A#

5867

P&S #:

5437

DATE:

July 28, 2004

TO:

ALL PARTICIPANTS

ATTENTION:

MANAGERS; OPERATIONS DEPT FOR ANNUITIES & LIFE INSURANCE, BROKERAGE OPERATIONS, INFORMATION SYSTEMS
FROM: NSCC Insurance Services
SUBJECT: IPS Enhancement Release
Overview:

In order to support industry requests, the Insurance Processing Service (IPS) has scheduled an enhancement release for Semptember 2004. IPS Enhancement Releases include User Group Enhancement Requests submitted by participants, as well as maintenance items National Securities Clearing Corporation (“NSCC”) deems necessary to improve the overall operational performance of the system.

The enhancements in the September 2004 release will affect the following functionalities:

·        Positions and Values (POV)

·        Financial Activity Reporting (FAR)

The enhancements to this product were reviewed and approved by the IPS Advisory Group Working Group.

Schedule:

·        Test – August 12, 2004 after 3:00 pm et

·        Production – September 8, 2004 after 6:00 pm et

Participants may begin testing the changes via the test region starting August 12th, 2004.   However, production files must be submitted in the old format until September 8th.

For a detailed look at all IPS enhancement information, please go to our website, http://ips.dtcc.com.  The enhancement information can be found in the Participant Member Section under User Group Information. 

Specification Documents:

To view the detailed specifications for this release, log on to the IPS website at http://insurance.dtcc.com.  Go to "Participants Section ® Record Layouts" and you will see "Draft Record Layouts".  Click on the arrow and you will find a list that includes IPS Enhancement Release.  Technical Specifications document, along with Draft Record Layouts should be used for programming. 

The following documentation will be listed.  All changes to the record layouts will be highlighted in yellow. 

·        IPS 2004 Enhancement Release Technical Specifications Document

·        PVF/PNF Draft Record Layouts

·        PFF Draft Record Layouts

·        PVF/PNF/PFF Standard Usage Document

·        FAR Draft Record Layouts

Release Specifications:

The following information indicates the exact changes made to the record layouts.  These changes are based on the approved recommendation made by the originator of the enhancement request. 

The actual enhancement request can be found at our website under “IPS Enhancements Approved for Future Release” in the User Group section of our website.  Do not use the enhancement documents for programming.  The draft record layouts and detailed specification document should be used for this purpose.  The original enhancement request forms are provided to understand the business purpose of the change.

1.      PVF/PNF – Add Payee Code to Party Role Code List (IPS00120)

A new code will be added to the Party Role code list (Item 3808) on the 13-09 Contract Party record:

PE – Payee

2.      PVF/PNF/PFF & FAR – Add New IRS Tax Qualification Code (IPS00122)

Add a new code to the IRS Tax Qualification code list (PVF/PFF Item 3031, FAR Item 5023). 

1314 – 412i Inherited IRA plan

3.      PVF/PNF/PFF – Add New Policy YTD Premium Qualifier Contract Value Qualifier Code List (IPS00124)

Add a new code to the Contract Value Qualifier code list (Item 3102) on the 13-02 Contract Valuation record:

YD – Policy Year To Date Premium (for Life Products)

4.      PVF/PNF/PFF & FAR – Add New Contract Status Codes (IPS00125)

Add two new codes to the Contract Status code list (Item 3022) on the 13-01 Contract record in PVF/PNF/PFF.

Add two new codes to the Contract Status code List (Item 5026) on the 43-01 Contact record in FAR.

SI – Surrender/Individual (to the client)

SE – Surrender/Exchange (to a third party)

5.      PVF – Add New Party Role Qualifier (IPS00129) – MANDATORY CHANGE

Add a 1-byte qualifier to the 13-09 Contract Party record.

Start   End    Length     Type     Field Name                                            Description       Item #   Opt/Req   Rej Code

177    177        1           A/N     Contract Party Role Qualifier       (See Code List)   3816          M         312

This field will be required if the 13-09 record is sent for PVF.

This code list will be identical to FAR (Item 5029) and APP/SUB (Item 4082).  See FAR 5029 in draft layouts for code changes.

