2.1.2.1 Validate PIGS and FOREX

This topic provides information to validate PIGS and FOREX.

The system will automatically mark any contract created in system after PIGSREGDATE as Regulated. However, you can change it manually.

For premiums, the system will consider any change in Status, Start Date, End Date, Value, Frequency and Transaction, and Escalation details/Asset Allocation as material change and will mark the policy as Regulated.

For recurring switches the system will consider any change in Status, Start Date, End Date, Value, Frequency, number of phase in occurrences and Transaction category, and Escalation details/Asset Allocation as Material change will mark the policy as Regulated.

GrandFathered to Regulated

The following transactions are considered as material changes and will change the contract status from GrandFathered to Regulated:
  • Top up transactions / additional investments
  • Unit Transfers
  • User initiated Switch transactions
  • Standing instruction, i.e. a new debit order, regular switch or phase in transaction
  • The following amendments to debit orders, regular switches:
    • Change in amount
    • Frequency change
    • Changes to the selected funds for either the debit order, phase in or regular switch.
    • Adding an escalation value to an existing Standing Instruction
    • Increasing the escalation value of an existing Standing Instruction considering the escalation frequency.
    • The creation of a new Phase in transaction will change the status of the Grandfathered contracts to Regulated.
The following system generated transactions are not considered as material changes, and will not alter the GrandFathered status to Regulated:
  • Fund Merge transactions
  • Reinvested Distributions
  • Bonus payments Fees
  • CMA switch transactions
  • Redemptions / Withdrawals do not alter the GrandFathered status as the funds under management will be reduced.
  • Existing premiums (in the form of existing debit orders, regular switches, phase in and annuities).
The following amendments to debit orders and regular switches:
  • Change in Bank details linked to a standing instruction (debit order or annuity payment) is not considered a material change.
  • Any changes to annuity payments will not affect the GrandFathered status.
  • The amendment or cancellation of a Phase In will not change the status to Regulated.
  • The creation of a new Phase In will change the status.

If a transaction, for which the status is changed from GrandFathered to Regulated, is Reversed or Cancelled, then the system will automatically change the status back to GrandFathered.

The system will not check GrandFathered contracts for asset limit compliance, when contract is amended to add or modify recurring debit orders or recurring switches. However, if a Top-up and switch transaction causes a contract to lose its GrandFathered status, then that transaction will not be subjected to Regulation 28 compliance checks.

The following transactions will be checked for Regulation 28 compliance:
  • New investments
  • Top up transactions
  • Switches
  • Partial redemption
  • 100% redemptions are not checked for compliance
  • Creation of a new recurring debit order

The Regulation 28 online checks will check compliance during the creation of a recurring debit order. For instance, if the debit order itself is validated, and the current value in the client’s portfolio is not taken into account, then that contract will be Non-Compliant. The system will only validate if the actual debit order instruction has passed Regulation 28 validation.

If a contract has failed compliance during a Quarterly monitoring run, and the contract is marked as Non-Compliant, then the system will not allow the creation of new recurring debit orders.

The new investments and top up transactions must be checked for Regulation 28 compliance, taking into account the current market value of the contract as well.

On capturing a transaction, the system will aggregate the asset allocation for each selected fund on a weighted average basis and check the same against the Regulation 28 asset limits. If the aggregate position is not compliant, then the system will display a warning message.

The system will run Policy PIGS Status Updation batch as part of the EOD to amend the PIGS status of GrandFathered contracts which had a material change transaction for the day. This batch will also change PIGS status for policy which may have been amended with a future effective date.

Parent topic: Policy Details Tab