SEC Rule on Variable Annuity Summary Prospectus Is Final
By Toppan_Merrill
1 min read | Industry Insights Insights Home

SEC Blog

The Securities and Exchange Commission said Wednesday that it has adopted its long-awaited variable annuity summary prospectus rule.

“The Commission is taking this important step to improve Main Street investors’ understanding of these products,” said SEC Chairman Jay Clayton, in a statement. “With today’s technology and the benefits of layered disclosure, investors should not have to work through hundreds of pages of disclosure to understand these products’ risks, fees, and features in order to make informed investment decisions.”

The changes permit the use of a concise, reader-friendly prospectus designed to improve investors’ understanding of the contracts’ features, fees and risks.

The new rule permits variable annuity and variable life insurance contracts to use a summary prospectus to provide disclosures to investors, much like a mutual fund prospectus.

Jason Berkowitz, chief legal and regulatory affairs officer for the Insured Retirement Institute, said that IRI is “carefully scrutinizing the final rule with our members to fully understand its ramifications and to ensure that it allows for a more rational disclosure of important consumer information versus today’s required book-length paper versions delivered by U.S. mail.”

Key Dates:

  • July 1, 2020 - A registrant can rely on rule 498A to satisfy its obligations to deliver a variable contract’s statutory prospectus by delivering a summary prospectus if the registrant also complies with the amendments to Forms N-3, N-4, or N-6 (as applicable). The Staff Letters will be withdrawn and the Commission position for eligible discontinued contracts will take effect.
  • January 1, 2022 - All initial registration statements on Forms N-3, N-4, and N-6, and all post-effective amendments that are annual updates to effective registration statements on these forms, must comply with the rule and form amendments.
  • January 1, 2023 - Registrants must submit to the Commission certain specified disclosures in Inline XBRL.

In addition to the final rule, the SEC published a draft Variable Insurance Product (VIP) Taxonomy which has been posted for a 90-day public review to begin after publication in the Federal Register. 

Please don’t hesitate to reach out to us with any questions. We are happy to be a resource and discuss how Toppan Merrill can help with the adoption of this new rule. 

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Additional Resources:

Read the SEC release: https://www.sec.gov/news/press-release/2020-57

Read the final rule: https://www.sec.gov/rules/final/2020/33-10765.pdf

Review the draft VIP Taxonomy (midway down the page): https://www.sec.gov/structureddata/dera_taxonomies\

 

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Toppan_Merrill


Toppan Merrill, a leader in financial printing and communication solutions, is part of the Toppan Printing Co., Ltd., the world's leading printing group, headquartered in Tokyo with approximately US$14 billion in annual sales. Toppan Merrill has been a pioneer and trusted partner to the financial, legal and corporate communities for five decades, providing secure, innovative solutions to complex content and communications requirements. Through proactive partnerships, unparalleled expertise, continuous innovation and unmatched service, Toppan Merrill delivers a hassle-free experience for mission-critical content for capital markets transactions, financial reporting and regulatory disclosure filings, and marketing and communications solutions for regulated and non-regulated industries.


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