1

Person

2

Other Non-person Entity

3

Unknown

4

Corporation

5

Trust

6

Plan

7

Limited Liability Corporation

8

Partnership

C

Custodial

D

Non-Profit Organization

E

Sole-Proprietorship

G

Government

H

Charitable Organization

R

Charitable Remainder Trust

U

UGMA/UTMA – See Enhancement

6.      PVF /PFF & FAR – Add/Delete IRS Qualification Codes (IPS00130) – MANDATORY CHANGE

Deletion of IRS Qualification Codes considered to be invalid or non-used (PVF/PFF Item 3031, FAR Item 5023).  

The following code will no longer be valid in this code list:

Code

Code Description

Reason for Change and Suggested Usage

1070

501c3

501c3 is the code for Charitable Organization.  The correct usage would be to use IRS code 2010 and indicate Charitable Organization as follows:

A new code would be added called ‘Charitable Organization’ to be used in:

·          APP/SUB Code List 4082

·          FAR Code List 5029

·          PVF/PNF – new Contract Role Qualifier List will be added, which will be the same as 4082 & 5029

·          PFF – qualifier not used

1075

408b

This is the tax code for Traditional IRA.  Use IRS code 2000.

1085

408K

Delete - This is the code for SEP IRA – use Code 2060.

1095

Custodial Keogh

Custodial is a registration type, not a type of tax code.  Use IRS Tax Code 1090 and indicate Custodial as follows:

·          APP/SUB Code List 4082, use code C

·          FAR Code List 5029 – use code C

·          PVF/PNF – new Contract Role List will be added, which will be the same as 4082 & 5029 - use code C

·          PFF – qualifier not used

2015

Non-qualified Charitable Remainder Trust

Charitable Remainder Trust is a type of entity, not a tax code.  The correct usage would be to use IRS code 2010 and indicate Charitable Remainder Trust as follows:

A new code would be added called ‘Charitable Remainder Trust’ to be used in:

·          APP/SUB Code List 4082

·          FAR Code List 5029

·          PVF/PNF – new Contract Role Qualifier List will be added, which will be the same as 4082 & 5029

·          PFF – qualifier not used

2045

Custodial Pension

Use IRS Tax Code 2040 and indicate Custodial as follows:

·          APP/SUB Code List 4082, use code C

·          FAR Code List 5029 – use code C

·          PVF/PNF – new Contract Role List will be added, which will be the same as 4082 & 5029 - use code C

·          PFF – qualifier not used

2065

Custodial SEP-IRA

Use IRS Tax Code 2060 and indicate Custodial as follows:

·          APP/SUB Code List 4082, use code C

·          FAR Code List 5029 – use code C

·          PVF/PNF – new Contract Role List will be added, which will be the same as 4082 & 5029 - use code C

·          PFF – qualifier not used

3020

403c

This code has to do with reinsurance reporting.  No usage of this code has been detected.

3030

Target Benefit Plan

No usage of this code has been detected.

3040

401a

This is used for Qualified Pension Plan – use code 2040.

3085

IRA Custodial

Use IRS Tax Code 2000 and indicate Custodial as follows:

·          APP/SUB Code List 4082, use code C

·          FAR Code List 5029 – use code C

·          PVF/PNF – new Contract Role List will be added, which will be the same as 4082 & 5029 - use code C

·          PFF – qualifier not used

3185

Tax Exempt (401c)

401c is the code for Non-Profit Organization.  The correct usage would be to use IRS code 2010 and indicate Non-Profit as follows:

A new code would be added called ‘ Non-Profit Organization’ to be used in:

·          APP/SUB Code List 4082, use code D

·          FAR Code List 5029, use code D

·          PVF/PNF – new Contract Role Qualifier List will be added, which will be the same as 4082 & 5029

·          PFF – qualifier not used

3200

Texas ORP

No usage of this code has been detected.

