As filed with the Securities and Exchange Commission on April 22, 1996
Registration No. 33-83928
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. ( )
POST-EFFECTIVE AMENDMENT NO. 2 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 2 (X)
(Check appropriate box or boxes)
RETIREMENT PLAN SERIES ACCOUNT
(Exact name of Registrant)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Name of Depositor)
8515 East Orchard Road
Englewood, Colorado 80111
(Address of Depositor's Principal Executive Officers) (Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 537-2033
William T. McCallum
President and Chief Executive Officer
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
(Name and Address of Agent for Service)
Copy to:
James F. Jorden, Esq.
Jorden Burt Berenson & Johnson, LLP
1025 Thomas Jefferson Street, N.W., Suite 400 East
Washington, D.C. 20007-0805
It is proposed that this filing will become effective (check
appropriate space):
Immediately upon filing pursuant to paragraph (b) of Rule 485
X On April 30, 1996, pursuant to paragraph (b) of Rule 485.
60 days after filing pursuant to paragraph (a)(1) of Rule 485.
On , pursuant to paragraph (a)(1) of Rule 485.
75 days after filing pursuant to paragraph (a)(2) of Rule 485.
On , pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following:
This post-effective amendment designates a new
effective date for a previously filed post-
effective amendment.
The Registrant has previously filed a declaration of indefinite
registration of its shares pursuant to Rule 24F-2 under the
Investment Company Act of 1940. The Rule 24F-2 Notice for
Registrant's fiscal year was filed February 29, 1996.
RETIREMENT PLAN SERIES ACCOUNT
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional Information
As Required by Form N-4
FORM N-4 ITEM PROSPECTUS CAPTION
1. Cover Page............... Cover Page
2. Definitions.............. Glossary of Special
Terms
3. Synopsis................. Fee Table; Questions
and Answers about the
Series Account
Variable Annuity
4. Condensed Financial Information Condensed Financial
Information
5. General Description of
Registrant, Depositor and
Portfolio Companies.........Great-West Life &
Annuity Insurance
Company; Retirement
Series Account;
Investments of the
Series Account; Voting
Rights
6. Deductions................... Administrative
Charges; Risk Charges,
Premium Taxes and
Other Deductions;
Appendix A;
Distribution of the
Contracts
7. General Description of
Variable Annuity Contracts. The Contracts;
Investments of the
Series Account;
Statement of
Additional Information
8. Annuity Period............... Annuity Options
9. Death Benefit................ The Contracts-
Accumulation Period -
Death Benefit; Prior
to Retirement Date;
Annuity Payments
10. Purchases and Contract Value. The Contracts-
General; The
Contracts-
Accumulation Period;
Distribution of the
Contracts; Cover
Page; Great-West
Life & Annuity
Insurance Company
11. Redemptions.................. The Contracts-
Accumulation Period
- Total and Partial
Surrenders; Return
Privilege
12. Taxes........................ Federal Tax
Consequences
13. Legal Proceedings............ Legal Proceedings
14. Table of Contents of
Statement of Additional
Information................ Statement of
Additional
Information
STATEMENT OF ADDITIONAL
FORM N-4 ITEM INFORMATION CAPTION
15. Cover Page................... Cover Page
16. Table of Contents............ Table of Contents
17. General Information and
History.................... Not Applicable
18. Services..................... Custodian and
Accountants
19. Purchase of Securities
Being Offered.............. Not Applicable
20. Underwriters................. Underwriter
21. Calculation of
Performance Data........... Calculation of
Performance Data
22. Annuity Payments............. Not Applicable
23. Financial Statements......... Financial Statements
PART A
INFORMATION REQUIRED IN A PROSPECTUS
RETIREMENT PLAN SERIES ACCOUNT
Of
Great-West Life & Annuity Insurance Company
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACTS
Distributed by
The Great-West Life Assurance Company
8515 East Orchard Road, Englewood, Colorado 80111
(800) 495-4952
The individual flexible premium variable annuity contracts
(the "Contracts") described in this prospectus are designed and
offered to provide for individual retirement account ("IRA")
programs. The Contracts may be purchased with rollover proceeds
from qualified plans under Section 401(k), ("401(k) Plans"), of the
Internal Revenue Code (the "Code"), or any other eligible rollover
sources as described in the Code.
The Contracts are issued by Great-West Life & Annuity
Insurance Company ("GWL&A"). The Great-West Life Assurance Company
("Great-West") is the principal underwriter and distributor of the
Contracts. The Contracts provide for a deferred annuity to begin
at a future pre-selected date (the "Annuity Commencement Date").
The Contracts also provide for a death benefit.
Prior to the Annuity Commencement Date, the Contributions can
accumulate on a variable basis, guaranteed basis, or a combination
of both. To accumulate on a variable basis, Contributions will be
allocated to the RETIREMENT PLAN SERIES ACCOUNT (the "Series
Account"), a segregated investment account of GWL&A. The value of
the Contributions prior to the Annuity Commencement Date and thus
the amount accumulated to provide annuity payments will depend upon
the investment performance of the Series Account. The minimum
initial Contribution amount is $3,500. The minimum additional
Contribution amount is $250.
The amount of annuity payments may also be variable based upon
the investment experience of the Series Account, or may be fixed
without regard to such experience, or may be a combination of both.
The Series Account currently has 13 Investment Divisions
available for allocation of Contributions. The Investment Divisions
invest in shares of one of the Portfolios of Maxim Series Fund, Inc.
("Maxim" or the "Fund"), a diversified, series, open-end management
investment company as described beginning on page 2.
THIS PROSPECTUS IS ACCOMPANIED BY A CURRENT
PROSPECTUS FOR MAXIM SERIES FUND, INC. THIS
PROSPECTUS PROVIDES INFORMATION A PROSPECTIVE
INVESTOR SHOULD KNOW BEFORE INVESTING AND
SHOULD BE KEPT FOR FUTURE REFERENCE. ADDITIONAL
INFORMATION ABOUT THE CONTRACTS HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IN
A STATEMENT OF ADDITIONAL INFORMATION, DATED
April 30, 1996 , WHICH IS INCORPORATED HEREIN
BY REFERENCE. THE STATEMENT OF ADDITIONAL
INFORMATION, THE TABLE OF CONTENTS OF WHICH IS
SET FORTH ON PAGE 33 OF THIS PROSPECTUS, IS
AVAILABLE WITHOUT CHARGE UPON REQUEST BY
WRITING OR TELEPHONING GWL&A AT THE ADDRESS
OR TELEPHONE NUMBER SET FORTH ABOVE. THESE
SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is April 30, 1996 .
Following is a description of the Portfolios of the Fund available
under this Contract:
the Money Market Portfolio, which seeks preservation of
capital, liquidity and the highest possible current income
consistent with the foregoing objectives, through investments
in short-term money market securities. Shares of the Money
Market Portfolio are neither insured nor guaranteed by the
U.S. Government. Further, there is no assurance that the
Portfolio will be able to maintain a stable net asset value of
$1.00 per share;
the Investment Grade Corporate Bond Portfolio, which seeks the
highest possible current income within the confines of the
primary goal of insuring the protection of capital by
investing in debt instruments of the U.S. Government and its
agencies and in medium to high-quality corporate debt
securities;
the Stock Index Portfolio, which seeks to provide investment
results, before fees, that correspond to the total return of
the S&P 500 Index and the S&P MidCap Index, weighted according
to their respective pro-rata shares of the market;
the U.S. Government Mortgage Securities Portfolio, which seeks
the highest level of return consistent with preservation of
capital and substantial credit protection and seeks to achieve
this objective by investing in mortgage-related securities
issued or guaranteed by an agency or instrumentality of the
U.S. Government, other U.S. agency and instrumentality
obligations, and in U.S. Treasury obligations;
the Total Return Portfolio, which seeks to obtain the highest
possible total return through a combination of income and
capital appreciation, consistent with reasonable risk;
the Small-Cap Index Portfolio, which seeks to provide
investment results, before fees, that correspond to the total
return of the Russell 2000 Index;
the Value Index Portfolio, which seeks to provide investment
results, before fees, that correspond to the total return of
the Russell 1000 Value Index;
the Growth Index Portfolio, which seeks to provide investment
results, before fees, that correspond to the total return of
the Russell 1000 Growth Index;
the Small-Cap Value Portfolio, which seeks to achieve long-
term capital appreciation by investing primarily in common
stocks, although the Portfolio may also invest in other
securities, including restricted and preferred stocks;
the Foreign Equity Portfolio, which seeks total return from
long-term growth of capital and dividend income and seeks to
achieve its investment objective by investing its assets
primarily in international equity securities which are
predominately common stocks and may also include any types of
equity securities;
the Small-Cap Aggressive Growth Portfolio, which seeks long-
term capital growth and seeks to achieve its investment
objective by investing its assets in common stocks or their
equivalent, emphasizing both undervalued securities and
securities of companies with significant growth potential and
may also hold a portion of its assets in cash or money market
instruments;
the Corporate Bond Portfolio, which seeks high total
investment return by investing primarily in debt securities
(including convertibles), although up to 20% of its assets, at
the time of acquisition, may be invested in preferred stocks;
and
the Short-Term Maturity Bond Portfolio, which seeks
preservation of capital, liquidity and maximum total return
through investment in an actively managed portfolio of debt
securities.
GLOSSARY OF SPECIAL TERMS
As used in this prospectus, the terms have the indicated meanings:
Accumulation Period: The Period during which the Contract Owner is
covered under this Contract prior to the Contract Owner's Annuity
Commencement Date.
Accumulation Unit: An accounting measure used to determine the
Variable Account Value before the Annuity Commencement Date.
Administrative Offices: The Administrative Offices of GWL&A are
located at 8515 E. Orchard Rd., Englewood, Colorado 80111.
