Supporting Statement (Form N-6)

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
FORM N-6
A.

JUSTIFICATION
1. Necessity for the Information Collection
Form N-6 (17 C.F.R. 239.17c and 274.11d) is the form used by insurance

company separate accounts organized as unit investment trusts that offer variable life
insurance policies to register as investment companies under the Investment Company
Act of 1940 (15 U.S.C. 80a-1 et seq.) (“Investment Company Act”) and/or to register
their securities under the Securities Act of 1933 (15 U.S.C. 77a et seq.) (“Securities
Act”). Section 5 of the Securities Act (15 U.S.C. 77e) requires the filing of a registration
statement prior to the offer of securities to the public and that the statement be effective
before any securities are sold, and Section 8 of the Investment Company Act (15 U.S.C.
80a-8) requires a separate account to register as an investment company. Form N-6 also
requires separate accounts organized as unit investment trusts that offer variable life
insurance policies to provide investors with a prospectus and a statement of additional
information (“SAI”) covering essential information about the separate account when it
makes an initial or additional offering of its securities. Section 5(b) of the Securities Act
requires that investors be provided with a prospectus containing the information required
in a registration statement prior to the sale or at the time of confirmation or delivery of
the securities.
2.

Purpose and Use of the Information Collection

The purpose of Form N-6 is to meet the filing and disclosure requirements of the
Securities Act and the Investment Company Act and to enable filers to provide investors

with information necessary to evaluate an investment in the security. This information
collection differs significantly from many other federal information collections, which
are primarily for the use and benefit of the collecting agency. The information required
to be filed with the Commission permits verification of compliance with securities law
requirements and assures the public availability and dissemination of the information.
3.

Consideration Given to Information Technology

The Commission’s electronic filing system (Electronic Data Gathering, Analysis
and Retrieval or “EDGAR”) is designed to automate the filing, processing, and
dissemination of full disclosure filings. The system permits publicly held companies to
transmit filings to the Commission electronically. This automation has increased the
speed, accuracy, and availability of information, generating benefits to investors and
financial markets. Form N-6 is required to be filed with the Commission electronically
on EDGAR. (17 CFR 232.101(a)(1)(i) and (iv)). The public may access filings on
EDGAR through the Commission’s Internet Web site (http://www.sec.gov) or at EDGAR
terminals located at the Commission’s public reference rooms.
4.

Duplication

The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication, and reevaluates them whenever it proposes a rule or a
change in a rule. The requirements of Form N-6 are not generally duplicated elsewhere.
5.

Effect on Small Entities

The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), to identify methods to minimize recordkeeping or
reporting requirements affecting small businesses. The current disclosure requirements

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for the registration statements and shareholder reports do not distinguish between small
entities and other funds. The burden on smaller funds, however, to prepare and file
registration statements may be greater than for larger funds. This burden includes the
cost of producing, printing, filing, and disseminating the prospectuses and SAIs. The
Commission believes, however, that imposing different requirements on smaller
investment companies would not be consistent with investor protection and the purposes
of the registration statements.
In any event, no small entities currently file registration statements on Form N-6.
6.

Consequences of Not Conducting Collection

The Investment Company Act requires that insurance company separate accounts
make initial filings and file annual amendments to their registration statements on
Form N-6. Less frequent collection of the information collected on Form N-6 would
mean that current information might not be available for investors in these life insurance
policies.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

None.
8.

Consultation Outside the Agency

Form N-6 has previously been amended through rulemaking actions pursuant to
the Administrative Procedures Act. Comments are generally received from registrants,
trade associations, the legal and accounting professions, and other interested parties. In
addition, the Commission and staff of the Division of Investment Management participate
in an ongoing dialogue with representatives of the investment company industry through
public conferences, meetings, and informal exchanges. The Commission requested

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public comment on the collection of information requirements in Form N-6 before it
submitted this request for extension and approval to the Office of Management and
Budget. The Commission received no comments in response to its request.
9.

Payment or Gift

Not Applicable.
10.

Confidentiality

Not Applicable.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be
required under this collection of information. The information collection collects basic
Personally Identifiable Information (PII) that may include names, job titles, and work
addresses. However, the agency has determined that the information collection does not
constitute a system of record for purposes of the Privacy Act. Information is not
retrieved by a personal identifier. In accordance with Section 208 of the E-Government
Act of 2002, the agency has conducted a Privacy Impact Assessment (PIA) of the
EDGAR system, in connection with this collection of information. The EDGAR PIA,
published on 1/29/2016, is provided as a supplemental document and is also available at
https://www.sec.gov/privacy.
12.

Burden of Information Collection

The following estimates of average burden hours and costs are made solely for
purposes of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) and are not
derived from a comprehensive or even representative survey or study of the cost of
Commission rules and forms. Providing the information required by Form N-6 is

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mandatory. Responses will not be kept confidential.
The estimate of the annual number of registration statements filed on Form N-6 is
based on the average annual number of filings received by the Commission over the past
three years (January 1, 2015 through December 31, 2017). The hour burden estimates for
preparing and filing registration statements on Form N-6 is based on past consultations
with filers and the Commission’s experience with its contents. The number of burden
hours may vary depending on, among other things, the complexity of the filing and
whether preparation of the registration statement is performed internally or by outside
counsel.
Form N-6 generally imposes two types of reporting burdens on investment
companies: (1) the burden of preparing and filing the initial registration statement; and
(2) the burden of preparing and filing post-effective amendments to a previously effective
registration statement. The Commission estimates that the burden hours imposed by
Form N-6 are as follows:
Calculation of Hour Burden of Initial Form N-6 Filings
•
•
•
•
•

Number of initial Form N-6 filings annually
Average number of portfolios per filing
Number of portfolios referenced in initial Form N-6
filings annually
Current hour burden per portfolio for initial Form
N-6 filing
Total annual hour burden for initial Form N-6 filings
(8 portfolios x 770.25 hrs.)

