Form N-4 - Supporting Statement (2023 RILAs)

OMB CONTROL NUMBER: 3235-0318
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
FORM N-4
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Form N-4 (17 CFR 239.17b and 274.11c) is the form used by insurance company
separate accounts organized as unit investment trusts that offer variable annuity contracts
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 registration statement be effective before
any securities are sold, and Section 8 of the Investment Company Act (15 U.S.C. 80a-8)
provides for the registration of investment companies. Pursuant to Form N-4, separate
accounts organized as unit investment trusts that offer variable annuity contracts provide
investors with a prospectus and a statement of additional information (“SAI”) covering
essential information about a separate account. 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.
On September 29, 2023, the Commission issued a release proposing amendments
to several rules and forms that would modify the registration, offering, and
communications process for registered index-linked annuities (“RILAs”) under the
Securities Act. 1 Under the proposed amendments, RILA issuers would register offerings
on Form N-4, as amended to address the features and risks of RILAs. Further, the
Commission is proposing other amendments to Form N-4 that would apply to all issuers
that use that form. For example, the Commission is proposing to switch the order of the
Key Information Table and Overview of the Contract items, require issuers to present
information in the KIT in a Q&A format, and to require more specific principal risk
disclosures.
2.

Purpose and Use of the Information Collection

The purpose of Form N-4 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 a 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
Registration for Index-Linked Annuities; Amendments to Form N-4 for Index-Linked and
Variable Annuities, Investment Company Act Release No. 35028 (Sep. 29, 2023), [88 FR 71088 (Oct. 13,
2023)], available at https://www.sec.gov/files/rules/proposed/2023/33-11250.pdf.
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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 Data Gathering, Analysis and Retrieval
(“EDGAR”) system automates the filing, processing, and dissemination of full disclosure
filings. This automation has increased the speed, accuracy, and availability of
information, generating benefits to investors and financial markets. Form N-4 is required
to be filed with the Commission electronically on EDGAR. 2 The public may access
filings on EDGAR through the Commission’s website (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-4 generally are not duplicated elsewhere.
5.

Effect on Small Entities

The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, 3 to identify methods to minimize recordkeeping or reporting
requirements affecting small businesses. The proposed disclosure requirements for
registration statements on Form N-4 do not distinguish between small entities and other
registrants. The burden on smaller registrants of preparing and filing registration
statements may be proportionately greater than for larger registrants. This burden
includes the cost of producing, printing, filing, and disseminating prospectuses and SAIs.
The Commission believes, however, that imposing different requirements on smaller
entities would not be consistent with investor protection and the purposes of registration
statements.
Furthermore, based on a review of EDGAR filings of existing RILA issuers, the
Commission does not expect any RILA issuers to be treated as small entities.
Additionally, RILA issuers are not investment companies. For these reasons, we believe
that the proposed amendments would not, if adopted, have a significant economic impact
on a substantial number of small entities.
The Commission staff reviews all rules periodically, as required by the
Regulatory Flexibility Act, to identify methods to minimize reporting or recordkeeping
requirements affecting small businesses.

2
3

17 CFR 232.101(a)(1)(i) and (iv).
5 U.S.C. 601 et seq.

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6.

Consequences of Not Conducting Collection

The purpose of Form N-4 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 a security. Less frequent filing
would be inconsistent with the filing and disclosure requirements of the Securities Act
and the Investment Company Act. In addition, if the form were to be filed less frequently,
investors may not be provided with the information necessary to evaluate an investment
in a security.
7.

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

This collection is not inconsistent with 5 CFR 1320.5(d)(2).
8.

