
Bret Worley, DST Systems
Chris DeWitt, Fidelity
Fred Conley, Genworth
Mike Westhoven, Genworth
Bill Harmon, Great-West Retirement Services
Joan McDonagh, Great-West Retirement Services
Michele Thurston, Great-West Retirement Services
Robert Chamerda, Guardian Life
Pat Harris, Hartford Life
Chris Lunsford, Hartford Life
Phyllis Epstein, ING
Tom Roberts, ING
Suleiman Valjee, ING
James Malin, John Hancock
Edward Cronin, J.P. Morgan
Theresa Becker, Lincoln Financial
Mike Oler, MetLife
Jim Brackett, Milliman
James Sprague, Milliman
Kim Bullock, New York Life
Keith Hylind, OppenheimerFunds
Len Steiner, Prudential
Susan Unvarsky, Prudential
Debbie Hettler, SunGard
Lori Weesner, SunTrust
Jeff Close, The SPARK Institute
Larry Goldbrum, The SPARK Institute
Ralph Sanna, TIAA-CREF
Larry Massaro, Vanguard
Don Stroube, Wachovia
The SPARK Institute Antitrust Notice
The SPARK Institute is committed to strict compliance with antitrust laws. Meetings conducted by The SPARK Institute are intended to provide a forum for the exchange of information and expression of various points of view on the topics discussed during such meetings. Under no circumstances shall Institute meetings be used as a means for competing companies or firms to reach any understanding, expressed or implied, which restricts competition or in any way impairs the ability of members to exercise independent business judgment regarding matters affecting competition. Accordingly, appropriate objection will be made to any presentation or discussion that presents a risk from the standpoint of the antitrust laws.
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SHAPING AMERICA’S RETIREMENT
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Lifetime Income Solutions
Task Force Meeting
April 20, 2010
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Task Force Member Firms
ACS
Alliance Bernstein
American Funds
AXA-Equitable
Deloitte
Delta Data Software
Diversified
DST Systems
Enterprise Iron
Fidelity
Genworth
Great West Retirement Services
Guardian Life
Hartford Life
ING
InvestLink
John Hancock
J.P. Morgan
Lincoln Financial
Mercer
MetLife
Milliman
New York Life
Oculus Partners
OppenheimerFunds
Pershing
Prudential
SunGard
SunTrust
TIAA-CREF
Vanguard
Vertical Management Systems
Wachovia
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Provider Team Member
Firms and Participants
Alliance Bernstein – Jeff Eng
AXA-Equitable – Keith Namiot
Genworth – Mike Westhoven
Great-West Retirement Services – Michele Thurston
Hartford Life – Kelly Hewes
ING – Jacqueline Jarboe
MetLife – Mike Oler
Milliman – James Sprague and Jim Brackett
Prudential – Len Steiner and Susan Unvarsky
TIAA-CREF – Ralph Sanna
Wachovia – Don Stroube
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Scope of Initiative
• Develop information sharing standards and file layouts that willprimarily facilitate:
– Maintaining one or more products on the record keeping system ofindependent customer-facing record keepers.
– Portability of products when the plan sponsor changes plan record keepers (“record keeper portability”).
– Rollovers to an IRA when a participant has a distributable event(“rollover portability”).
5SHAPING AMERICA’S RETIREMENT
Scope of Initiative
• The standards and layouts should be flexible and accommodate as many products and services as reasonably possible, but still maintain a reasonable degree of certainty so there are reliable common standards among users.
• The standards and layouts may also be designed to help facilitate enrollment, cancellation, communicating participant guarantee history, and modeling, to the extent reasonably feasible as determined by the working team.
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Scope of Initiative
• The standards and layouts will not be specifically developed to facilitate “insurance company portability,” i.e., where a plan decides to leave one insurer and move to another, and wants to have the successor insurer assume the liabilities of its predecessor. However, this issue will be revisited by the working team in order to determine whether standards and layouts that are otherwise developed can accommodate this without significant additional effort or delay.
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Milestones
• Identify and define products that are in scope and not in scope.
– See Product Definitions Summary Chart.
• Identify and define industry service models covered by the standards and layouts.
– Record Keeper Traded Model.
– Provider Traded Model.
– Guarantee Administrator Model.
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Milestones
• Identify, define and logically organize the universe of information, transactions, and events that require information sharing.
– Data records defined for each service model.
• Identify data elements to be included in each data record.
– See draft of data layouts.