Annuitant: The person upon whose life the annuity payments will be
based.
Annuity Period: The period after the Annuity Commencement Date .
Annuity Commencement Date: The date on which annuity payments
commence under an Annuity Option.
Annuity Unit: An accounting measure used to determine the dollar
value of any variable dollar annuity payment after the first
payment.
Contribution(s): The total dollar amount(s) paid to purchase an
annuity for an Annuitant.
Contract: An agreement between GWL&A and the Contract Owner
providing a variable annuity. The agreement consists of the
contract form and the application for it.
Contract Owner: The person to whom a Contract described in this
prospectus is issued.
Contract Value: The sum of the dollar values of all Accumulation
Units credited to the Contract during the Accumulation Period.
Fixed Annuity: An annuity with payments which remain fixed
throughout the payment period and which do not reflect the
investment experience of the Series Account .
Fund: Maxim Series Fund, Inc., a registered, diversified, open-end,
management investment company in which the assets of the Series
Account are invested.
Investment Division: The Series Account is divided into investment
divisions, one for each designated Portfolio maintained by the Fund
and made available to the Series Account.
Premium Tax: The amount of tax, if any, charged by a state or other
government authority on premiums.
Request: Any request in a form, either written, telephone or
computerized, satisfactory to GWL&A and received by GWL&A at its
Administrative Office, as required by any provision of the Contract,
and at other times as required by GWL&A.
Series Account: The segregated investment account of Great-West
Life & Annuity Insurance company called Retirement Plan Series
Account ("Series Account") existing under Colorado law and
registered as a unit investment trust under the Investment Company
Act of 1940, as amended.
Transfer: The transfer of all or a portion of the Contract Value
between and among the sub-accounts.
Transfer to Other Companies: The transfer of all or a portion of
the Contract Value to another company.
Valuation Date: The date on which the net asset value of the Fund
is determined. Valuation will occur on each day that the New York
Stock Exchange is open for trading. Contributions and Requests
received after 4:00 EST/EDT will be deemed to have been received on
the next business day. No Transaction/Valuation will occur on the
following
dates: i) if Independence Day or Christmas is on a Saturday, then the
preceding Friday; or ii) if either holiday is on a Sunday, then the following
Monday. No Transaction/Valuation will ever occur on the day after
Thanksgiving. These dates are subject to change in the future. For more
information regarding dates on which no valuation will occur
please contact GWL&A.
Valuation Period: The period between the ending of two successive
Valuation Dates.
Variable Annuity: An annuity providing for payments, the amount of
which will vary in accordance with the changing values of securities
held in the Series Account.
Variable Account Value: The sum of the values of the Variable Sub-
Accounts credited to the Contract Value.
Variable Sub-Account: A subdivision of the Series Account containing
the value credited to a Contract Owner from an Investment
Division.
FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchases
(as a percentage of purchase payments) None
Deferred Sales Load
(as a percentage of amount distributed) None
Distribution Fees
(as a percentage of amount distributed) None
Exchange Fee None
Administrative Surrender Fees
$50 administrative surrender fee if the Contract is surrendered in
whole during first 12 months
$25 administrative surrender fee if the Contract is surrendered in
part during first 12 months
TOTAL Contract Owner Transaction Expenses
(as a percentage of purchase payments) 0%
Annual Contract Fee None
Mortality & Expense Risk
The level of the mortality and expense risk charge applicable
to the Contract during the first calendar year will be based upon
the initial account balance of the Contract, in accordance with the
schedule set forth below. The level of the mortality and expense
risk charge applicable in subsequent calendar years will be based
upon the account balance as of December 31 of the previous calendar
year, in accordance with such schedule. The following table sets
forth the level of the mortality and expense risk charges that will
apply to a Contract:
Mortality & Expense Risk Charge Account Balance
.75% $0 - $9,999.99
.50% $10,000 - $ 24,999.99
.25% $25,000 - $49,999.99
.00% $50,000 and greater
Because the mortality and expense risk charge is determined based on the
December 31
account balance of the previous calendar year, Contract Owners may wish to
monitor their
account balances closely to ensure timely contributions are made to the
extent possible
to reduce the mortality and expense risk charge that will be applicable in
the
ensuing year.
Please note that while GWL&A currently intends to pay any Premium Tax
levied by
any governmental entity, GWL&A reserves the right to, in the future and with
prior
notice to the Contract Owner, deduct the Premium Tax, if any, from the
Contract Value.
Please see page 24 of the prospectus for more information.
Maxim Series Fund, Inc. Annual Expenses
(as a percentage of Maxim Series Fund, Inc. average daily net assets)
Money Investment Stock U.S. Govt. Small-Cap Growth Short-Term
Market Grade Corporate Index Mortgage Index Index Maturity
Portfolio Bond Portfolio Securities Portfolio Portfolio Bond Portfolio
Portfolio Portfolio
- -------------------------------------------------------------------------------
- -------------------------------------------
Management Fees 0.46% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%
Other Expenses None None None None None None None
TOTAL Maxim 0.46% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%
Series Fund Annual
Expenses
Value Small-Cap Total Foreign Small-Cap Corporate
Index Value Return Equity Agressive Bond
Portfolio Portfolio Portfolio Portfolio
Growth Portfolio
- -------------------------------------------------------------------------------
- -------------------------------------------
Management Fees 0.60% 1.00% 0.60% 1.00% 1.00% 0.90%
Other Expenses None 0.35% None 0.50% 0.30% None
TOTAL Maxim 0.60% 1.35% 0.60% 1.50% 1.30% 0.90%
Series Fund Annual
Expenses
EXAMPLES
If you do not take a distribution from your Contract, or if you
annuitize at the end of the applicable time period, you would pay
the following expenses on a $1,000 investment, assuming a 5% annual
return on assets:
1 Year 3 Year 5 Year 10 Year
Money Market Investment Division
12.6341.2674.92185.62
Investment Grade Corporate Bond Investment Division
14.0845.9483.30205.68
Stock Index Investment Division
14.0845.9483.30205.68
U.S. Government Mortgage Securities Investment Division
14.0845.9483.30205.68
Small-Cap Index Investment Division
14.0845.9483.30205.68
Growth Index Investment Division
14.0845.9483.30205.68
Value Index Investment Division
14.0845.9483.30205.68
Total Return Investment Division
14.0845.9483.30205.68
Small-Cap Value Investment Division
21.8270.67127.20308.51
Foreign Equity Investment Division
23.3675.55135.79328.17
Small-Cap Aggressive Growth Investment Division
21.3069.04124.33301.89
Corporate Bond Investment Division
17.1855.90101.06247.74
Short-Term Maturity Bond Investment Division
14.0845.9483.30205.68
EXAMPLES
If you take a distribution in whole from your Contract at the end of
the applicable time period, you would pay the following expenses on
a $1,000 investment, assuming a 5% annual return on assets:
1 Year 3 Year 5 Year 10 Year
Money Market Investment Division
62.6341.2674.92185.62
Investment Grade Corporate Bond Investment Division
64.0845.9483.30205.68
Stock Index Investment Division
64.0845.9483.30205.68
U.S. Government Mortgage Securities Investment Division
64.0845.9483.30205.68
Small-Cap Index Investment Division
64.0845.9483.30205.68
Growth Index Investment Division
64.0845.9483.30205.68
Value Index Investment Division
64.0845.9483.30205.68
Total Return Investment Division
64.0845.9483.30205.68
Small-Cap Value Investment Division
71.8270.67127.20308.51
Foreign Equity Investment Division
73.3675.55135.79328.17
Small-Cap Aggressive Growth Investment Division
71.3069.04124.33301.89
Corporate Bond Investment Division
67.1855.90101.06247.74
Short-Term Maturity Bond Investment Division
64.0845.9483.30205.68
The above Examples should not be considered a representation
of past or future expenses. Actual expenses may be greater or less
than those shown, subject to the guarantees in the Contracts.
The purpose of the table shown above is to assist the Contract
Owner in understanding the various costs and expenses that a
Contract Owner will bear directly or indirectly. More information
pertaining to these costs and expenses is contained in page 24 of
the prospectus.
Please note that while GWL&A currently intends to pay any
Premium Tax levied by any governmental entity, GWL&A reserves the
right to, in the future and with prior notice to the Contract Owner,
deduct the Premium Tax, if any, from the Contract Value. Please see
page 24 of the prospectus for more information.
FINANCIAL HIGHLIGHTS
Selected Data for Accumulation Units
Outstanding From June 1, 1995 (Inception) to
December 31, 1995
Investment Division
From Inception to December 31,1995 By Category
MONEY MARKET
A*(3) O*(15) U*(15) Z*(3)
Value at beginning of period
$ 10.00$ 10.00$ 10.00$ 10.00
Value at end of period
$ 10.23$ 10.02$ 10.05$ 10.27
Increase (decrease) in value of accumulation units
.23 .02 .05 .27
Number of accumulation units outstanding at end of period
2,395.98 926.69 1,445.2944,935.09
INVESTMENT GRADE CORPORATE BOND
A(8) O(5) U(11) Z(6)
Value at beginning of period
$ 10.00$ 10.00$ 10.00$ 10.00
Value at end of period
$ 10.48$ 10.55$ 10.45$ 10.58
Increase (decrease) in value of accumulation units
.48 .55 .45 .58
Number of accumulation units outstanding at end of period
756.561,298.142,523.647,411.72
STOCK INDEX
A(1) O(5) U(4) Z(8)
Value at beginning of period
$ 10.00$ 10.00$ 10.00$ 10.00
Value at end of period
$ 11.59$ 11.55$ 11.57$ 11.58
Increase (decrease) in value of accumulation units
1.59 1.55 1.57 1.58
Number of accumulation units outstanding at end of period
4,042.6311,673.4718,708.7355,122.00
Mortality & Expense Charge Account Balance
A = .75% $0 - $9,999.99
O = .50% $10,000 - $24,999.99
U = .25% $25,000 - $49,999.99
Z = .00% $50,000 and greater
(1) The inception date for the Small-Cap Index A and Stock Index A Investment
Divisions was June 20, 1995.
