NO. 11.  AN ACT RELATING TO LOWERING THE MINIMUM NONFORFEITURE RATE OF INTEREST.

(H.123)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  8 V.S.A. § 3750(d) is amended to read:

(d)  The minimum values as specified in subsections (e), (f), (g), (h), and (j) of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section.

(1)(A)  With respect to contracts providing for flexible considerations, the minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at a rate of interest of three one and one-half percent per annum of percentages of the net considerations (as hereinafter defined) paid prior to such time,:

(i)  decreased by the sum of:

(A)(I)  any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest of three one and one-half percent per annum; and

(B)(II)  the amount of any indebtedness to the company on the contract, including interest due and accrued; and

(ii)  increased by any existing additional amounts credited by the company to the contract.

(B)  The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount not less than zero and shall be equal to the corresponding gross considerations credited to the contract during that contract year less an annual contract charge of thirty dollars $30.00 and less a collection charge of one dollar and twenty-five cents $1.25 per consideration credited to the contract during that contract year.  The percentages of net considerations shall be sixty-five 65 percent of the net consideration for the first contract year and eighty-seven and one-half 87 and one-half percent of the net considerations for the second and later contract years.  Notwithstanding the provisions of the preceding sentence, the percentage shall be sixty-five 65 percent of the portion of the total net consideration for any renewal contract year which exceeds by not more than two times the sum of those portions of the net considerations in all prior contract years for which the percentage was sixty-five 65 percent.

* * *

Sec. 2.  8 V.S.A. § 3750(d)(1)(A) is amended to read:

(A)  With respect to contracts providing for flexible considerations, the minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at a rate of interest of one and one-half three percent per annum of percentages of the net considerations (as hereinafter defined) paid prior to such time,:

(i)  decreased by the sum of:

(I)  any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest of one and one-half three percent per annum; and

* * *

Sec. 3.  EFFECTIVE DATE

This act, except for Sec. 2, shall be effective upon passage and shall apply to all contracts of annuity subject to 8 V.S.A. § 3750 issued after that date. Sec. 2 shall be effective January 1, 2005.

Approved:  May 6, 2003