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SUP 16.8 Persistency reports from insurers and data reports on stakeholder pensions

Application

SUP 16.8.1G

1The effect of SUP 16.1.1 R is that this section applies to:

  1. (1)

    every insurer with permission to effect or carry out life policies, unless it is a non-directive friendly society1; and

  2. (2)

    every firm with permission to establish, operate or wind up a stakeholder pension scheme.

Purpose

SUP 16.8.2G

1The purpose of this section is to enable information on the persistency of life policies and data on stakeholder pensions to be prepared and provided to the FCA10 in a standard format. This information is used in the monitoring of firms both individually and collectively.

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Requirement to submit persistency and data reports

SUP 16.8.3R
  1. (1)

    1An insurer with permission to effect or carry out life policies10 must submit to theFCA8 a persistency report in respect of life policies by 30 April each year in accordance with this section.

    1010
  2. (2)

    A firm with permission to establish, operate or wind up a stakeholder pension scheme must submit to the FCA10:

    10
    1. (a)

      a data report on stakeholder pensions by 30 April each year using the form specified in SUP 16 Annex 6R;9

      9
    2. (b)

      [deleted]9

      9

Alternative year end date

SUP 16.8.3AR
  1. (1)

    9A firm may submit persistency and a data report for a 12 month period ending within 4 months of its accounting reference date if:

    1. (a)

      it has notified the FCA of this intention by email using the email address specified in SUP 16.3.10 G (3) no later than the firm's accounting reference date; and

    2. (b)

      it either:

      1. (i)

        has an accounting reference date other than 31 December; or

      2. (ii)

        undertakes industrial assurance policy business.

How to submit persistency and data reports

SUP 16.8.3BR

9Firms required to submit reports as set out in SUP 16.8.3 R (1) and SUP 16.8.3 R (2) must do so online through the appropriate systems accessible from the FCA's website.

Interpretation of this section

SUP 16.8.4R

1In this section, and in SUP 16 Annex 6R:

9
  1. (1)

    '12 month report' means the part of a persistency report or data report reporting on life policies or stakeholder pensions effected in Y-2, '24 month report' means the part of a persistency report or data report reporting on life policies or stakeholder pensions effected in Y-3, and so on;

  2. (2)

    'CC' means the number of life policies or stakeholder pensions which:

    1. (a)

      were effected during the period to which the calculation relates; and

    2. (b)

      are reported on in the persistency report or data report (see SUP 16.8.8 R to SUP 16.8.15 R);

  3. (3)

    'CF' means the number of life policies or stakeholder pensions within 'CC' which are treated as in force at the end of Y-1 or, for a report under SUP 16.8.3 R (2) (b), the relevant 12 month period (see SUP 16.8.16 R to SUP 16.8.18 R);

  4. (4)

    'contract anniversary' means the anniversary of the date on which the life policy or stakeholder pension was effected falling within Y-1;

  5. (5)

    'data report' means a report in respect of stakeholder pensions complying with SUP 16.8.19 R to SUP 16.8.21 R;

  6. (6)

    [deleted]9

    9
  7. (7)

    'group personal pension policy' means a life policy which is not a separate pension scheme, effected under a collecting arrangement made for the employees of a particular employer to participate in a personal pension arrangement on a group basis;

  8. (8)

    [deleted]

  9. (9)

    'mortgage endowment' means an endowment assurance effected or believed to be effected for the purposes of paying off a loan on land;

  10. (10)

    'new', in relation to a stakeholder pension, has the meaning given in SUP 16.8.11 R (2);

  11. (11)

    'ordinary assurance policy' means a life policy which is not an industrial assurance policy;

  12. (12)

    'other life assurance' means a life policy other than a pension policy, endowment assurance or whole life assurance;

  13. (13)

    'other pension policy' means a pension policy other than a personal pension policy;

  14. (14)

    'persistency rate' means a rate calculated using this formula:CF x 100/CC(see the example in SUP 16.8.5 G);

  15. (15)

    'persistency report' means a report in respect of life policies and stakeholder pensions9 complying with SUP 16.8.19A R and9 SUP 16.8.21 R;

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  16. (16)

    'regular premium life policy' means a life policy where there is (or could be, or has been) a commitment by the policyholder to make a regular stream of contributions (for example by means of a direct debit mandate);

  17. (17)

    'regular premium stakeholder pension' means a stakeholder pension where there is (or could be, or has been) a commitment by the policyholder to make a regular stream of contributions;

  18. (18)