(2) The inception date for the Foreign Equity A Investment Division was June
23, 1995.
(3) The inception date for the Money Market A and Money Market Z Investment
Divisions was July 5, 1995.
(4) The inception date for the Stock Index U, Small-Cap Value U, Value Index
U, and U.S.
Government Mortgage Securities U Investment Divisions was July 12, 1995.
(5) The inception date for the Foreign Equity O, Small-Cap Index O, Growth
Index O, Stock Index O, Small-Cap Value O, Total Return O, Value Index O,
U.S. Government Mortgage Securities O, and Corporate Bond O Investment
Divisions was July 24, 1995.
(6) The inception date for the Growth Index Z, Investment Grade Corporate
Bond Z, U.S. Government Mortgage Securities Z, and Corporate Bond Z
Investment Divisions was July 26, 1995.
(7) The inception date for the Small-Cap Aggressive Growth Z, Small-Cap Value
Z, Total Return Z, and Small-Cap Aggressive Growth O Investment Divisions was
August 3, 1995.
(8) The inception date for the Small-Cap Index Z, Stock Index Z, Growth Index
A, Small-Cap
Aggressive Growth A, Small-Cap Value A, Total Return A, Value Index A, U.S.
Government Mortgage Securities A, Investment Grade Corporate Bond A, and
Corporate Bond A Investment Divisions was August 9, 1995.
(9) The inception date for the Small-Cap Index U, and the Growth Index U
Investment Divisions
was September 8, 1995.
(10)The inception date for the Value Index Z Investment Division was
September 13, 1995.
(11)The inception date for the Total Return U, Investment Grade Corporate
Bond U, and Corporate Bond U Investment Divisions was September 19, 1995.
(12)The inception date for the Foreign Equity U Investment Division was
October 3, 1995.
(13)The inception date for the Foreign Equity Z Investment Division was
October 4, 1995.
(14)The inception date for the Small-Cap Aggressive Growth Investment
Division was November
17, 1995.
(15)The inception date for the Money Market O, and the Money Market U
Investment Divisions was November 30, 1995.
Investment Division
From Inception to December 31, 1995 By Category
U.S. GOVERNMENT MORTGAGE SECURITIES
A*(8) O*(5) U*(4) Z*(6)
Value at beginning of period
$ 10.00$ 10.00$ 10.00$ 10.00
Value at end of period
$ 10.45$ 10.52$ 10.54$ 10.55
Increase (decrease) in value of accumulation units
.45 .52 .54 .55
Number of accumulation units outstanding at end of period
731.025,864.011,624.617,344.94
SMALL-CAP INDEX
A(1) O(5) U(9) Z(8)
Value at beginning of period
$ 10.00$ 10.00$ 10.00$ 10.00
Value at end of period
$ 11.60$ 11.62$ 11.63$ 11.65
Increase (decrease) in value of accumulation units
1.60 1.62 1.63 1.65
Number of accumulation units outstanding at end of period
2,240.545,959.113,318.1414,397.06
GROWTH INDEX
A(8) O(5) U(9) Z(6)
Value at beginning of period
$ 10.00$ 10.00$ 10.00$ 10.00
Value at end of period
$ 11.69$ 11.71$ 11.72$ 11.74
Increase (decrease) in value of accumulation units
1.69 1.71 1.72 1.74
Number of accumulation units outstanding at end of period
3,339.1010,056.699,367.3319,673.41
Mortality & Expense Charge Account Balance
A = .75% $0 - $9,999.99
O = .50% $10,000 - $24,999.99
U = .25% $25,000 - $49,999.99
Z = .00% $50,000 and greater
(1) The inception date for the Small-Cap Index A and Stock Index A Investment
Divisions was June 20, 1995.
(2) The inception date for the Foreign Equity A Investment Division was June
23, 1995.
(3) The inception date for the Money Market A and Money Market Z Investment
Divisions was July 5, 1995.
(4) The inception date for the Stock Index U, Small-Cap Value U, Value Index
U, and U.S.
Government Mortgage Securities U Investment Divisions was July 12, 1995.
(5) The inception date for the Foreign Equity O, Small-Cap Index O, Growth
Index O, Stock Index O, Small-Cap Value O, Total Return O, Value Index O,
U.S. Government Mortgage Securities O, and Corporate Bond O Investment
Divisions was July 24, 1995.
(6) The inception date for the Growth Index Z, Investment Grade Corporate
Bond Z, U.S. Government Mortgage Securities Z, and Corporate Bond Z
Investment Divisions was July 26, 1995.
(7) The inception date for the Small-Cap Aggressive Growth Z, Small-Cap
Value Z, Total Return Z, and Small-Cap Aggressive Growth O Investment
Divisions was August 3, 1995.
(8) The inception date for the Small-Cap Index Z, Stock Index Z, Growth
Index A, Small-Cap
Aggressive Growth A, Small-Cap Value A, Total Return A, Value Index A, U.S.
Government Mortgage Securities A, Investment Grade Corporate Bond A, and
Corporate Bond A Investment Divisions was August 9, 1995.
(9) The inception date for the Small-Cap Index U, and the Growth Index U
Investment Divisions
was September 8, 1995.
(10)The inception date for the Value Index Z Investment Division was
September 13, 1995.
(11)The inception date for the Total Return U, Investment Grade Corporate
Bond U, and Corporate Bond U Investment Divisions was September 19, 1995.
(12)The inception date for the Foreign Equity U Investment Division was
October 3, 1995.
(13)The inception date for the Foreign Equity Z Investment Division was
October 4, 1995.
(14)The inception date for the Small-Cap Aggressive Growth Investment
Division was November
17, 1995.
(15)The inception date for the Money Market O, and the Money Market U
Investment Divisions was November 30, 1995.
Investment Division
From Inception to December 31, 1995 By Category
VALUE INDEX
A*(8) O*(5) U*(4) Z*(10)
Value at beginning of period
$ 10.00$ 10.00$ 10.00$ 10.00
Value at end of period
$ 11.55$ 11.56$ 11.58$ 11.60
Increase (decrease) in value of accumulation units
1.55 1.56 1.58 1.60
Number of accumulation units outstanding at end of period
1,666.797,395.1812,134.8918,036.45
SMALL-CAP VALUE
A(8) O(5) U(4) Z(7)
Value at beginning of period
$ 10.00$ 10.00$ 10.00$ 10.00
Value at end of period
$ 11.02$ 11.04$ 11.05$ 11.07
Increase (decrease) in value of accumulation units
1.02 1.04 1.05 1.07
Number of accumulation units outstanding at end of period
773.211,371.515,416.352,801.92
TOTAL RETURN
A(8) O(5) U(11) Z(7)
Value at beginning of period
$ 10.00$ 10.00$ 10.00$ 10.00
Value at end of period
$ 10.89$ 10.90$ 10.92$ 10.93
Increase (decrease) in value of accumulation units
.89 .90 .92 .93
Number of accumulation units outstanding at end of period
1,177.805,184.262,940.804,666.32
Mortality & Expense Charge Account Balance
A = .75% $0 - $9,999.99
O = .50% $10,000 - $24,999.99
U = .25% $25,000 - $49,999.99
Z = .00% $50,000 and greater
(1) The inception date for the Small-Cap Index A and Stock Index A
Investment Divisions was June 20, 1995.
(2) The inception date for the Foreign Equity A Investment Division was June
23, 1995.
(3) The inception date for the Money Market A and Money Market Z Investment
Divisions was July 5, 1995.
(4) The inception date for the Stock Index U, Small-Cap Value U, Value Index
U, and U.S.
Government Mortgage Securities U Investment Divisions was July 12, 1995.
(5) The inception date for the Foreign Equity O, Small-Cap Index O, Growth
Index O, Stock Index O, Small-Cap Value O, Total Return O, Value Index O,
U.S. Government Mortgage Securities O, and Corporate Bond O Investment
Divisions was July 24, 1995.
(6) The inception date for the Growth Index Z, Investment Grade Corporate
Bond Z, U.S. Government Mortgage Securities Z, and Corporate Bond Z
Investment Divisions was July 26, 1995.
(7) The inception date for the Small-Cap Aggressive Growth Z, Small-Cap
Value Z, Total Return Z, and Small-Cap Aggressive Growth O Investment
Divisions was August 3, 1995.
(8) The inception date for the Small-Cap Index Z, Stock Index Z, Growth
Index A, Small-Cap
Aggressive Growth A, Small-Cap Value A, Total Return A, Value Index A, U.S.
Government Mortgage Securities A, Investment Grade Corporate Bond A, and
Corporate Bond A Investment Divisions was August 9, 1995.
(9) The inception date for the Small-Cap Index U, and the Growth Index U
Investment Divisions
was September 8, 1995.
(10)The inception date for the Value Index Z Investment Division was
September 13, 1995.
(11)The inception date for the Total Return U, Investment Grade Corporate
Bond U, and Corporate Bond U Investment Divisions was September 19, 1995.
(12)The inception date for the Foreign Equity U Investment Division was
October 3, 1995.
(13)The inception date for the Foreign Equity Z Investment Division was
October 4, 1995.
(14)The inception date for the Small-Cap Aggressive Growth Investment
Division was November
17, 1995.
(15)The inception date for the Money Market O, and the Money Market U
Investment Divisions was November 30, 1995.