• Develop standards, definitions and protocols for all data records and data elements.
– See draft of data layouts (in process).
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Proposed Meeting Objectives
• Level set Task Force members knowledge and understanding of:
– The Structure of Data Layout Standards document.
– How each Service Model works and the products they cover, their similarities and key differences.
– How the layouts and records are used for each Model, including the similarities and differences in how and when they are used.
• Get initial feedback from Task Force members on proposed structure and direction of initiative.
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Proposed Meeting Objectives
• Get commitment from record keepers to provide detailed written comments and feedback on materials within an agreed upon timeframe after today’s meeting.
• Review proposed timeline and next steps.
• Other objectives?
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Data Layouts
• Part 1 – File Layout Conventions and Data Sharing
– Comparable to 403(b) Best Practices protocols.
– Header and trailer records.
– File naming conventions and related codes.
– Still under development.
– Secondary at this stage relative to substantive issues.
• Part 2 – Record Keeper Traded Service Model
– Based on the mutual fund model for record keeping and trading. Products with a daily unit value and few restrictions can work easily within this framework.
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Data Layouts
• Part 3 – Provider Traded Service Model
– Based on the self directed brokerage concept for record keeping and trading. Income products that are valued by the carrier and maintained as a standard investment option work best in this model. The investments are not actually held in a brokerage account under this model.
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Data Layouts
• Part 4 – Guarantee Administrator Service Model
– Similar to the Record Keeper Traded Service Model, with assets held and traded by the Record Keeper, except that the Guarantee Administrator manages pool of reinsurers. Guarantee can be applied to one or more funds or to entire participant account. Alternative workflows can be supported.
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Products
• Guaranteed Minimum Withdrawal Benefit (GMWB):
– Daily valued and traded investment with a unit value and accountbalance.
– At income election, assets stay with the record keeper and plan with record keeper administering guaranteed payments.
• Guaranteed Minimum Income Benefit (GMIB):
– Daily valued and traded investment with a unit value and accountbalance .
– At income election, assets leave the plan and move to carrier for all administration (annuitization).
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Products
• Deferred Fixed Income Annuity:
– Daily valued and traded investment with a $1.00 unit value and account balance calculated by the carrier .
– At income election, assets leave the plan and move to carrier for all administration (annuitization).
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The SPARK Institute is committed to strict compliance with antitrust laws. Meetings conducted by The SPARK Institute are intended to provide a forum for the exchange of information and expression of various points of view on the topics discussed during such meetings. Under no circumstances shall Institute meetings be used as a means for competing companies or firms to reach any understanding, expressed or implied, which restricts competition or in any way impairs the ability of members to exercise independent business judgment regarding matters affecting competition. Accordingly, appropriate objection will be made to any presentation or discussion that presents a risk from the standpoint of the antitrust laws.
SPARK Institute Antitrust Policy Notice
Lifetime Income Solutions
Record Keeper Traded Model Workflow
Lifetime Income SolutionsRecord Keeper Traded Model Integration
Comparison of supported activities for a GMIB and GMWB products at a minimum and full integration within the Record Keeper Traded Service Model.
R=Done by record keeper P=Done by Provider (Insurer) Mutual Fund
Accumulation: Min Full Min Full
Holds plan assets R R R R R
Holds daily NAV & trades/settles T+1 R R R R R
Supports Contributions/Transfers/Exchanges/Loans/Hardships(Trading restrictions similar or same as mutual fund)
R R R R R
Participant transaction servicing R R R R R
Call center supports product questions R P R P R
Provides participant data & transactions R R R R
Calculates and provides guarantee P P P P
Guarantees displayed on statements P R P R
Guarantee posted on web with account value P R P R
Income Election:
Distribute plan assets R R N/A N/A
Holds daily NAV & trades/settles T+1 N/A N/A R R
Liquidity (Same as accumulation but subject to benefit reduction) N/A N/A R R
Participant transaction servicing to include payments N/A N/A R R
Provides participant data & transactions N/A N/A R R
Calculates and provides guarantee N/A N/A P P
Guarantees displayed on statements N/A N/A P R
Guarantee posted on web with account value N/A N/A P R
Call center supports product questions N/A N/A P R
GMIB GMWB
Integration Integration
Lifetime Income Solutions
Provider Traded Model Workflow
Product Specific Information/Guaranteed Values–
Participant Level 3.3Daily Net Position (Fund/Plan Level)-
File 3.8Daily Error Transactions 3.11
Indicative and Financial Data- 3.1Plan Totals/Reconciliation (Plan Level Data)
3.7
Financial Transactions
Single Sign-on or Inquiry of Product
InformationEducation and Modeling tools
Detailed transaction information by fundInquiry of guaranteed product information
Guaranteed Fund Trading
Participant InquiryAccount balances (aggregate for Guarantee
funds)Account Activity (Transfers, Contributions, Withdrawals, etc)
Record Keeper
Participant InstructionsSet allocation to Guarantee ‘bucket’Transfer into/out of Guarantee ‘bucket’Initiate loans and disbursementsUpdate indicative dataIncome election
Provider
Initiate Income ElectionTransfers Out
Trading: - Provider handles any associated trades or investing of the funds of the guaranteed income product . - Revenue sharing may be passed through to record keeper depending upon the product.- Provider calculates the market value and sends this information to the record keeper daily.