    'single premium life policy' means a life policy that is not a regular premium life policy, except that a recurrent single premium life policy must be treated as a regular premium life policy;

  19. (19)

    'single premium stakeholder pension' means a stakeholder pension which is not a regular premium stakeholder pension, except that a recurrent single premium stakeholder pension must be treated as a regular premium stakeholder pension;

  20. (20)

    'stakeholder pension' means an individual's rights under a stakeholder pension scheme;

  21. (21)

    'substitute', in relation to stakeholder pension, has the meaning given in SUP 16.8.11 R (2);

  22. (22)

    'Y' means the year in which the report must be submitted, 'Y-1' means the preceding year, 'Y-2' means the next earlier year and so on;

  23. (23)

    'year' means calendar year, unless SUP 16.8.3AR (1) applies in which case it means the 12 month period notified to the FCA.9

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SUP 16.8.5G

Example of calculation of persistency rate for life policies that commenced during 1996 (see SUP 16.8.3 R)1

Y (year of reporting)

Number of life policies which commenced during 1996

Number of 1996 policies that cease to be in force during Y-1

Deaths and retirements (not included in CC and CF)

CF

CC

1998

1000

143

2

1000 - 143 - 2 = 855

1000 - 2 = 998

1999

1000

25

1

1000 - 143 - 25 - 2 - 1 = 829

1000 - 2 - 1 = 997

Report submitted in 1998 Persistency rate for life policies that commenced during Y-2 (that is 1996)

Report submitted in 1999 Persistency rate for life policies that commenced during Y-3 (that is 1996)

SUP 16.8.6G

1Firms are reminded that annuity contracts other than deferred annuity contracts are not within the definition of 'life policy'.

SUP 16.8.7R

[deleted]9

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Life policies and stakeholder pension to be reported on in the persistency or data reports

SUP 16.8.8R

1A persistency report or data report must report on a life policy or stakeholder pension if:

  1. (1)

    it is not of a type listed in SUP 16.8.13 R or SUP 16.8.14 R;

  2. (2)

    it was effected by:

    1. (a)

      the firm submitting the report; or

    2. (b)

      an unauthorised member of the group of the firm submitting the report and in circumstances in which that firm was responsible for the promotion of that life policy or stakeholder pension; or

    3. (c)

      another firm, but is being carried out by the firm submitting the report; and

  3. (3)

    the person who sold it or who was responsible for its promotion was, in so doing, subject to rules in COBS5.

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SUP 16.8.9G

1Life policies and stakeholder pensions falling within SUP 16.8.8 R (2) (c) are those which have been transferred from another firm, for example under an insurance business transfer scheme under Part 710 of the Act (Control of Business Transfers).

10
SUP 16.8.10R

1Life policies falling within SUP 16.8.8 R, which were sold subject to the conduct of business rules of a previous regulator, need to be reported only if they were required to be reported on by the rules of the previous regulator of the firm submitting the report.

SUP 16.8.11R
  1. (1)

    1A life policy or stakeholder pension which was issued in substitution for a similar contract may be treated as being effected on the inception date of the previous life policy or stakeholder pension, provided that the firm is satisfied that no loss to the policyholder is attributable to the substitution;

  2. (2)

    A stakeholder pension which is treated as in (1) is a "substitute" stakeholder pension. A "new" stakeholder pension is any other stakeholder pension.

SUP 16.8.12G

1Examples of loss to the policyholder under SUP 16.8.11 R are losses resulting from higher charges and more restrictive benefits and options.

SUP 16.8.13R

1A persistency or data report must not report on any of the following:

  1. (1)

    a life policy or stakeholder pension that was cancelled from inception whether or not this was as a result of service of a notice under the rules on cancellation (COBS 15)5;

    5
  2. (2)

    [deleted]7

    7
  3. (3)

    a life policy (excluding income withdrawal) or stakeholder pension which has terminated as a result of death, critical illness, retirement, maturity or other completion of the contract term;

  4. (4)

    income withdrawals that have ceased as a result of the death of the policyholder;

  5. (5)

    in the case of a persistency report only, a life policy which is a stakeholder pension;

  6. (6)

    a life policy purchased by the trustees of an occupational pension scheme 2 which is a defined benefits pension scheme;

  7. (7)

    a life policy purchased by the trustees of an executive money purchase occupational pension scheme.