Investment Division
From Inception to December 31, 1995 By Category
FOREIGN EQUITY A*(2) O*(5) U*(12) Z*(13)
Value at beginning of
period$ 10.00 $ 10.00 $ 10.00 $ 10.00
Value at end of period
$ 10.30 $ 10.27 $ 10.26 $ 10.28
Increase (decrease) in value of accumulation units
.30 .27 .26 .28
Number of accumulation units outstanding at end of period
2,788.66 1,670.77 2,190.94 1,192.47
SMALL-CAP AGGRESSIVE GROWTH A(8) O(7) U(14) Z(7)
Value at beginning of period
$ 10.00 $ 10.00 $ 10.00 $ 10.00
Value at end of period
$ 11.93 $ 11.95 $ 11.96 $ 11.98
Increase (decrease) in value of accumulation units
1.93 1.95 1.96 1.98
Number of accumulation units outstanding at end of period
1,064.47 5,718.10 1,398.81 4,726.93
CORPORATE BOND A(8) O(5) U(11) Z(6)
Value at beginning of period
$ 10.00 $ 10.00 $ 10.00 $ 10.00
Value at end of period
$ 10.95 $ 11.03 $ 10.91 $ 11.06
Increase (decrease) in value of accumulation units
.95 1.03 .91 1.06
Number of accumulation units outstanding at end of period
821.90 2,425.21 1,650.00 22,880.14
Current Accumulation Unit Values can be obtained by calling GWL&A
toll free at 1-800-495-4952.
Mortality & Expense Charge Account Balance
* A = .75% $0 - $9,999.99
O = .50% $10,000 - $24,999.99
U = .25% $25,000 - $49,999.99
Z = .00% $50,000 and greater
(1) The inception date for the Small-Cap IndexA and Stock IndexA Investment
Divisions was June
20, 1995.
(2) The inception date for the Foreign EquityA Investment Division was June
23, 1995.
(3) The inception date for the Money MarketA and Money MarketZ Investment
Divisions was July
5, 1995.
(4) The inception date for the Stock IndexU, Small-Cap ValueU, Value IndexU,
and U.S.
Government Mortgage SecuritiesU Investment Divisions was July 12, 1995.
(5) The inception date for the Foreign EquityO, Small-Cap IndexO,
Growth IndexO, Stock IndexO,
Small-Cap ValueO, Total ReturnO, Value IndexO, U.S. Government Mortgage
SecuritiesO, and
Corporate BondO Investment Divisions was July 24, 1995.
(6) The inception date for the Growth IndexZ, Investment Grade Corporate
BondZ, U.S. Government
Mortgage SecuritiesZ, and Corporate BondZ Investment Divisions was July 26,
1995.
(7) The inception date for the Small-Cap Aggressive GrowthZ, Small-Cap
ValueZ, Total ReturnZ,
and Small-Cap Aggressive GrowthO Investment Divisions was August 3, 1995.
(8) The inception date for the Small-Cap IndexZ, Stock IndexZ, Growth
IndexA, Small-Cap
Aggressive GrowthA, Small-Cap ValueA, Total ReturnA, Value IndexA, U.S.
Government Mortgage
SecuritiesA, Investment Grade Corporate BondA, and Corporate BondA
Investment Divisions was
August 9, 1995.
(9) The inception date for the Small-Cap IndexU, and the Growth IndexU
Investment Divisions
was September 8, 1995.
(10)The inception date for the Value IndexZ Investment Division was
September 13, 1995.
(11)The inception date for the Total ReturnU, Investment Grade Corporate
BondU, and Corporate
BondU Investment Divisions was September 19, 1995.
(12)The inception date for the Foreign EquityU Investment Division was
October 3, 1995.
(13)The inception date for the Foreign EquityZ Investment Division was
October 4, 1995.
(14)The inception date for the Small-Cap Aggressive Growth Investment
Division was November
17, 1995.
(15)The inception date for the Money MarketO, and the Money MarketU
Investment Divisions was
November 30, 1995.
QUESTIONS AND ANSWERS ABOUT THE SERIES ACCOUNT VARIABLE ANNUITY
What is the purpose of the Contracts offered in the Prospectus?
The variable annuity Contracts offered in this prospectus
provide an IRA program (the "Program") as defined by the Code. This
Program is primarily designed for individuals seeking to rollover
assets which they accumulated under a 401(k) Plan. However, the
Contracts may also be used by individuals who wish to rollover
assets from other eligible sources, as described in the Code. The
value of the Contract and the amount of the annuity payments will
vary according to the investment results of the Fund.
How are Contributions allocated?
Contributions allocated to the Series Account accumulate on a
variable basis. The assets of the Series Account are invested at
net asset value (no sales charge) in shares of the Fund. The
investment objectives and policies of those portfolios of the Fund
which are available for allocation of Contributions to the Series
Account are set forth beginning on page 2 of the prospectus and are
described in full in the accompanying prospectus for the Fund.
What are the charges to Contract Owner s under the Contract?
There is an administrative surrender fee of $50 for a Contract
surrendered in whole during the first 12 months of the Contract
(excluding the free look period) and an administrative surrender fee
of $25 for a Contract surrendered in part during the first 12 months
of the Contract.
There is no contract maintenance charge or sales charges
(contingent, deferred or otherwise) applied to the Contract Value.
GWL&A deducts from the net asset value of the Series Account an
amount, computed daily for mortality and expense risk guarantees as
described below.
The level of the mortality and expense risk charge applicable
to the Contract during the first calendar year will be based upon
the initial account balance of the Contract, in accordance with the
schedule set forth below. The level of the mortality and expense
risk charge applicable in subsequent calendar years will be based
upon the account balance as of December 31 of the previous calendar
year, in accordance with such schedule. The following table sets
forth the level of the mortality and expense risk charges that will
apply to a Contract:
Mortality & Expense Risk Charge
Account Balance
.75% $0 - $9,999.99
.50% $10,000 - $ 24,999.99
.25% $25,000 - $49,999.99
.00% $50,000 and greater
Because the mortality and expense risk charge is determined based on
the December 31 account balance of the previous calendar year,
Contract Owners may wish to monitor their account balances closely
to ensure timely contributions are made to the extent possible to
reduce the mortality and expense risk charge that will be applicable
in the ensuing year.
Upon a total or partial distribution, a penalty tax may be
imposed pursuant to Section 72 of the Code. (See "Federal Tax
Consequences," page 29 .)
GWL&A presently makes no deduction from Contributions for
premium taxes; however, applicable state premium taxes, ranging from
0 to 3.50% , are deducted from the Contract Value upon the annuity
date.
In addition to the charges set forth above, the Contract Owner
will indirectly bear the investment advisory fees and other expenses
of the Fund. (See "Investments of the Series Account - Investment
Adviser," page 23).
Can I surrender the Contract in whole or in part?
A distribution in whole or in part may be taken up to 30 days
prior to the Annuity Commencement Date, subject to restrictions by
the retirement plan under which your Contract is issued. If a
distribution is requested less than 30 days prior to the Annuity
Commencement Date, the Company may delay the Annuity Commencement
Date for a period of up to 30 days. (See "The Contracts -
Accumulation Period - Total and Partial Distribution," page 21, for
a description of surrender procedures.) Upon a total or partial
distribution, a penalty tax may be imposed pursuant to Section 72 of
the Code. (See "Federal Tax Status," page 29.) In addition, an
administrative surrender fee may apply. (See "Charges and
Deductions", page 24.)
Can Contributions be Transferred between the Variable and Guaranteed
Sub-Accounts?
Yes. All or a portion of the Contract Value held in any of
the Variable Sub-Accounts may be Transferred at any time prior to
the Annuity Commencement Date by Request. (See "Transfers Between
Sub-Accounts," page 21 ).
What Annuity Options are available?
The Contracts provide for several annuity options payable on
a variable, fixed, or combination basis. An election of any annuity
option(s) must be made at least 30 days prior to the Contract
Owner's Annuity Commencement Date. If no election is made, annuity
payments will begin automatically on the Annuity Commencement Date
under an option providing for a life annuity with 120 monthly
payments certain. (See "Annuity Options," page 27 .)
What are the voting rights under the Contracts?
Contract Owners will be entitled to instruct GWL&A to vote
shares of the Fund held in the Series Account based upon the value
of their Contract. (See "Voting Rights," page 31 .)
Is there a short-term cancellation ("Free Look") right?
Yes. Within 10 days (20 days in Idaho and North Dakota) after
the Contract is first received by the Contract Owner, it may be
canceled by the Contract Owner for any reason by delivering or
mailing it along with a Request to cancel, to GWL&A's Administrative
Office. (See "Return Privilege," page 32</R32>.)
How will the Contracts be distributed?
The Contracts will be distributed through Great-West. (See
"Distribution of the Contracts," page
32 .)
What is the Fund?
The Contributions may be allocated to the Series Account. The
assets of the Series Account are invested at net asset value in
shares of the Fund. The Fund is a diversified, open-end management
investment company of the series type. A more complete description
of the Fund and its Portfolios can be found in the accompanying Fund
prospectus which should be read together with this prospectus. The
Fund is required to redeem its shares at GWL&A's request. GWL&A
reserves the right to add, delete or substitute Portfolios subject
to approval, as necessary, of the Securities and Exchange
Commission.
Who can invest and what is the minimum Contribution?
Any individual of legal age in the states where the Contract
may be lawfully sold, who is not older than age 90, may purchase a
Contract. The individual must also be eligible to participate in
the plan for which the Contract is designed.
A Contract may be purchased as described on page 19 . The
minimum initial Contribution amount is $3,500 and must be an
eligible rollover distribution (as defined by the Code) from a plan
qualified under Code Section 401(k). The minimum additional
Contribution amount is $250. Contributions may be made at any time
during the Accumulation Period.
Performance Related Information
From time to time, the Series Account may advertise certain
performance related information concerning its Investment Divisions.