Consultation Outside the Agency

The Commission and staff of the Division of Investment Management participate
in an ongoing dialogue with representatives of the investment company and insurance
industry through public conferences, meetings, and informal exchanges. These various
forums provide the Commission and staff with a means of ascertaining and acting upon
paperwork burdens confronting the industry. In addition, the Commission has requested
public comment on the proposed amendments to Form N-4, including the collection of
information requirements resulting from the proposed amendments. The Commission’s
solicitation of public comments included estimating and requesting public comments on
the burden estimates for all information collections under this OMB control number (i.e.,
both changes associated with the rulemaking and other burden updates). All comments on
the proposal are available at https://www.sec.gov/comments/s7-16-23/s71623.htm.
Before adopting these amendments, the Commission will receive and evaluate public
comments on the proposed amendments and their associated collection of information
requirements as required by 5 CFR 1320.11(f).
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

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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
March 22, 2023, 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 4 and are not derived from a
comprehensive or even representative survey or study of the cost of Commission rules
and forms.
In our most recent Paperwork Reduction Act submission for Form N-4, we
estimated for Form N-4 a total aggregate annual hour burden of 292,487 hours, and a
total aggregate annual external cost burden of $33,348,866. 5 Compliance with the
disclosure requirements of Form N-4 is mandatory, and the responses to the disclosure
requirements will not be kept confidential. The respondents to these collections of
information would be RILA issuers and registered variable annuity separate accounts.
The table below summarizes our PRA initial and ongoing annual burden estimates
associated with the proposed amendments to Form N-4.

44 U.S.C. 3501 et seq.
On October 26, 2021, the Office of Management and Budget approved without change a revision
of the currently approved information collection estimate for Form N-4.

4
5

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TABLE 1: FORM N-4 PRA ESTIMATES FOR INITIAL FILINGS
Internal initial
burden hours

Internal annual
burden hours

Wage rate2

Internal time
costs

Annual external
cost burden

PROPOSED ESTIMATES 3
Separate Account Registrants
Proposed amendments

12

$406
(blended rate for compliance
attorney and senior
programmer)3

141

$5,684

-

Estimated number of annual
responses4

x 42

x 42

-

Total new annual burden

588

$238,728

-

RILA Issuers
Proposed amendments to Form N-4

300

390.895

Website availability requirement6

-

0.5

$406
(blended rate for compliance
attorney and senior
programmer)3

$40,0008
$158,701.34

$286 (webmaster)

$143

x 20

Estimated number of annual
responses7

x 20

x 20

Total new annual burden

7,827.80

$3,176,886.80

$800,000

Total Burdens
Responses

Internal Hour
Estimate

Internal Hour
Cost Estimate

30

8,427

$2,494,716

Aggregate proposed additional annual
burden estimates

+329

+8,416.80

+$3,416,614.80

Revised aggregate annual burden
estimates

=62

=16,843.80

=$5,911,330.80

Current aggregate annual burden
estimates

External Cost
Estimate
$754,740
+$800,000
=$1,554,740

Notes:
1. This estimate includes the initial burden estimates annualized over a three-year period, plus 10 hours of ongoing annual burden hours.
2. The Commission’s estimates of the relevant wage rates are based on the SIFMA Wage Report. The estimated wage figures are modified by Commission
staff to account for an 1,800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, overhead, and adjusted to account
for the effects of inflation.
3. The $406 wage rate reflects current estimates of the blended hourly rate for an in-house compliance attorney ($425) and a senior programmer ($386).
$406 is based on the following calculation: ($425 + $386)/2 = $406 rounded to the nearest whole dollar.
4. The estimate of the annual number of registration statements filed on Form N-4 is based on the average annual number of filings received by the
Commission over the past three years (Jan. 1, 2020 to Dec. 31, 2022). In its most recently approved PRA submission, the Commission estimated that
separate accounts will make approximately 30 initial registration statement filings per year. For the estimated burden of the proposed amendments to Form
N-4, we have taken into account updated data regarding the number of initial filings on Form N-4.
5. The proposed estimate includes the initial burden estimates annualized over a three-year period, plus 290.89 hours of ongoing annual burden hours. The
ongoing annual burden is estimated to be equal to the currently approved ongoing annual burden for initial filings on Form N-4 plus 10 hours of ongoing
annual burden hours.
6. The proposed amendments would require RILA issuers to separately to include information about current contract limits on gains on their websites. See
Item 17 of proposed Form N-4.
7. This estimate is based on a review of Morningstar data regarding the number of new RILA product launches that occurred over the prior three calendar
years (2020 – 2022), rounded to the nearest ten. Current RILA registration statements would make their first filing on proposed Form N-4 as a post-effective
amendment. See supra footnote Error! Bookmark not defined. and accompanying text.