8
1
8
770.25
6,162

Calculation of Hour Burden of Post-Effective Amendments
•
•
•

Number of post-effective amendments filed annually
Average number of portfolios per filing
Number of portfolios in post-effective amendments
to Form N-6 annually

5

380
1
380

•
•

Current hour burden per portfolio for preparing posteffective amendments
Total annual hour burden to prepare post-effective
amendments (380 portfolios x 67.5 hours)

67.5
25,650

Total Annual Hour Burden
•

Annual hours for initial Form N-6 filings + annual
hours for post effective amendments
(6,162 hours + 25,650 hours)

31,812

Based on the estimated wage rate, the total cost to the fund industry of the hour burden
for complying with Form N-6 is approximately $10,704,738. 1
Table 1: Summary of Revised Annual Responses, Burden Hours, and
Burden Hour Costs for Each Information Collection
Information Collection

No. of Responses

Initial Form N-6 Filings
Post-Effective
Amendments
Total
13.

8
380

Burden
Hours
6,162
25,650

Burden Hour
Costs
$209,352
$3,607,340

388

31,812

$3,816,692

Cost to Respondents

Cost burden is the cost of services purchased to prepare and update filings on
Form N-6, such as for the services of independent auditors and outside counsel. The cost

1

The cost to the industry is calculated by multiplying the total annual hour burden
(31,812 hours) by the estimated hourly wage rate of $336.50. The estimated wage figure
is based on published rates for Compliance Attorneys ($353) and Senior Programmers
($320). The $353/hour figure for a Compliance Attorney and $320/hour figure for a
Senior Programmer are from SIFMA’s Management & Professional Earnings in the
Securities Industry 2013, modified by Commission staff to account for an 1800-hour
work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits
and overhead. The estimated wage rate was further based on the estimate that
Compliance Attorneys and Senior Programmers would divide time equally, resulting in a
weighted wage rate of $336.50 (($353 x .50) + ($320 x .50)).

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burden does not include the hour burden discussed in Item 12. Estimates are based on the
Commission’s experience with the filing of registration forms.
The Commission estimates that the cost burden for preparing an initial Form N-6
filing is $26,169 per portfolio and the current cost burden for preparing a post-effective
amendment to a previously effective registration statement is $9,493 per portfolio. 2 The
Commission estimates that, on an annual basis, 8 portfolios will be referenced in an
initial Form N-6 and 380 portfolios will be referenced in a post-effective amendment of
Form N-6. Thus, the total cost burden allocated to Form N-6 would be $3,816,692, as
follows:
Cost Burden of Preparing and Filing Initial Form N-6
•
•
•

Cost burden per portfolio for preparing and filing
initial Form N-6
Number of portfolios filing initial Form N-6
annually
Cost burden of preparing and filing initial
Form N-6 (8 portfolios x $26,169)

$26,169
8
$209,352

Cost Burden of Preparing and Filing Post-Effective Amendments
•
•
•

Cost burden per portfolio of preparing and filing
post-effective amendments
Number of post-effective annual updates
Cost burden of preparing and filing post-effective
amendments (380 portfolios x $9,493)

$9,493
380
$3,607,340

Total Cost Burden for Form N-6
•
2

Initial Form N-6 + post-effective amendments

The previous cost burden for preparing an initial Form N-6 filing was $24,169 per
portfolio and the previous cost burden for preparing a post-effective amendment to a
previously effective registration statement was $8,788 per portfolio. To account for the
effects of inflation since 2015, an inflation rate was applied which was calculated using
the Consumer Price Index. (See CPI Inflation Calculator of the Bureau of Labor
Statistics found at: http://www.bls.gov/data/inflation_calculator.htm.)

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($209,352+ $3,607,340)
14.

$3,816,692

Cost to the Federal Government

The annual cost of reviewing and processing disclosure documents, including new
registration statements, post-effective amendments, proxy statements, and shareholder
reports of investment companies amounted to approximately $22.2 million in fiscal year
2017, based on the Commission’s computation of the value of staff time devoted to this
activity and related overhead.
15.

Changes in Burden

Currently, the approved total annual hour burden for preparing and filing
registration statements on Form N-6 is 85,269 hours and the total annual cost burden
allocated to Form N-6 is $5,316,892. These burdens were based on the previous estimate
of 472 total annual responses (76 initial responses + 396 post-effective amendments).
The new estimate of the total annual hour burden is 31,812 hours and the new estimate of
the total annual cost burden is $3,816,692. These new burdens are based on the new
estimated total annual number of responses of 388 total annual responses (8 initial
responses + 380 post-effective amendments). The decrease to the total annual hour
burden of 53,457 hours and the decrease to the total annual cost burden of $1,500,200 are
due to a decrease in estimated responses representing initial filings, as well as a decrease
in the estimated number of responses representing post-effective amendments.
16.

Information Collection Planned for Statistical Purposes

Not Applicable.
17.

Approval to Omit OMB Expiration Date

Not Applicable.

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18.

Exceptions to Certification Statement for Paperwork Reduction Act
Submission

The Commission is not seeking an exception to the certification statement.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS

The collection of information will not employ statistical methods.

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