Redemption Fee Prototype

Redemption fees can be applied to a withdrawal when the withdrawal occurs before the deposit has matured. OIPA can validate that the redemption fees apply to a withdrawal and can determine the amount to apply.

Configuration Required

The following configuration must be in place to support redemption fees.

  • The FundScreen rule must contain dynamic fields for the RedemptionFactor, RedemptionDuration and RedemptionFee. The name of these fields is important and must be referenced exactly in the RedemptionAmountFormula rule.
  • The RedemptionAmountFormula rule defines the calculations that must be performed to determine the redemption fee. It must reference the Fund screen redemption amount and redemption duration field names exactly.
  • A transaction must be configured with the assignment types that contain the redemption attributes REDEMPTIONFEE and REDEMPTIONMONEYTYPE.
  • Funds that support the use of redemption fees must have Fund fields identified for Redemption Fee, Redemption Factor and Redemption Duration.

Prototype Explanation

The following business rules and transactions were configured in the Dynamic Prototype Plan to demonstrate this new functionality.

Business Rules

  • The FundScreen business rule should contain dynamic fields for Redemption Factor, Redemption Fee and Redemption Duration. The names of these fields must be referenced exactly in the RedemptionAmountFormula rule. To view configuration, navigate in the Global Explorer to Business Rules | Screen | FundScreen | Company Overrides | FundScreen (Dynamic Company).

    • Redemption Factor: this is used by the RedemptionAmountFormula rule to calculate redemption fees. This should be entered as a decimal value that indicates a percent. For example, 0.01 would be 1%. The default value is 0.00.
    • Redemption Fee: this is an existing dynamic field, which by default is set to 01. This indicates that OIPA should look at fund details to calculate fees.
    • Redemption Duration: this identifies the number of calendar days the deposit must sit in the policy account before a withdrawal can occur. If the age of the deposit is less than the date when the withdrawal occurs, then the withdrawal is subject to redemption fees.

  • The RedemptionAmountFormula rule defines the calculations that must be performed to determine redemption fees. The important parts of configuration are explained below. To view configuration, navigate in the Global Explorer to Business Rules | System | RedemptionAmountFormula | Plan Overrides | RedemptionAmountFormula (Dynamic Prototype Plan).

    • The redemption factor and redemption duration are retrieved from the FundScreen rule. A math variable is identified that pulls the values using the prefix Fund: and then the name of the dynamic field from the FundScreen rule. For example, Fund:RedemptionFactor pulls the value from the Redemption Factor field on the Fund screen.
    • Output math variable.

Transactions

The following transactions were created to demonstrate how a full and partial withdrawal can process with redemption fees.

  • The FullWithdrawalWithRedemption transaction uses the GrossWithdrawal assignment and two redemption attributes: REDEMPTIONFEEand REDEMPTIONMONEYTYPE. To view configuration, navigate in the Global Explorer to Transactions | FullWithdrawalWithRedemption | FullWithdrawalWithRedemption (Dynamic Prototype Plan).

  • The PartialWithdrawalWithRedemption transaction uses the GrossWithdrawal assignment and two redemption attributes: REDMEPTIONFEE and REDEMPTIONMONEYTYPE. To view configuration, navigate in the Global Explorer to Transactions | PartialWithdrawalWithRedemption | PartialWithdrawalWithRedemption (Dynamic Prototype Plan).

View Prototype in OIPA

  1. Log in to OIPA using the Prototype Company user ID and password. Make sure the user has privileges to view comments.

  2. Open a policy.
  3. Click the Add Activity link on the Secondary menu of the Policy screen. This will open the Activity screen.
  4. Select the FullWithdrawalWithRedemption activity and click OK.
  5. Click the Activities link in the Left Navigation menu to open the Activity screen.
  6. Process the activity.
  7. Click the Activity Detail icon to the left of the processed activity.
  8. Click the Allocation tab to view the redemption information.
  9. Close the window when finished.