SVIA

Glossary

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Participant

An active employee who has met the eligibility requirements of the employer's retirement plan, a former employee (such as a retiree or terminated employee) who previously met such eligibility requirements and maintains a balance in the former employer’s plan, a beneficiary, or an alternate payee. (Note that beneficiaries and alternate payees are technically “beneficiaries” rather than “participants” as defined under ERISA, but the term “participant” is commonly used in investment contracts to refer to both categories.) A participant may sometimes be called an investor because the participant of a plan directs allocations among a plan’s investment options.

Participant-Directed Cash Flow

In a stable value investment option, contributions, withdrawals, loans, or transfers that are controlled by a plan’s participant. (See also participant-initiated withdrawals.)

Participant-Initiated Withdrawals

Withdrawals or transfers requested by participants without any influence, inducement, or prompting by the plan sponsor or other plan intermediaries.

Participating Contract (also known as “experience rated”)

An investment contract characteristic such that the contract’s crediting rate varies with fluctuations in the investment earnings of the associated assets based on changes in asset values, reinvestment rates, and cash flow experience. Participating contracts participate more fully in asset and liability risks than other types of investment contracts and transfer these risks from the issuer to the stable value investment option.

Plan-Initiated Withdrawal

A withdrawal requested by a plan sponsor, trustee, or contract-holder, or agent thereof, of some or all of a plan’s investment in a stable value investment option or investment contract. Plans that wish to terminate their participation in stable value commingled funds or some insurance company guaranteed insurance accounts and receive contract value may be subject to a deferral period. Any deferral period is outlined in the investment documentation (also known as a put option). Other commingled funds or insurance funds may offer a different deferral period, a series of book value payments over a period of time, or no deferral period and instead offer a lesser of book or market payment option. During any deferral period participant directed transactions will continue to be made at book value.

Plan Sponsor

The entity, usually an employer, that has established a retirement plan, selected the type of plan and investment options, and determined the method of funding plan benefits.

Pooled Fund

A fund, typically offered by a bank or trust company that combines the assets of unaffiliated plans into one large group. With respect to a stable value investment option that is a pooled fund, the fund would purchase stable value investment contracts and other investments on behalf of the invested, unaffiliated plans. These funds may also be referred to as commingled funds, pooled GIC funds, bank pooled funds, collective investment funds, bank collective trusts, commingled investment trusts (CITs), or group trusts. (Compare to a separately managed account.)

Pooled GIC Fund

A stable value investment option, typically offered by an insurance company, consisting of a group annuity contract that covers many, usually smaller plans. (See also guaranteed insurance account.)

Principal

The face amount of a deposit to a debt obligation or investment contract on which interest is earned.

Put Option

A stable value term (unrelated to derivatives) that describes the ability of a plan to exit a stable value commingled fund at contract value, subject to a specified notice period. A put option may mean either (1) a provision under the fund documentation that an invested plan can exit the fund at contract value by the end of a notice period or (2) a provision that many investment managers of stable value commingled funds request in their stable value investment contracts, allowing them to remove invested assets at contract value for purposes of funding plan-initiated withdrawals within the put period.