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8. We estimate that the external cost to prepare and file an initial registration statement on Form N-4 is $40,000 per filing.
9. The estimated number of new responses is based on the total of the number of RILA responses under the proposed amendments (20 responses) and the
difference between the number of responses for registered separate accounts under the current aggregate annual burden estimate (30 responses) and the
proposed additional annual burden estimates (42 responses). (20 RILA responses plus 12 registered separate account responses).

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TABLE 2: FORM N-4 PRA ESTIMATES FOR POST-EFFECTIVE
AMENDMENT FILINGS
Internal initial
burden hours

Internal annual
burden hours

Internal time
costs

Wage rate2

Annual external
cost burden

PROPOSED ESTIMATES 3
Separate Account Registrants
Proposed amendments

12

$406
(blended rate for compliance
attorney and senior
programmer)3

61

$2,436
-

Estimated number of annual
responses4

x1,016

x1,016

Total new annual burden

6,096

$2,474,976

-

RILA Issuers
Proposed amendments to Form N-4

210

279.955

$406
(blended rate for compliance
attorney and senior
programmer)3

$113,659.70

$24,0008

Website availability requirement6

-

0.5

$286 (webmaster)

$143

-

Estimated number of annual
responses7

x90

x90

x90

Total new annual burden

25,240.50

10,242,243

$2,160,000
External Cost
Estimate

Total Burdens

Current aggregate annual burden
estimates
Aggregate proposed additional annual
burden estimates
Revised aggregate annual burden
estimates

Responses

Internal Hour
Estimate

Internal Hour
Cost Estimate

1,366

+284,060

$84,100,454

-2609

+31,336.50

=1,106

=315,369.50

+

+$12,717,219
=96,817,673

+$32,594,126
+$2,160,000
=$34,754,126

Notes:
1. This estimate includes the initial burden estimates annualized over a three-year period, plus two hours of on-going annual burden hours.
2. The Commission’s estimates of the relevant wage rates are based on the SIFMA Wage Report. The estimated wage figures are modified by Commission
staff to account for an 1,800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, overhead, and adjusted to account
for the effects of inflation.
3. The $406 wage rate reflects current estimates of the blended hourly rate for an in-house compliance attorney ($425) and a senior programmer ($386).
$406 is based on the following calculation: ($425 + $386)/2 = $406 rounded to the nearest whole dollar.
4. The estimate of the annual number of post-effective amendments to registration statements on Form N-4 is based on the average annual number of filings
received by the Commission over the past three years (Jan. 1, 2020 to Dec. 31, 2022). In its most recently approved PRA submission, the Commission
estimated that separate accounts will make approximately 1,366 post-effective amendment filings per year on Form N-4. For the estimated burden of the
proposed amendments to Form N-4, we have taken into account updated data regarding the number of post-effective amendment filings on Form N-4..
5. The proposed estimate includes the initial burden estimates annualized over a three-year period, plus 207.95 hours of ongoing annual burden hours. The
ongoing annual burden is estimated to be equal to the currently approved ongoing annual burden for initial filings on Form N-4 plus an addition 2 hours of
ongoing annual burden hours.
6. The proposed amendments would require RILA issuers to separately to include information about current contract limits on gains on their websites. See
Item 17 of proposed Form N-4.
7. This estimate is based on a review of RILA registration statements filed with the Commission as of May 2023.
8. We estimate that the external cost to prepare and file a post-effective registration statement on Form N-4 is approximately $24,000 per filing.
9. The estimated number of new responses is based on the total of the number of RILA responses under the proposed amendments (90 responses) and the
difference between the number of responses for registered separate accounts under the current aggregate annual burden estimate (1,366 responses) and
the proposed additional annual burden estimates (1,016 responses). (90 RILA responses subtracted by 350 registered separate account responses).