Performance information about an Investment Division is based on the
Investment Division's historical performance only and is not
intended to indicate future performance. Below is a table of
performance related information for the period from Inception to
December 31, 1995. For the "Inception Date" of a particular
Investment Division see the "Total Return" tables below.
Investment Division Yield Effective Yield
Money Market a* 4.80% 4.91%
Money Market o* 5.05% 5.17%
Money Market u* 5.30% 5.44%
Money Market z* 5.55% 5.70%
Yield and effective Yield for the Money Market Investment Division
is for the 7-day period ended December 31, 1995. Yield calculations
take into account recurring charges against the Series Account and
the Money Market Portfolio. All yield and effective yield
information is annualized.
Investment Divisions Date of Inception Total
Return
for
Inception
to
December
31,
1995
Foreign Equity a* June 23, 1995 2.06%
Small-Cap Index a* June 20, 1995 11.13%
Growth Index a* August 9, 1995 9.54%
Small-Cap Aggressive Growth a* August 9, 1995 8.81%
Stock Index a* June 20, 1995 13.14%
Small-Cap Value a* August 9, 1995 6.56%
Total Return a* August 9, 1995 5.54%
Value Index a* August 9, 1995 11.45%
U.S. Government Mortgage Securities a* August 9, 1995 5.30%
Investment Grade Corporate Bond a* August 9, 1995 5.62%
Corporate Bond a* August 9, 1995 9.32%
Money Market a* July, 5 1995 2.30%
Mortality & Expense Charge Account Balance
a* = .75% $0 - $9,999.99
o* = .50% $10,000 - $24,999.99
u* = .25% $25,000 - $49,999.99
z* = .00% $50,000 and greater
Investment Divisions Date of Inception Total Return for
Inception to
December 31, 1995
Foreign Equity o* July 24, 1995 -0.52%
Small-Cap Index o* July 24, 1995 7.80%
Growth Index o* July 24, 1995 10.73%
Small-Cap Aggressive Growth o* August 3, 1995 10.39%
Stock Index o* July 24, 1995 10.87%
Small-Cap Value o* July 24, 1995 8.48%
Total Return o* July 24, 1995 6.48%
Value Index o* July 24, 1995 12.50%
U.S. Government Mortgage Securities o* July 24, 1995 5.58%
Investment Grade Corporate Bond o* July 24, 1995 5.87%
Corporate Bond o* July 24, 1995 9.86%
Money Market o* November 30, 1995 0.41%
Investment Divisions Date of Inception Total Return for
Inception to
December 31, 1995
Foreign Equity u* October 3, 1995 2.63%
Small-Cap Index u* September 8, 1995 0.66%
Growth Index u* September 8, 1995 6.82%
Small-Cap Aggressive Growth u* November 17, 1995 5.98%
Stock Index u* July 12, 1995 10.11%
Small-Cap Value u* July 12, 1995 6.51%
Total Return u* September 19, 1995 2.57%
Value Index u* July 12, 1995 11.89%
U.S. Government Mortgage Securities u* July 12, 1995 4.25%
Investment Grade Corporate Bond u* September 19, 1995 3.49%
Corporate Bond u* September 19, 1995 5.74%
Money Market u* November 30, 1995 0.96%
Mortality & Expense Charge Account Balance
a* = .75% $0 - $9,999.99
o* = .50% $10,000 - $24,999.99
u* = .25% $25,000 - $49,999.99
z* = .00% $50,000 and greater
Investment Divisions Date of Inception Total
Return for
Inception
to
December
31, 1995
Foreign Equity z* October 13, 1995 2.24%
Small-Cap Index z* August 9, 1995 5.66%
Growth Index z* July 26, 1995 9.56%
Small-Cap Aggressive Growth z* August 3, 1995 10.61%
Stock Index z* August 9, 1995 10.22%
Small-Cap Value z* August 3, 1995 8.16%
Total Return z* August 3, 1995 6.04%
Value Index z* September 13, 1995 7.25%
U.S. Government Mortgage Securities z* July 26, 1995 6.03%
Investment Grade Corporate Bond z* July 26, 1995 6.31%
Corporate Bond z* July 26, 1995 10.04%
Money Market z* July 5, 1995 2.67%
Mortality & Expense Charge Account Balance
a* = .75% $0 - $9,999.99
o* = .50% $10,000 - $24,999.99
u* = .25% $25,000 - $49,999.99
z* = .00% $50,000 and greater
The Series Account may include total return in advertisements
or other sales material regarding the Money Market Portfolio,
Investment Grade Corporate Bond Portfolio, Stock Index Portfolio,
U.S. Government Mortgage Securities Portfolio, Small-Cap Index
Portfolio, Growth Index Portfolio, Value Index Portfolio, Total
Return Portfolio, Small-Cap Value Portfolio, Foreign Equity
Portfolio, Small-Cap Aggressive Growth Portfolio, Corporate Bond
Portfolio and Short-Term Maturity Bond Portfolio . When the Series
Account advertises the total return of one of these portfolios, it
will be calculated for one year, five years, and ten years or some
other relevant period if the portfolio has not been in existence for
at least ten years. Total return is measured by comparing the value
of an investment in the portfolio at the beginning of the relevant
period to the value of the investment at the end of the period
(assuming immediate reinvestment of any dividends or capital gains
distributions).
"Total return" refers to the compounded annual income
generated by an investment in the respective Investment Divisions
over a stated one-year or longer period (which longer period will be
for five years and ten years, or the length of time since the
Investment Division's inception, if less). In calculating the total
return, it is assumed that the entire value of the Investment
Division will be distributed on the last day of the period.
For the Money Market Investment Division, "yield" refers to
the income generated by an investment in the Money Market Investment
Division over a stated seven-day period. This income is then
"annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the
investment. The "effective yield" of the Money Market Investment
Division is calculated similarly but, when annualized, the income
earned by an investment in the Money Market Investment Division is
assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this
assumed reinvestment.
The yield and effective yield calculations for the Money
Market Investment Division includes all recurring charges under the
Contract, and is lower than yield and effective yield for the Fund,
which does not have comparable charges. Total return for the
Investment Divisions include all charges under the Contract, and
likewise, is lower than total return at the Fund level, which has no
comparable charges.
For more complete information on the method used to calculate
yield, effective yields, and total return of the respective
Investment Divisions, see the Statement of Additional Information.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY ("GWL&A")
GWL&A is a stock life insurance company originally organized
under the laws of the state of Kansas as the National Interment
Association. Its name was changed to Ranger National Life Insurance
Company in 1963 and to Insuramerica Corporation prior to changing to
its current name in February of 1982. In September of 1990, GWL&A
redomesticated and is now organized under the laws of the state of
Colorado.
GWL&A is authorized to engage in the sale of life insurance,
accident and health insurance and annuities. It is qualified to do
business in Puerto Rico, the District of Columbia and 49 states in
the United States.
GWL&A is a wholly-owned subsidiary of The Great-West Life
Assurance Company. The Great-West Life Assurance Company is a
subsidiary of Great-West Lifeco Inc., a holding company. Great-West
Lifeco Inc. is in turn a subsidiary of Power Financial Corporation
of Canada, a financial services company. Power Corporation of
Canada, a holding and management company, has voting control of
Power Financial Corporation of Canada. Mr. Paul Desmarais, through
a group of private holding companies, which he controls, has voting
control of Power Corporation of Canada.
GWL&A has primary responsibility for administration of the
Contracts and the Series Account. Its Administrative Offices are
located at 8515 E. Orchard Road, Englewood, Colorado 80111.
Retirement Plan Series Account
The Retirement Plan Series Account was established by GWL&A
under Colorado law on January 25, 1994. The Retirement Plan Series
Account has been registered with the Securities and Exchange
Commission as a unit investment trust pursuant to the provisions of
the Investment Company Act of 1940, as amended, and meets the
definition of a "separate account" under the Federal securities
laws. Such registration does not involve supervision of the
management of the Series Account or GWL&A by the Securities and
Exchange Commission.
The Series Account currently has 13 Investment Divisions
available for allocation of Contributions. If, in the future, GWL&A
determines that marketing needs and investment conditions warrant,
it may establish additional Investment Divisions which will be made
available to existing Contract Owners to the extent and on a basis
to be determined by GWL&A. Each Investment Division invests in
shares of the Fund allocable to one of the Portfolios, each having
a specific investment objective.
GWL&A does not guarantee the investment performance of the
Series Account. The portion of the Contract Value attributable to
the Series Account and the amount of variable annuity payments
depend on the investment performance of the Fund. Thus, the
Contract Owner bears the full investment risk for all Contributions
allocated to the Series Account.
The Series Account is administered and accounted for as part
of the general business of GWL&A; but the income, capital gains, or
capital losses of each Variable Sub-Account are credited to or
charged against the assets held in that Variable Sub-Account in
accordance with the terms of the Contracts, without regard to other
income, capital gains or capital losses of any other Variable Sub-
Account or arising out of any other business GWL&A may conduct.
Under Colorado law, the assets of the Series Account are not
chargeable with liabilities arising out of any other business GWL&A
may conduct. Nevertheless, all obligations arising under the
Contracts are generally corporate obligations of GWL&A.
THE CONTRACTS
Purchase of Contracts
Persons wishing to purchase a Contract must complete an
application form to be forwarded to the GWL&A Administrative Offices
for its acceptance. The minimum initial contribution amount is
$3,500 and must be an eligible rollover distribution (as defined by
the Code) from a plan qualified under Code Section 401(k). The
initial Contribution will be allocated after receipt at GWL&A's
Administrative Offices within two business days, if the application
form is complete, or within five business days, if the application
form is incomplete. If an incomplete application form is completed
within five business days of GWL&A's receipt, the initial
Contribution will be allocated within two business days of the
application's completion. If the initial Contribution cannot be so
allocated, it will be returned at once. Upon acceptance, a Contract
will be prepared, executed by duly authorized officers of GWL&A and
forwarded to the Contract Owner. Subsequent Contributions will be
allocated upon receipt by GWL&A at its Administrative Offices on the
day received.