Guaranty: - Record keeper provides participant detail data to Provider daily, including participant transactions and indicative data. - The file may include data for multiple plans.- Provider calculates the guarantee and may send this information to the Record keeper daily.
Comparison of supported activities for Fixed and GMWB products at a minimum and full integration within the Provider Traded structure
R=Done by record keeper P=Done by Provider (Insurer)
Lifetime Income SolutionsProvider Traded Model Integration
Accumulation: SDB Min Full Min Full
Holds plan assets R R R R R
Daily traded/settled T+1 using insurer market value R R R R R
Maintains NAV or age-based prices & calculates daily market value R P P P P
Supports Contributions/Transfers/Exchanges/Loans/Hardships(Trading restrictions similar or same as mutual fund or SDB)
R R R R R
Participant transaction servicing R R R R
Provides participant data & transactions R R R R
Calculates and provides guarantee P P P P
Guarantees displayed on statements P R P R
Guarantee posted on web with account value P R P R
Single sign-on to insurer web to display guaranteed income detail R R R R
Call center supports product questions P R P R
Income Election:
Distribute plan assets R R N/A N/A
Daily recordkeeper traded/settled T+1 N/A N/A R R
Maintains NAV or age-based prices & calculates daily market value N/A N/A P P
Liquidity (Same as accumulation but subject to benefit reduction) N/A N/A R R
Participant transaction servicing to include payments N/A N/A R R
Provides participant data & transactions N/A N/A R R
Calculates and provides guarantee N/A N/A P P
Guarantees displayed on statements N/A N/A P R
Guarantee posted on web with account value N/A N/A P R
Call center supports product questions N/A N/A P R
Fixed GMWB
Integration Integration
Fund Manager
(may or may not be affiliated with RK or
Insurer)
Record keeperPlan Sponsor/
Participant
Reinsurer 1
Lead Insurer
Participant Guarantee Values (optional)
NSCC or DirectTrade/
Settlement
Insurer and Reinsurance Pool
Participant Indicative and Transaction Data
Omnibus Trade
Trading: - Record keeper trades one or more mutual funds via NSCC.- Revenue sharing with underlying fund may be passed through to record keeper.
Guaranty: - Record keeper provides participant detail data to Guarantee Administrator daily, includes participant transactions (values, types) &personal data. Direct, Single File – can include multiple plans.
- Guarantee administrator optionally calculates and makes guarantee available to record keeper (Daily- Monthly). Record keeper can calculate and send copies to guarantee administrator, who monitors/audits calculations.
Lifetime Income Solutions
Guarantee Administrator Model Not Showing Separate Account
Guarantee Administrator
Reinsurer 2
Reinsurer n
Modeling/Projection Queries/Results
Reports(not standardized)
Participant Data for Marketing or Additional
Hedging (optional)
Fund Manager
(may or may not be affiliated with RK or
Insurer)
Record keeperPlan Sponsor/
Participant
Reinsurer 1
Lead Insurer
Participant Guarantee Values (optional)
NSCC or DirectTrade/
Settlement
Insurer and Reinsurance Pool
Participant Indicative and Transaction Data
Omnibus Trade
• Record keeper trades one or more mutual funds via NSCC • Revenue sharing with underlying fund may be passed through to record keeper
• Record keeper provides participant detail data to Guaranty Administrator daily, includes Participant Transactions (Values, Types) & Personal Data. Direct, Single File – can include Multiple Plans
• Guarantee Administrator optionally calculates and makes guarantee available to record keeper (Daily-Monthly). (RK can calculate and send copies to GA, who monitors/audits calculations)
Trading:
Guarantee:
Guarantee Administrator
Reinsurer 2
Reinsurer n
Modeling/Projection Queries/Results
Reports(not standardized)
Participant Data for Marketing or Additional
Hedging (optional)
Separate Account
(Collateralized Obligations
and Hedges)
Fees after RK share
Collateral Required from Insurers
Profit Above Collateral Requirements
Trade Instructions for Hedging and Profit Release
Collateral RequirementsGuarantee Administration
Fee
Lifetime Income Solutions
Guarantee Administrator Model with Separate Account and Fees
Lifetime Income SolutionsGuarantee Administrator Traded Model Integration
Comparison of supported activities for a GMIB and GMWB products at a minimum and full integration within the Record Keeper Traded Service Model.
