Surrender Charge
Any payment required for terminating an investment contract, typically a guaranteed investment contract, prior to its scheduled maturity date.
Arbitrage
In general usage, a relatively low-risk purchase and simultaneous sale of an asset in order to profit from a difference in the price. With respect to stable value investment options, exploiting short-term differences between a plan investment option with similar objectives or characteristics (the competing option) as the stable value investment option whereby assets flow to the competing option […]
Cash Buffer
See liquidity buffer.
Crediting Rate
The interest rate applied to the book value of a stable value investment contract, typically expressed as an effective annual yield. As provided in the investment contract, the crediting rate may remain fixed for the term of the contract or may be “reset” at predetermined intervals. The crediting rate may be expressed as a gross or net crediting rate. For separate account GICs or synthetic GICs, […]
Evergreen
See constant duration.
Guaranteed Investment Contract (GIC)
A stable value investment contracts (typically a group annuity contract) issued by an insurance company that pays a specified rate of return for a specific period of time, offers book value accounting, typically pays benefits to plan participants, and provides annuities upon request. These contracts are also known as guaranteed insurance contracts or guaranteed interest contracts and may be backed by […]
Market Value Adjustments
The adjustment to an investment contract’s market value due to employer-initiated events, impaired securities, or market value events. Alternatively, for some GICs, the adjustment (sometimes known as a surrender charge or surrender value adjustment) to a GIC’s market value due to termination prior to the stated maturity date.
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 […]
SEC
See Securities and Exchange Commission.