Amendment of Contracts
GWL&A reserves the right to amend the Contract without the
consent of any person to meet the requirements of the Investment
Company Act of 1940 or other applicable Federal or state laws or
regulations, or to modify the annuity rates for future
Contributions. GWL&A will notify the Contract Owners of any such
changes.
Ownership
The Contract Owner has all rights under the Contract. Under
law, the assets of the Series Account are held for the exclusive
benefit of the Contract Owners and their designated beneficiaries
and are not chargeable with liabilities arising out of any other
business that GWL&A may conduct.
ACCUMULATION PERIOD
Allocation of Contributions
Initial Contributions will be applied after receipt at GWL&A's
Administrative Offices within two business days if the application
form is complete, or within five business days if the application
form is incomplete. If an incomplete application form is completed
within five business days of GWL&A's receipt, the initial
Contribution will be applied within two calendar days of the
application's completion. If the initial Contribution cannot be so
applied, it will be returned at once unless the prospective
purchaser specifically consents to GWL&A retaining the purchase
payment until the application is made complete. The initial
contribution will be allocated to the Money Market Investment
Division during the "free look" period (See "Return Privilege" on
page 32 .) Upon expiration of the "free look" period amounts
contributed previously will be allocated according to the Contract
Owner's instructions on the application form. Subsequent
contributions will be applied pursuant to the allocation
instructions in the completed application and will be allocated upon
receipt by GWL&A at its Administrative Offices on the day received.
Contributions by a Contract Owner are allocated to the Series
Account to accumulate on a variable basis. Allocation instructions
may be changed at any time and will be effective the later of (1)
the date specified on the form and (2) the date the completed form
is received and recorded by GWL&A at its Administrative Offices.
GWL&A will allocate the Contributions based upon the instructions in
the application form. A change of allocation instructions will be
effective for Contributions which are received after GWL&A's receipt
and recording of the change.
Upon allocation to the appropriate Variable Sub-Account, the
Contributions are converted into Accumulation Units. The number of
Accumulation Units credited with respect to the initial Contribution
is determined by dividing the amount allocated to each Variable Sub-
Account by the value of an Accumulation Unit for that Variable Sub-
Account on the day following GWL&A's receipt of the initial
Contribution and GWL&A's acceptance of such Contribution. The
number of Accumulation Units with respect to any additional
Contribution is determined by dividing the amount allocated to the
appropriate Variable Sub-Account by the value of an Accumulation
Unit for that Sub-Account on the day the Contribution is accepted.
Contributions received after 4:00 p.m., EST/EDT, shall be deemed to
have been received on the next Valuation Date. The number of
Accumulation Units so determined shall not be changed by any
subsequent change in the value of an Accumulation Unit, but the
dollar value of an Accumulation Unit will vary in amount depending
upon the investment experience of the Fund.
Valuation of Accumulation Units
Accumulation Units for each Variable Sub-Account are valued
separately, but the method used for valuing Accumulation Units in
each Variable Sub-Account is the same. Initially, the value of each
Accumulation Unit was set at $10.00. Thereafter, the value of an
Accumulation Unit in any Variable Sub-Account on any Valuation Date
equals the value of an Accumulation Unit in the Sub-Account as of
the immediately preceding Valuation Date multiplied by the most
current "Net Investment Factor" of that Variable Sub-Account.
Accumulation Unit values are valued once each day that the Fund
shares are valued.
The Net Investment Factor for each Variable Sub-Account is
determined by dividing (a) by (b), and subtracting (c) from the
result where:
(a) is the net result of:
(i) the net asset value per share of the Fund shares held in
the Variable Sub-Account determined as of the end of the
current Valuation Period, plus
(ii) the per share amount of any dividend (or, if applicable,
capital gain distributions) made by the Fund on shares held in
the Variable Sub-Account if the "ex-dividend" date occurs
during the current Valuation Period, minus or plus
(iii) a per unit charge or credit for any taxes incurred by or
provided for in the Variable Sub-Account, which is determined
by GWL&A to have resulted from the investment operations of
the Variable Sub-Account; and
(b) is the net result of:
(i) the net asset value per share of the Fund shares held in
the Variable Sub-Account determined as of the end of the
immediately preceding Valuation Period, minus or plus
(ii) the per unit charge or credit for any taxes incurred by
or provided for in the Variable Sub-Account for the
immediately preceding Valuation Period; and
(c) is an amount representing the Mortality and Expense Risk Charge
deducted from each Variable Sub-Account on a daily basis, as
described on page 25 of this prospectus.
The Net Investment Factor may be greater than, less than, or
equal to one. Therefore, the Accumulation Unit Value may increase,
decrease or remain unchanged.
The net asset value per share referred to in paragraphs (a)(i)
and (b)(i) above, reflect the investment performance of the Fund as
well as the payment of underlying mutual fund expenses. (See
"Investments of the Series Account," page 23 .)
Transfers Between Sub-Accounts
All or a portion of the Contract Value held in any of the Sub-
Accounts may be transferred at any time prior to the Annuity
Commencement Date by Request to GWL&A's Administrative Offices. In
order for telephone transfers to be accommodated, a Telephone
Transfer Form must be on file with GWL&A. This form can be obtained
at the time the Contract is signed, or at any time thereafter from
the Administrative Offices of GWL&A. The Transfer request shall be
made by the Contract Owner. A transfer will take effect on the
later of the date designated in the request, or the date that the
Transfer request is received by GWL&A at its Administrative Offices.
Transfer requests received after 4:00 p.m., EST/EDT, shall be deemed
to have been received on the next following Valuation Date. If a
Transfer request is received by GWL&A within 30 days of the Annuity
Commencement Date, GWL&A may delay the Annuity Commencement Date by
not more than 30 days. Additional Transfer conditions apply to
Transfers to or from the Guaranteed Sub-Accounts, as more fully
described in the Contract.
For Transfer Requests GWL&A will use reasonable procedures
such as requiring certain identifying information from the caller,
tape recording the telephone instructions, and providing written
confirmation of the transaction, in order to confirm that
instructions communicated by telephone are genuine. Any telephone
instructions reasonably believed by GWL&A to be genuine will be the
responsibility of the Contract Owner, including losses arising from
any errors in the communication of instructions. As a result, the
Contract Owner will bear the risk of loss. If GWL&A does not employ
reasonable procedures to confirm that instructions communicated by
telephone are genuine, GWL&A may be liable for any losses due to
unauthorized or fraudulent instructions.
Total and Partial Distribution
The right to a total or partial distribution is subject to any
limitations or restrictions contained in the Contract. A Request
must be received by GWL&A's Administrative Offices at least 30 days
prior to the Annuity Commencement Date. A request for partial
distribution must also specify the Variable and/or Guaranteed Sub-
Account(s) from which the partial distribution is to be made. If a
request for a total or partial distribution is received less than 30
days prior to Annuity Commencement Date, GWL&A, at its option, may
delay the Annuity Commencement Date for a period of up to 30 days.
The amount available for a distribution in whole or in part is the
current value of the Contract Value at the end of the Valuation
Period for the "effective date" of the request. The "effective
date" is the later of the date selected in the request or the date
which the Request is received by GWL&A's Administrative Offices.
Requests received after 4:00 p.m., EST/EDT, shall be deemed to have
been received on the next following Valuation Date. The partial or
total distribution will be made within seven days after GWL&A
receives the Request. The payment may be postponed as permitted by
the Investment Company Act of 1940. The amount payable upon a total
distribution may be applied to an Annuity Option (see "Annuity
Options," page 27 ) instead of a lump-sum payment. There are
additional conditions that apply to a partial or total distribution
of the Contract Value from a Guaranteed Sub-Account, as more fully
described in the Contract.
There may be certain charges imposed upon a partial or total
distribution prior the Annuity Commencement Date and there may be
certain tax consequences (see "Charges and Deductions," page 24 and
"Taxation of Annuities in General," page 30 ).
Cessation of Contributions
If, in the judgment of GWL&A, further Contributions or
Transfers to certain or all of the Variable and Guaranteed Sub-
Accounts should become inappropriate, GWL&A may, upon 30 days
written notice to the Contract Owner, direct that no future
Contributions or Transfers to such Sub-Account(s) be made.
In the event that such written notice is given for any or all
of the Sub-Accounts, Contributions and Transfers made to such Sub-
Account(s) prior to the effective date of the notice (that date
being called the "Date of Cessation") may be maintained in such Sub-
Account(s). Allocation instructions must be changed to delete the
affected Sub-Account(s). If no change of allocation instructions is
received, GWL&A may return all affected Contributions or allocate
such Contributions as designated in the written notice provided to
the Contract Owner.
In the event that a Date of Cessation is declared for all Sub-
Accounts, no new Contributions will be accepted by GWL&A.
Death Benefit
In the event of the death of the Contract Owner prior to
his/her Annuity Commencement Date, a death benefit will be paid upon
receipt of proof of the death of the Contract Owner. The death
benefit is the Contract Value. The death benefit will be paid to
the beneficiary designated by the Contract Owner.
If the Contract Owner dies before distribution of his or her
interest begins, distribution of the Contract Owner's entire
interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Contract Owner's death
except to the extent that an election is made to receive
distributions in accordance with (A) or (B) below:
(A) If the Contract Owner's interest is payable to a designated
beneficiary, then the entire interest of the Contract Owner
may be distributed over the life or over a period certain not
greater than the life expectancy of the designated beneficiary
commencing or before December 31 of the calendar year
immediately following the calendar year in which the Contract
Owner died.