SUP 16.8.14R

1A persistency report required by SUP 16.8.3 R need not contain information:9

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  1. (1)

    on a life policy if the number of life policies on substantially the same terms effected by the relevant firm (or member of the firm's group) in the relevant year did not exceed the higher of fifty and 1% of the total reportable life policies effected by the person in that year; and9

  2. (2)

    on life policies and stakeholder pensions if a firm has no life policies or stakeholder pensions to report on in SUP 16 Annex 6R.9

SUP 16.8.14AR

9In circumstances where a firm has no data to report in one or both of the life policies and stakeholder pensions sections of SUP 16 Annex 6R, a firm must submit a nil return using the relevant field(s) in the form.

SUP 16.8.15R

1If the term of an endowment assurance is less than five years, the life policy must only be included in a persistency report in respect of years up to and including the anniversary prior to maturity.

Life policies and stakeholder pensions to be treated as in force

SUP 16.8.16R

1Subject to SUP 16.8.17 R and SUP 16.8.18 R, a life policy or stakeholder pension must be treated as in force at the end of Y-1 (that is, included in CF) if and only if:

  1. (1)

    in the case of a regular premium life policy:

    1. (a)

      in the case of an industrial assurance policy on which the premiums are paid at intervals of four weeks, the premium has been paid in respect of the four-week period in which the policy anniversary falls; or

    2. (b)

      in any other case, the premium has been paid in respect of the month in which the policy anniversary falls;

  2. (2)

    in the case of a single premium life policy, the policy has not been surrendered as at the policy anniversary;

  3. (3)

    in the case of a regular premium stakeholder pension:

    1. (a)

      for a report required by SUP 16.8.3 R (2) (a), the premium has been paid in respect of the month in which the contract anniversary falls;

    2. (b)

      [deleted]9

      9
  4. (4)

    in the case of a single premium stakeholder pension:

    1. (a)

      for a report required by SUP 16.8.3 R (2)(a), the contract has not been surrendered as at the contract anniversary; or

    2. (b)

      [deleted]9

      9
SUP 16.8.17R

1A cluster life policy must be reported as a single life policy and must be treated as in force (that is included in CF) even if some of the constituent life policies have been terminated.

SUP 16.8.18R

1An income withdrawal that has terminated other than by death of the policyholder must be treated as not in force at the end of Y-1 (that is, not included in CF).

Contents of the persistency or data report

SUP 16.8.19R
  1. (1)

    [deleted]9

    9
  2. (2)

    [deleted]9

    9
  3. (3)

    [deleted]9

    9
SUP 16.8.19AR

9A persistency report on life policies and stakeholder pensions must be in the format of SUP 16 Annex 6R.

SUP 16.8.20R

[deleted]9

9
SUP 16.8.21R

1The firm must, if a persistency report reports on;

  1. (1)

    an endowment assurance with a term of five years or less:

    1. (a)

      [deleted]9

      9
    2. (b)

      report on such a policy in the report in SUP 16 Annex 6R;9

      9
  2. (2)

    a group personal pension policy, include the policy as a personal pension policy in the report in SUP 16 Annex 6R;9

    9
  3. (3)

    a mortgage endowment, also include the policy as an endowment assurance in the report in SUP 16 Annex 6R;9

    9
  4. (4)

    an income withdrawal, not include the policy under any other relevant category in SUP 16 Annex 6R.9

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SUP 16.8.22G
  1. (1)

    [deleted]9

    9
  2. (2)

    [deleted]9

    9

Records

SUP 16.8.23R

1A firm must make and retain such records as will enable it to:

  1. (1)

    monitor regularly the persistency of life policies and stakeholder pensions effected through each of its representatives; and

  2. (2)

    make persistency reports or data reports to the FCA10 in accordance with SUP 16.8.3R.

    10
SUP 16.8.24G

1In order to comply with SUP 16.8.23 R, a firm will as a minimum need to make and retain separate records for:

  1. (1)

    life policies and stakeholder pensions originally promoted:

    1. (a)

      by company9 representatives; or

    2. (b)

      by intermediaries providing independent advice or restricted advice; or9

      9
    3. (c)

      through the firm's own direct offer financial promotions;

      9
    4. (d)

      [deleted]9

      9
  2. (2)

    life policies and stakeholder pensions not within (1), including those effected as execution-only transactions,9for inclusion in the relevant form under 'Other';9

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  3. (3)

    life policies and stakeholder pensions written assuming the payment of:

    1. (a)

      regular premiums;

    2. (b)

      a single premium;

  4. (4)

    life policies written as:

    1. (a)

      ordinary assurance policies;

    2. (b)

      industrial assurance policies;

  5. (5)

    the categories of life policies and stakeholder pensions referred to in SUP 16 Annex 6R.9

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