VA Summary Prospectus Looks Inevitable

Most providers of variable annuities (VAs) are now offering plan participants a summary of their investments as part of a larger prospectus, but participants would like things to be even more concise, as evidenced by a recent survey conducted by Cambridge, Massachusetts-based Cogent Research for the Insured Retirement Institute (IRI) in Washington.

According to the survey’s results, only half of the people who get a prospectus actually read it, and although most prospectuses include a summary, “it is just ‘something’ in there for most consumers,” says Danielle Holland, assistant VP at IRI. “Because there is so much regulation, there isn’t yet the possibility for a standalone summary.”

But IRI has been working on efforts for a VA summary prospectus for a while now, and in December 2008, the organization developed and submitted to the Securities and Exchange Commission (SEC) a Draft Summary Prospectus Rulemaking Petition. IRI subsequently met with the SEC on several occasions to help advance its consideration of a summary prospectus for variable annuity products, and according to Holland, the SEC is extremely interested in the concept. Last year, SEC Chairman Mary Schapiro said that there is a clear, concise need for a summary so that Main Street can understand annuity documentation, Holland says.