3225

Custodial Roth IRA

Use IRS Tax Code 3215 and indicate Custodial as follows:

·          APP/SUB Code List 4082, use code C

·          FAR Code List 5029 – use code C

·          PVF/PNF – new Contract Role List will be added, which will be the same as 4082 & 5029 - use code C

·          PFF – qualifier not used

UGM

Uniformed Gift to Minors

UGMA is a registration type, not a tax code.  This code belongs in the following code lists:

·          APP/SUB Code List 4082, new code will be added

·          FAR Code List 5029 – new code will be added

·          PVF/PNF – new Contract Role List will be added, which will be the same as 4082 & 5029

·          PFF – qualifier not used

58

414h

This is the code for Deferred Compensation Plan for Government Workers – no usage detected.

59

Custodial

Apply appropriate  IRS Tax Code and indicate Custodial as follows:

·          APP/SUB Code List 4082, use code C

·          FAR Code List 5029 – use code C

·          PVF/PNF – new Contract Role List will be added, which will be the same as 4082 & 5029 - use code C

·          PFF – qualifier not used

60

Foreign National

No usage detected.  However, this should not be a tax code.  Use tax code 2010 and decipher foreign entity information from the tax id qualifier or resident country fields for each product.

61

Qualified Funding Vehicle

No usage of this code has been detected.

25

Deferred Profit Sharing Plan

No usage of this code has been detected.

7.      Service Feature Record (13-11) Change (No Enhancement Number)

The 13-11 record will be removed form the PFF layout and added to both the PVF and the new PNF layout.  The fields in the record will remain exactly the same. 

8.      PNF File Format

Members of the IPS community have identified a need to send position information to their trading partners on a daily basis for new business separately from their regularly scheduled positions file existing contracts.  PNF (Positions New File) will serve this purpose.    

Specifications

·        This new format will follow the same record layout as PVF (including the Service Feature record (13-11).   The 13-11 record will be removed from PFF.

·        A new IPS Event Code (Item 1002) may be submitted called “PNF”. 

·        PNF will go through same edits as PVF.

·        A new Production AutoRoute number will be added for PNF only.  The number is:  02341391 new Test AutoRoute number will be added for PNF only.  The number is:  02981391

·        To submit PNF files through DataTrak, use 46027 and 26027.

Billing (Transactions)

·        For purposes of monthly billing, PNF transactions will be charged the same price as PVF and PFF and will be incorporated into the existing position volume to achieve appropriate tier.

Billing (File Fees)

·        Since there will be a separate AutoRoute number for PNF, a separate file fee will be charged on output. 

Participants should review the new Positions Standard Usage Documentation, which incorporates the use of PNF.

9.      PVF/PFF/PNF Edit Rule Changes

A.     Contra Header – 12 record – edit change

IPS will not allow duplicate contra headers (C12) under the same submitting header (C10).  A duplicate contra header consists of multiple contra headers containing the same participant number, associated firm id and event code (PNF, PVF, PFF).  If this occurs, IPS will reject the file back to the Carrier with Reject Code 093 (Duplicate Contra Header).

Currently, IPS does not reject transactions in which a Carrier duplicates the same contra header for the same product under the same submitting header.  IPS does reject this in other products and will start rejecting it as part of this enhancement release.

The following example would now be rejected for duplicate contra header.

Example for Insurance Carrier ABCD sending to Distributor WXYZ, Associated Firm #AAAA:

C10ABCD

C12-WXYZ-AAAA-PVF – this would pass

C13-01

C13-02

C12-WXYZ-AAAA-PVF – this would reject

C1301

C1302

These examples would be allowed:

C10-ABCD

C12-WXYZ-AAAA-PFF

C1301

C1302

C12-WXYZ-AAAA-PNF

C1301

C1302

Or

C10-ABCD

C12-WXYZ-AAAA-PFF

C13-01

C13-02

C12-WXYZ-BBBB-PFF

C13-01

C13-02

B.     PVF/PNF - 13-08 Record - item 7303 - Annuity Frequency Code

The record layouts indicate that this is a mandatory field.  This means that Carriers must populate a code in this field.  However, IPS was not validating this rule.  Spaces were being accepted.  As part of this enhancement release, the edit will be enforced.  If field 7303 is left as spaces on input, IPS will reject this back to the Carrier.  This is consistent with the documented edit rule.

For additional information on this enhancement release, please call Craig Gurien at 212-855-5649.  You may also contact your Account Relationship Manager for more information.

Craig Gurien
Product Manager
Insurance Services