Resolution SBS No. 17728-2010: Approve the Mandatory Use of Mortality Tables RV-2004 Modified Adjusted and B-85 Adjusted

Los Laureles Nº 214 - Lima 27 - Perú Telf. : (511)2218990 Fax: (511) 4417760 Lima, December 27, 2010

Resolution S.B.S
No. 17728 - 2010

The Superintendent of Banking, Insurance and Private Pension Fund Administrators

CONSIDERING:

That, the General Law of the Financial and Insurance System and the Organic Law of the Superintendence of Banking and Insurance, Law No. 26702 and its amendments, hereinafter General Law, establishes in its article 306 that insurance and/or reinsurance companies must monthly constitute reserves for claims, mathematical, in-force risks, and catastrophic risks;

That, retirement pensions and disability, survivorship, and burial expense benefits of affiliates to Private Pension Fund Administrators and their beneficiaries may be attended to by insurance companies, provided they are requested under the modalities of family life annuity and deferred life annuity, as provided in articles 44, 47, 49, 50, and 51 of the Single Text of the Law of the Private System of Pension Fund Administration, Supreme Decree No. 054-97-EF and its amendments, hereinafter TUO of the SPP Law;

That, by Resolution SBS No. 309-93 of June 18, 1993, the technical bases for the calculation of mathematical reserves for pension insurance and life annuities from the SPP were approved, which included, among other aspects, the use of mortality tables for principal annuitants (RV-85-H and RV-85-M), survivors (B-85-H and B-85-M), and invalids (MI-85-H and MI-85-M);

That, by Resolution SBS No. 354-2006 of March 21, 2006, the use of the "RV-2004 Modified" tables was approved, applied only to principal annuitants of the SPP for the calculation of mathematical reserves for retirement pensions in the life annuity modality, as well as for the annual calculation of pensions in the programmed withdrawal modality;

That, it corresponds to the Superintendence to approve the mortality tables of annuitants and beneficiaries that must be used by insurance companies granting life annuities from the Private System of Pension Fund Administration (SPP) and the Complementary Insurance for Work-Related Risks (SCTR), as well as by AFPs in the case of programmed withdrawal and the actuarial calculations derived therefrom;

That, the approval of new mortality tables responds to the need to establish adequate matching and valuation of payment commitments for pensions in the SPP and SCTR by insurance companies in the long term, with the consequent constitution of reserves for assumed pension obligations, within an integral vision of protecting the solvency of the insurance system;

Los Laureles Nº 214 - Lima 27 - Perú Telf. : (511)2218990 Fax: (511) 4417760

That, by virtue of the evaluations carried out, it is necessary to update the mortality tables to reflect the greater life expectancy of SPP affiliates at the age of retirement, both in the life annuity and programmed withdrawal modalities, in order to guarantee full compliance with the payment of corresponding pensions under the aforementioned systems;

In view of the opinion of the Adjunct Superintendencies of Insurance, Private Pension Fund Administrators, Legal Advice, and Economic Studies, and;

In exercise of the powers conferred by numeral 9 of article 349 of the General Law, and item d) of article 57 of the TUO of the SPP Law, and based on the exceptional conditions established in numeral 3.2 of article 14 of Supreme Decree No. 001-2009-JUS;

RESOLVES:

Article First.- Approve the mandatory use of the following mortality tables detailed in the Annex of this resolution, which will be published on the Institutional Portal (www.sbs.gob.pe), in accordance with what is established in Supreme Decree No. 001-2009-JUS:

a) RV-2004 Modified Adjusted (men and women) regarding pensioners for retirement and early retirement in replacement of the current RV-2004 Modified mortality tables;

b) B-85 Adjusted (men and women) regarding pensioners for partial disability and beneficiaries in replacement of the current B-85 (men and women) mortality tables.

Article Second.- The aforementioned RV-2004 Modified Adjusted table shall be mandatory for the calculation of pensions and mathematical reserves for retirement pensions in the life annuity modality, as well as for the annual calculation of pensions in the programmed withdrawal modality in the SPP.

Likewise, in the case of the B-85 Adjusted table, they shall apply to the mathematical reserves corresponding to pensioners for partial disability and beneficiaries in the SPP and the SCTR.

Article Third.- Insurance companies shall apply the RV-2004 Modified Adjusted and B-85 Adjusted mortality tables mandatorily for the calculation of mathematical reserves for life annuities for retirement and survivorship, respectively, whose requests are available for quotation starting June 1, 2011.

For this effect, it shall be understood that a request is available for quotation when the "Date of sending" field recorded in the MELER Electronic Contracting Platform registers the date indicated in the preceding paragraph.

Article Fourth.- The contracting of pensions under the Programmed Withdrawal modality shall be carried out taking into consideration the following conditions:

a) Those requests that are available for quotation prior to March 1, 2011, shall use the RV-2004 Modified and B-85 tables, as applicable, in the calculations of annuities.

Los Laureles Nº 214 - Lima 27 - Perú Telf. : (511)2218990 Fax: (511) 4417760

b) Those requests that are available for quotation between March 1 and May 31, 2011, shall calculate annuities as follows:

For retirement:
b.1. First annuity: According to the RV-2004 Modified tables. b.2. Second annuity: Weighted average between the RV-2004 Modified tables (80%) and the RV-2004 Modified Adjusted tables (20%). b.3. Third annuity: Weighted average between the RV-2004 Modified tables (40%) and the RV-2004 Modified Adjusted tables (60%). b.4. Fourth annuity and onwards: According to the RV-2004 Modified Adjusted tables.

For survivorship:
b.5. First annuity: According to the B-85 tables. b.6. Second annuity: Weighted average between the B-85 tables (80%) and the B-85 Adjusted tables (20%). b.7. Third annuity: Weighted average between the B-85 tables (40%) and the B-85 Adjusted tables (60%). b.8. Fourth annuity and onwards: According to the B-85 Adjusted tables.

c) Those requests that are available for quotation starting June 1, 2011, shall mandatorily use the RV-2004 Modified Adjusted and B-85 Adjusted mortality tables, as applicable, in the calculations of annuities.

The status of "requests available for quotation" referred to in this article is that referred to in the second paragraph of Article Third of this resolution.

Article Fifth.- This resolution shall enter into force starting the day following its publication in the Official Gazette El Peruano.

FINAL AND TRANSITORY PROVISIONS

FIRST.- The tables referred to in Article First shall apply as long as this Superintendence does not approve the definitive use of mortality tables for SPP annuitants prepared from mortality statistics with own experience.

SECOND.- For the calculation of pensions and reserves for total disability pensions, the MI-85 tables for men and women shall remain in force.

Register, communicate, and publish

FELIPE TAM FOX
Superintendent of Banking, Insurance and Private Pension Fund Administrators