R=Done by record keeper P=Done by Insurer/Guarantee AdministratorMutual Fund
Accumulation: Min Full Min Full
Holds plan assets R N/A N/A R R
Holds daily NAV & trades/settles T+1 R N/A N/A R R
Supports Contributions/Transfers/Exchanges/Loans/Hardships(Trading restrictions similar or same as mutual fund)
R N/A N/A R R
Participant transaction servicing R N/A N/A R R
Call center supports product questions R N/A N/A P R
Provides participant data & transactions N/A N/A R R
Calculates and provides guarantee N/A N/A P/R P/R
Guarantees displayed on statements N/A N/A R R
Guarantee posted on web with account value N/A N/A P R
Income Election:
Holds daily NAV & trades/settles T+1 N/A N/A R R
Liquidity (Same as accumulation but subject to benefit reduction) N/A N/A R R
Participant transaction servicing to include payments N/A N/A R R
Distribute guarantee payments after participant exhausts assets N/A N/A P R
Calculates and provides guarantee N/A N/A P/R P/R
Guarantees displayed on statements N/A N/A R R
Guarantee posted on web with account value N/A N/A R R
Call center supports product questions N/A N/A P R
GMIB GMWB
Integration Integration
The SPARK InstituteLifetime Income Solutions Initiative
Preliminary Timeline
Task/Milestone Start Date End Date Complete Assigned To Notes
Full Task Force Meeting Tuesday, April 20, 2010 Tuesday, April 20, 2010 100% All
Conference call to debrief
from 4/20 meetingWednesday, April 21, 2010 Wednesday, April 21, 2010
Providers
and Others4/21 - 1:00-2:30 Eastern.
Revisions to materials
based on 4/20 meetingWednesday, April 21, 2010 Wednesday, May 19, 2010
Working
Teams4 weeks
Provide advanced copy to
certain other trades and
non-members for
comment
Wednesday, April 28, 2010 Friday, May 07, 2010 GoldbrumIRC, DCIAA, end date is when comments
are due back from reviewers
Conference call to review
comments from other
trades, etc
Monday, May 10, 2010 Monday, May 10, 2010Providers
and OthersGoldbrum to schedule
Revisions to materials
based on comments from
traced and others
Monday, May 10, 2010 Wednesday, May 19, 2010Providers
and Others
Completion date same as date for changes
from 4/20 meeting.
Distribute revised
materials to full Task
Force and Board
Thursday, May 20, 2010 Thursday, May 20, 2010 Goldbrum
Member review of
revised materialsThursday, May 20, 2010 Tuesday, May 25, 2010 Members Comments due by end date - 1 week
Revisions to materials
based on final commentsWednesday, May 26, 2010 Friday, May 28, 2010
Providers
and Others3 days.
Release Materials for
public review and
comment
Monday, May 31, 2010 Monday, June 21, 2010 Goldbrum Comments due on end date - 3 weeks
Conference call to discuss
public commentsTuesday, June 22, 2010 Tuesday, June 22, 2010 TBD Goldbrum to schedule
CONFIDENTIAL
The SPARK InstituteLifetime Income Solutions Initiative
Preliminary Timeline
Task/Milestone Start Date End Date Complete Assigned To Notes
Revisions to reflect public
commentsTuesday, June 22, 2010 Wednesday, July 07, 2010 TBD
Final Review by members Thursday, July 08, 2010 Thursday, July 22, 2010 Comments due by end date - 2 weeks
Public Release of Final
VersionMonday, August 02, 2010 Monday, August 02, 2010
CONFIDENTIAL
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