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TABLE 3: TOTAL BURDEN ESTIMATES FOR FORM N-4
Responses

Internal annual burden
hours1

Internal time costs

Annual external cost
burden

TOTAL BURDEN ESTIMATES INCLUDING AMENDMENTS
Current aggregate annual burden
estimates

1,366

Aggregate proposed additional
annual burden estimates

-228

Revised aggregate annual burden
hours

=1,168

292,487

$86,595,170

$33,348,866

+39,753.30+

+$16,133,833.80

+$2,914,740

=332,240.30

=$102,729,004

=$36,263,606

Notes:
1. This estimate includes the initial burden estimates annualized over a three-year period.

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We estimate that 90 RILA respondents and 419 separate account registrants
would be subject to collection of information requirements under the proposed
amendments to Form N-4. 6
As summarized in Table 1 and Table 2 above, the Commission has previously
estimated that separate account registrants will make approximately 42 initial registration
statement filings and 1,016 post-effective amendments annually, while RILA issuers will
make approximately 20 initial registration filings and 90 post-effective amendments
annually, based on filings with the Commission. The hour burden estimates for preparing
and filing Form N-4 are based on the Commission’s experience with the contents of the
form. The number of burden hours may vary depending on, among other things, the
complexity of the filing and whether preparation of the forms is performed by internal
staff or outside counsel.
Form N-4 imposes two types of reporting burdens on separate accounts organized
as unit investment trusts that offer variable life insurance contracts that are registered
under the Investment Company Act: (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.
As summarized in Table 3 above, in our most recent Paperwork Reduction Act
submission for Form N-4, Commission staff estimated that the annual compliance burden
to comply with the collection of information requirements of Form N-4 is 292,487 hours,
with an internal cost of about $86.6 million. As summarized in Table 3 above, we
estimate that the total internal burden associated with Form N-4 will be 332,240.30 hours
per year, at a cost of about $102.7 million.
13.

Cost to Respondents

Cost burden is the cost of goods and services purchased to prepare and update
registration statements on Form N-4, such as for the services of independent auditors and
outside counsel. The cost burden does not include the hour burden discussed in Item 12
above. Estimates are based on the Commission’s experience with the filing of registration
forms.
As summarized in Table 3 above, in our most recent Paperwork Reduction Act
submission for Form N-4, Commission staff estimated about $33.3 million in external
cost burden per year. We estimate that the revised external burden will be about $36.3
million.

For RILA registrants, this estimate is based on a review of RILA registration statements filed with
the Commission as of May 2023. For separate account registrants, this amount is based on Form N-CEN
reports through Apr. 15, 2023.
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14.

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 $29 million in fiscal year
2022, based on the Commission’s computation of the value of staff time devoted to this
activity and related overhead.
15.

Changes in Burden

As summarized in Table 4 above, the estimated hourly burden associated with
Form N-4 has increased from 292,487 hours to 332,240.30 hours (an increase of
39,753.30 hours). In addition, the cost burden associated with Form N-4 has increased
from $33,348,866 to $36,263,606 (an increase of $2,914,740). The amendments proposed
by the Commission would result in a change in our estimate of the burdens associated
with the collection of information, specifically to account for the additional requirements
for issuers that use Form N-4 currently and to add RILAs to the estimates.
These changes in burden also reflect the Commission’s revision and update of
burden estimates for all information collections under this OMB control number (whether
or not associated with rulemaking changes), and the Commission requested public
comment on all information collection burden estimates for this OMB control number.
16.

Information Collection Planned for Statistical Purposes

Not Applicable.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the expiration date for OMB
approval.
18.

Exceptions to Certification Statement for Paperwork Reduction Act
Submission

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

COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS

The collection of information will not employ statistical methods.

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