Resolution SBS No. 2789-2016: Incorporates Subchapter VIII "Staggered Life Annuity" into Chapter II of Subtitle I of Title VII of the Compendium of Superintendence Norms

Los Laureles Nº 214 – Lima 27 – Perú Telf.: (511) 6309000 Fax: (511) 6309239 Lima, May 17, 2016 S.B.S. Resolution No. 2789-2016

The Superintendent of Banks, Insurance and Private Pension Fund Administrators

CONSIDERING:

That, by Supreme Decree No. 054-97-EF, the Single Text of the Law on the Private System of Pension Fund Administration was approved, hereinafter TUO of the SPP Law;

That, by Supreme Decree No. 004-98-EF, the Regulation of the aforementioned TUO of the SPP Law was approved;

That, pursuant to the Third Final and Transitory Provision of the Regulation of the TUO of the Law, the Superintendence is empowered to issue the complementary operational norms necessary for the proper functioning of the Private System of Pension Fund Administration;

That, Article 1 of the TUO of the SPP Law, in defining the object of the SPP, establishes that the Private System of Pension Fund Administration is composed of Private Pension Fund Administrators (AFP), as well as Insurance Companies that provide the corresponding pensions in the SPP;

That, Title VII of the Compendium of Superintendence Regulatory Norms of the Private System of Pension Fund Administration, approved by Resolution No. 232-98-EF/SAFP and its amendments, referred to Benefits, establishes the basic modalities under which the granting of retirement, disability and survivorship benefits can be made effective, as well as the method of calculating pensions, under the different modalities;

That, likewise, the aforementioned Title VII of the Compendium contemplates the regulation of the benefits and advantages granted within the Private System of Pension Fund Administration (SPP), on a general framework that provides a variety of options for pension modalities that, by virtue of the return and risk profile identified by each affiliate and their respective family group, enable the exercise of an adequate decision-making process, guaranteeing the receipt of sufficient income under the pension modality, in accordance with the contributory effort made by the worker during their active working life;

That, by Law No. 30425, it was provided that the affiliate, from the age of 65 or by accessing the special early retirement regime (REJA), may request the delivery of up to 95.5% of the balance of their Individual Capitalization Account (ICA) in the tranches they consider necessary;

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That, as a consequence of the promulgation of the aforementioned law, a framework of greater flexibility is introduced in the regulation regarding withdrawal and/or pension options in the SPP, so that affiliates have various possibilities and combination options regarding the administration of the balance of their individual capitalization account accumulated throughout their working life, assuming or ceding the administration of their longevity risk, under various combinations associated with the withdrawal of a percentage of the pension fund, depending on the decision made;

That, Article 104 of the Regulation of the TUO of the SPP Law, approved by Supreme Decree No. 004-98-EF-SAFP and its amendments, establishes that affiliates or their beneficiaries may choose additional products or services within the basic modalities offered by Insurance Companies, in accordance with the provisions established by the Superintendence;

That, to this end, it is necessary for this Superintendence to issue the corresponding regulation in order to provide greater options for the choice of pension products to affiliates who have the status of potential pensioners in the SPP, so that, under the new legislative framework in force in the SPP, there are more alternatives of pension products that, being under the parameters of a family life annuity, can present differentiated characteristics to their potential buyers, based on the time horizons for longevity risk protection that an affiliate might decide to assume within the scope of the SPP, since they would fulfill the object of protection against old age established by the SPP;

Having the approval of the Adjunct Superintendencies of Private Pension Fund Administrators, of Insurance, and of Legal Advice; and,

In exercise of the powers conferred by numeral 9 of article 349 of the General Law of the Financial System and the Insurance System and the Organic Law of the Superintendence of Banking and Insurance, Law No. 26702 and its amendments, subsection d) of article 57 of the TUO of the SPP Law whose publication is ordered based on the exceptional conditions established in numeral 3.2 of article 14 of Supreme Decree No. 001-2009-JUS:

RESOLVES:

Article First.- Incorporate Subchapter VIII into Chapter II of Subtitle I of Title VII of the Compendium of Superintendence Regulatory Norms of the SPP, referred to Benefits, as follows:

“SUBCHAPTER VIII
STAGGERED LIFE ANNUITY

Article 39G.- Definition. The staggered life annuity is a pension modality by which the affiliate, with the balance of the Individual Capitalization Account (ICA), contracts a monthly life annuity with an insurance company under the family life annuity modality, having as its main characteristic being composed of two pension period tranches; where the second life annuity tranche may be, according to the affiliate's choice: (i) equivalent to 50% of the first pension of the first tranche; or (ii) equivalent to 75% of the first pension of the first tranche of the life annuity, duly updated by the adjustment factor corresponding between the period that elapses from the start of the validity of the first tranche of the pension until its completion.