(B) If the designated beneficiary is the Contract Owner's
surviving spouse, the date distributions are required to begin
in accordance with (A) above shall not be earlier than the
later of (1) December 31 of the calendar year immediately
following the calendar year in which the Contract Owner died
or (2) December 31 of the calendar year in which the Contract
Owner would have attained age 70 1/2.
(C) If the designated beneficiary is the individual's surviving
spouse, the spouse may treat the Contract as his or her own
IRA. This election will be deemed to have been made if such
surviving spouse makes a regular IRA contribution to the
Contract, makes a rollover to or from such Contract, or fails
to elect any of the above provisions.
Life expectancy is computed by use of the expected return
multiples in Tables V and VI of section 1.72-9 of the Income Tax
Regulations. For purposes of distributions beginning after the
Contract Owner's death, unless otherwise elected by the surviving
spouse by the time distributions are required to begin, life
expectancies shall be recalculated annually. Such election shall be
irrevocable by the surviving spouse and shall apply to all
subsequent years. In the case of any other designated beneficiary,
life expectancies shall be calculated using the attained age of such
beneficiary during the calendar year in which distributions are
required to begin pursuant to this section, and payments for any
subsequent calendar year shall be calculated based on such life
expectancy reduced by one for each calendar year which has elapsed
since the calendar year life expectancy was first calculated.
Distributions under this section are considered to have begun
if distributions are made on account of the Contract Owner reaching
his or her required beginning date or if prior to the required
beginning date distributions irrevocably commence to the Contract
Owner over a period permitted and in an annuity form acceptable
under section 1.401(a)(9) of the Regulations.
The Contract Owner may designate or change a beneficiary by
filing a Request with GWL&A at its Administrative Offices. Each
change of beneficiary revokes any previous designation. Unless
otherwise provided in the beneficiary designation, one of the
following procedures will take place on the death of a beneficiary:
(1) if there is more than one primary surviving beneficiary, the
Contract Value will be shared equally among them; (2) if any primary
beneficiary dies before the Contract Owner, that beneficiary's
interest will pass to any other named surviving primary beneficiary
or Beneficiaries, to be shared equally; (3) if there is no surviving
primary beneficiary, the Contract Value shall pass to any surviving
contingent beneficiary, and if more than one contingent beneficiary,
shall be shared equally among them; (4) if no beneficiary survives
the Contract Owner, the Contract Value shall pass to the Contract
Owner's estate; or (5) if the designation of the beneficiary was not
adequately made, the Contract Value shall pass to the Contract
Owner's estate.
INVESTMENTS OF THE SERIES ACCOUNT
The Series Account invests in shares of the Fund, a
diversified open-end management investment company registered with
the Securities and Exchange Commission. Such registration does not
involve supervision of the management of the Fund by the Securities
and Exchange Commission. Shares of the Fund are also sold to the
FutureFunds Series Account and Maxim Series Account, which are
separate accounts established by GWL&A to receive and invest
premiums paid under variable annuity contracts issued by GWL&A.
Shares of the Fund are also sold to TNE Series (k) Account of The
New England Mutual Life Insurance Company ("TNE") to fund benefits
under variable annuity contracts. Shares of the Fund are also sold
to the Pinnacle Series Account of GWL&A to fund variable life
insurance policies. Shares of the Fund are currently and may be
sold to other separate accounts of GWL&A, its affiliates and other
insurance companies. It is conceivable that, in the future, it may
be disadvantageous for variable life insurance separate accounts and
variable annuity separate accounts to invest in the Fund
simultaneously. Although any such disadvantages are not currently
foreseen, whether to variable life insurance policyowners or the
variable annuity contract owners, the Board of Directors of the Fund
intends to monitor events in order to identify any material
conflicts between such policyowners and contract owners and to
determine what action, if any, should be taken in response thereto.
Such action could include the sale of the Fund shares by one or more
of GWL&A's separate accounts which could have adverse consequences.
Material conflicts could result from, for example, (1) changes in
state insurance laws, (2) changes in Federal income tax laws, (3)
changes in the investment management of any portfolio of the Fund,
or (4) differences in voting instructions between those given by
policyowners and those given by contract owners.
The investment objectives of each Portfolio of the Fund
available under the Contract are described beginning on page 2 of
this prospectus. A more complete description of the Fund and the
available Portfolios and investment objectives can be found in the
accompanying the Fund prospectus which should be read together with
this prospectus before investing. THERE IS NO ASSURANCE THAT
THE FUND WILL ACHIEVE ITS RESPECTIVE STATED OBJECTIVES. The
Fund has additional portfolios which are not generally available for
allocation of Contributions to the Series Account.
Investment Adviser
The investment adviser (the "Investment Adviser") for the Fund
is Great-West, which is registered with the Securities and Exchange
Commission as an investment adviser. The Investment Adviser
provides portfolio management and investment advice to the Fund and
administers its other affairs subject to the supervision of Maxim's
Board of Directors.
Sub-Advisers
Ariel Capital Management Inc. ("Ariel") 307 N. Michigan
Avenue, Chicago, Illinois 60601, is a privately held minority-owned
money manager registered with the Securities and Exchange Commission
as an investment adviser. Subject to review and supervision by the
Investment Adviser and the Board of Directors of the Fund, Ariel is
responsible for the actual management of the Small-Cap Value
Portfolio and for making decisions to buy, sell or hold any
particular security.
Draycott Partners, Ltd. ("Draycott") 8 City Road, London EC2Y
1HE serves as the investment advisor of the Foreign Equity
Portfolio. Draycott is registered with the Securities and Exchange
Commission as an investment adviser. Subject to review and
supervision by the Investment Adviser and the Board of Directors of
the Fund, Draycott is responsible for the actual management of the
Foreign Equity Portfolio and for making decisions to buy, sell or
hold any particular security.
Loomis, Sayles & Company, Inc. ("Loomis Sayles") located at
One Financial Center, Boston, Massachusetts 02111, is the
investment advisor of the Small-Cap Aggressive Growth and Corporate
Bond Portfolios, respectively. Loomis Sayles is registered with the
Securities and Exchange Commission as an investment adviser.
Subject to review and supervision by the Investment Adviser and the
Board of Directors of the Fund, Loomis Sayles is responsible for the
actual management of the Small-Cap Aggressive Growth and Corporate
Bond Portfolios and for making decisions to buy, sell or hold any
particular security.
Reinvestment and Redemption
All dividend distributions of Maxim will be automatically
reinvested in shares of Maxim at their net asset value on the date
of distribution; all capital gains distributions of Maxim, if any,
will likewise by reinvested at the net asset value on the record
date. GWL&A will redeem Maxim shares at their net asset values to
the extent necessary to make annuity or other payments under the
Contract.
Substitution of Investments
GWL&A reserves the right, subject to compliance with the law
as currently applicable or subsequently changed, to make additions
to, deletions from or substitutions for the investments held by the
Series Account. In the future, GWL&A may establish additional
Investment Divisions within the Series Account. These Investment
Divisions will be established if, and when, in the sole discretion
of GWL&A marketing needs and investment conditions warrant, and will
be made available under existing Contracts to the extent and on a
basis to be determined by GWL&A.
If shares of any of the Portfolios of Maxim should no longer
be available for investment, or if in the judgment of GWL&A's
management further investment in any of the Portfolios' shares
should become inappropriate in view of the objectives of the
Contracts, then GWL&A may substitute shares of another mutual fund
for shares already purchased, or to be purchased in the future under
the Contracts. No substitution of securities held by the Series
Account may take place without prior approval of the Securities and
Exchange Commission, and prior notice to the Contract Owners.
CHARGES AND DEDUCTIONS
No Contract Maintenance Charge
While GWL&A has primary responsibility for the administration
of all Contracts and the Series Account, GWL&A will impose no
contract maintenance charge.
No Sales Charge
GWL&A will impose no sales charge .
Administrative Surrender Fee
A $50 charge will be imposed for any Contract surrendered in
whole during the first 12 months after issue, excluding the "free
look" period and a $25 charge will be imposed for any Contract
surrendered in part during the first 12 months after issue. This
charge reflects the actual expenses associated with the surrenders
GWL&A expects to incur and may not be increased.
Deductions for Premium Taxes
The applicable Premium Tax rates that states and other
governmental entities impose currently range from 0% to 3.5% and are
subject to change by the respective state legislature, by
administrative interpretations or by judicial act. Such Premium
Taxes will depend, among other things, on the state of residence of
a Contract Owner and the insurance tax laws and status of GWL&A in
these states when the Premium Taxes are incurred.
Deductions for Assumption of Mortality and Expense Risks
GWL&A deducts from the daily net asset value of the Series
Account an amount, computed daily, which is equal to an annual rate
as described below.
The level of the mortality and expense risk charge applicable
to the Contract during the first calendar year will be based upon
the initial account balance of the Contract, in accordance with the
schedule set forth below. The level of the mortality and expense
risk charge applicable in subsequent calendar years will be based
upon the account balance as of December 31 of the previous calendar
year, in accordance with such schedule. The following table sets
forth the level of the mortality and expense risk charges that will
apply to a Contract:
M & E Charge Account Balance
.75% From $0 - $9,999.99
.50% From $10,000 - $24,999.99
.25% From $25,000 - $49,999.99
.0% From $50,000 and greater
Because the mortality and expense risk charge is determined based on
the December 31 account balance of the previous calendar year,
Contract Owners may wish to monitor their account balances closely
to ensure timely contributions are made to the extent possible to
reduce the mortality and expense risk charge that will be applicable
in the ensuing year.
The level of this charge is guaranteed and will not be increased.