The conditions referring to the parameters of the offer of the staggered life annuity pension product are determined by the insurance companies offering life annuities in the SPP, and are provided within the framework established by the Superintendence through a norm of general application.

Article 39H.- Characteristics. The staggered life annuity pension modality has the following main characteristics:

a) The characteristics described in subsections a), b) and c) of Article 21 apply to it, insofar as it is a life annuity, as well as what is established in Article 24 for the purposes of the validity of the life annuity and Article 25 regarding the transfer of the ICA by the issuance of the policy, insofar as applicable.

b) It is offered only under the adjusted soles and adjusted dollars modalities, based on the fixed adjustment rate established in Supreme Decree No. 104-2010-EF, in concordance with numeral 7 of Circular No. AFP-117-2010 or the norm that replaces it.

c) The pension tranches are determined by the insurance company, with the first tranche having a defined duration in a number of years; the second tranche is for life.

d) The value of the first pension corresponding to the second tranche of the staggered annuity may be, according to the affiliate's choice: (i) equivalent to 50% of the first pension of the first tranche, or (ii) equivalent to 75% of the first pension of the first tranche, duly updated by the adjustment factor corresponding between the period that elapses from the start of the validity of the first tranche of the pension until its completion, based on the design of the pension product offered by the insurance company.

e) The death of the affiliate generates survivorship pensions in both tranches of the pension, according to the percentages established by law and will depend on the tranche of the staggered life annuity in which the death occurred, subject to the conditions provided in Article 26.

f) It is compatible with the offering of the complementary guaranteed period product. In such circumstances, only the authorized periods of ten (10) or fifteen (15) years may be offered, in accordance with what is established in Circular No. AFP-117-2010 and its amendments. This additional clause will only be applicable to the first tranche of the staggered life annuity.

g) In case an insurance company offers a guaranteed period, the delimitation of the first tranche of the staggered life annuity is limited to said period.

h) The formation and reimbursement of funeral expenses for this pension product are calculated in the same way regardless of the tranche in which the death claim occurs.

i) It does not apply to the offering of pension products with semi-annual pension gratifications.

Article 39I.- Right to Staggered Life Annuity. Those affiliates who meet the circumstances provided for in letters a), b) and f) of Article 22 have the right to be pensioned under this modality; in the latter case, only insofar as it corresponds to affiliates pensioned for retirement.”

Article Second.- Incorporate a final paragraph into numeral 3 of Circular No. AFP-117-2010, under the following text:

“(…)

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Insurance companies that are registered in the SPP Registry for the granting of life annuities and wish to offer pension products of the staggered life annuity type, must send a communication to the Superintendence manifesting their adherence to the SPP norms and its amendments, requesting their inscription in the SPP Registry. To this end, they must indicate the list of pension products to be registered, and provide the policy models; as well as the corresponding Technical Notes. Companies may use, insofar as pertinent, the clauses approved by this Superintendence for the Immediate Family Life Annuity, which appears in Annex 1 of this Circular.

Once verified and based on the evaluations carried out, the Superintendence will adhere to what is established in the second paragraph of this numeral.”

Article Third.- Modify sections III, IV and V of Annex 1 and section III of Annexes 7 and 8 of Title VII of the Compendium of Superintendence Regulatory Norms of the SPP attached to this resolution, which is published on the electronic portal of this Superintendence (www.sbs.gob.pe), in accordance with what is established in Supreme Decree No. 001-2009-JUS.

Article Fourth.- This resolution enters into force the day following its publication.

Register, communicate and publish

JAVIER MARTIN POGGI CAMPODÓNICO
Superintendent of Banks, Insurance and
Private Pension Fund Administrators (e)