GWL&A's assumption of mortality risk guarantees that the
annuity payments made to the beneficiary or other payee will not be
affected by the mortality experience (life span) of persons
receiving such payment or of the general population. GWL&A assumes
this "mortality risk" by virtue of the fact that annuity rates in
effect at the time that any Contributions are made cannot be
changed.
GWL&A also assumes the risk that the actual administrative
expenses in connection with the Contracts will exceed the
anticipated administrative expenses. The administrative services
which GWL&A provides include: processing of applications for
issuance of the Contracts and establishing individual Contract Owner
records; purchase and redemption of the underlying mutual fund
shares as required; maintenance of records; administration of
annuity payments; accounting and valuation services; and regulatory
and reporting services.
If the deduction for mortality and expense risks is
insufficient to cover actual costs and assumed risks, the loss will
fall on GWL&A. Conversely, if the deduction proves more than
sufficient, any excess will be added to the GWL&A surplus.
There are also fees and expenses associated with the
underlying mutual fund as described on page 23.
PERIODIC PAYMENT OPTIONS
GWL&A offers two distribution options that are not considered
Annuity options: The Estate Maximizer Option ("EMO") and the
Flexible Payment Option ("FPO"). These options are available for
any Contract Owners but with respect to the EMO, Contract Owners
must be at least age 70 1/2.
Since EMO and FPO are not Annuity options, the Contract
remains in the Accumulation Period and retains all rights and
flexibility described in this prospectus. The value of the
Accumulation Units cancelled will be withdrawn in the same order
that the contributions were applied to the Contract and on a pro
rata basis; i.e., proportioned across the Investment Divisions to
which a Contract Owner has allocated his/her Contributions.
Distributions from a periodic payment option prior to age 59
1/2 may be subject to an early withdrawal penalty imposed by the
Code. Distributions after age 59 1/2 will be subject to no
penalties as long as payments are substantially level and are paid
over a period of not less than five (5) years.
All payments made to an Contract Owner upon the Contract
Owner's attainment of age 70 1/2 from any periodic payment option
must comply with the Code's minimum distribution regulations.
GWL&A reserves the right to discontinue the availability of
these distribution options and to change the terms for future
elections.
Once elected, the applicable option(s) may be revoked by the
Contract Owner at any time, by submitting a Request to the Company's
Home Office. Any revocation will apply only to the amounts not yet
paid. Once EMO or FPO is revoked, it may not be elected again.
If any periodic payment will be less than $100, GWL&A may make
the payments in the most frequent interval which produces a payment
of at least $100.
FPO is different from EMO in the following ways: (1) FPO
payments are made for a fixed dollar amount or a fixed time period
whereas EMO payments vary in dollar amount and can continue
indefinitely during the Contract Owner's lifetime, and (2)
generally, FPO payments will be higher than expected EMO payments.
Contract Owners should carefully assess their future income needs
when considering the election of these distribution options.
1. Estate Maximizer Option ("EMO")
GWL&A will calculate and distribute an annual amount using the
method contained in the Code's minimum distribution regulations.
The Contract Owner specifies the initial distribution date.
Subsequent distributions will be made on the 15th of any month or
such other date the Company may designate or allow. The annual
distribution is determined by dividing the Contract Value by a life
expectancy factor from tables designated by the Internal Revenue
Service ("IRS"). The factor will be based on either the Contract
Owner's life expectancy or the joint life expectancy of the Contract
Owner and the Contract Owner's spouse and will be redetermined for
each calendar year's distribution. The Contract Value to be used in
this calculation is the Contract Value on the December 31st prior to
the year in which the EMO payment is being made. This calculation
will be changed, if necessary, to conform to changes in the Code or
applicable regulations.
2. Flexible Payment Option ("FPO")
FPO payments are available on a monthly, quarterly, semiannual
or annual basis. The Contract Owner specifies the initial
distribution date. Subsequent distributions will be made on the
15th of any month or such other date the Company may designate or
allow.
One of two methods of distribution may be elected for payments
from Variable Sub-Accounts:
(a) Specified Payment - payments of a designated dollar
amount. The dollar amount chosen must be greater than
or equal to the minimum distribution amount allowed by
the Code and applicable regulations. The Contract Value
on December 31st prior to the year for which the payment
is being made will be used in this calculation.
Payments will cease on the earlier of the date the
amount elected to be paid under the option selected has
been reduced to zero or the Contract Value is zero.
(b) Specified Period - payments for a designated time
period. The annual distribution amount must be greater
than or equal to the minimum distribution amount
required by the Code and applicable regulations. Each
annual distribution is determined by dividing the
Contract Value by the number of years remaining in the
elected period. The Contract Value on December 31st
prior to the year for which the payment is being made
will be used in this calculation. For payments made
more often than annually, the annual payment result
(calculated above) is divided by the number of payments
due each year. The specified period must be at least
three (3) years, but not greater than the Annuitant's
life expectancy factor. Payments will cease on the
earlier of the date the amount elected to be paid under
the option selected has been reduced to zero or the
Contract Value is zero.
For purposes of determination of amount to distributed under each of
the referenced distribution methods, life expectancy will be
recalculated annually based on Code 401(a)(9) or applicable
regulations.
ANNUITY OPTIONS
An Annuity Commencement Date and the form of annuity payments
("Annuity Options") may be elected at any time during the
Accumulation Period. The elections are made by the Contract Owner.
The Annuity Commencement Date elected generally must, to avoid the
imposition of an excise tax, not be later than April 1 of the
calendar year following the calendar year in which the Contract
Owner attains age 70 1/2, without regard to the actual retirement
date or termination of employment date. It is the responsibility of
the Contract Owner to file the necessary Request with GWL&A.
The Annuity Commencement Date may be postponed or accelerated,
or the election of any of the Annuity Options changed, upon Request
received by GWL&A at its Administrative Offices up to 30 days prior
to the existing Annuity Commencement Date. If any Annuity
Commencement Date elected would be less than 30 Days from the date
that the Request is received, GWL&A may delay the date elected by
not more than 30 days.
The Contract provides for the Annuity Options described below,
as well as such other Annuity Options as GWL&A may choose to make
available in the future. Except as otherwise noted, the Annuity
Options are payable on a variable, fixed or combination basis. More
than one Annuity Option may be elected. If no Annuity Option is
elected, the Contract automatically provides for a variable life
annuity (with respect to the variable portion of the Contract)
and/or a fixed life annuity (with respect to the fixed portion of
the Contract) with 120 monthly payments guaranteed.
The level of annuity payments under the following options is
based upon the option selected and, depending on the option chosen,
such factors as the age at which payments begin and the frequency
and duration of payments.
Option No. 1: Life Annuity
This option provides an annuity payable monthly during the
lifetime of the annuitant. It would be possible under this option
for the Annuitant to receive no annuity payment if he/she died prior
to the date of the first annuity payment, one annuity payment if the
Annuitant died before the second annuity payment, etc.
Option No. 2: Life Annuity with Payments Guaranteed for Designated
Periods
This option provides an annuity payable monthly for the
guaranteed period elected or the lifetime of the annuitant,
whichever is longer, with the guarantee that if, at the death of the
annuitant, payments have been made for less than the designated
period, the beneficiary will receive payments for the remainder of
the period. The designated period may be 5, 10, 15, or 20 years.
The period generally referred to as "Installment Refund" is
available only on a fixed dollar payment basis.
Option No. 3: Joint and One-Half Survivor (available only as fixed
dollar payments)
This option provides an annuity payable during the joint
lifetime of the annuitant and a designated second person, and
thereafter during the remaining lifetime of the survivor. After the
death of the annuitant, and while only the designated second person
is alive, the amount payable will be one-half of the amount paid
while both were living. It would be possible under this option for
the annuitant and the beneficiary to receive no annuity payment if
both persons died prior to the date of the first annuity payment,
one annuity payment if both persons died before the second annuity
payment, etc.
Option No. 4: Income of Specified Amount (available only as fixed
dollar payments)
Under this option, the amount of the periodic benefit is
selected, which amount will be paid to the payee in equal annual,
semiannual, quarterly, or monthly installments as elected, provided
that the annuity payment period is not less than 36 months nor more
than 240 months.
Option No. 5: Income for Specified Period (available only as fixed
dollar payments)
Under this option, the duration of the periodic benefit is
selected (which may not be less than 36 months nor more than 240
months), and a resulting annuity payment amount will be paid to the
payee in equal annual, semiannual, quarterly, or monthly
installments, as elected.
Option No. 6: Installment Refund Period (available only as fixed
dollar payments)
Under this payment option, monthly payments for the life of
the annuitant will be made or until the sum of the payments made
equals the amount applied, whichever is greater.
Variable Annuity Payments
Variable annuity payments will be determined on the basis of:
(i) the Variable Account Value prior to the Annuity Commencement
Date; (ii) the annuity tables contained in the Contract which
reflect the age of the Contract Owner; (iii) the type of annuity
option(s) selected; and (iv) the investment performance of the
underlying mutual fund. The Contract Owner receives the value of a
fixed number of Annuity Units each month.
At the Annuity Commencement Date, the number of Annuity Units
for each Variable Sub-Account on which variable annuity payments are
based is established. The number of Annuity Units to be credited is
determined by dividing the amount of the first monthly payment by
the value of an Annuity Unit as of the fifth Valuation Period prior
to the Annuity Commencement Date in each Variable Sub-Account
selected. Although the number of Annuity Units is fixed by this
process, the value of such units will vary with the value of the
underlying mutual fund.
The dollar amount of the first monthly variable annuity
payment is determined by applying the total value of the
Accumulation Units credited to the Contract valued as of the fifth
Valuation Period prior to the Annuity Commencement Date to the
annuity tables contained in the Contract. Amounts shown in the
tables are based on the 1983 Table (a) for Individual Annuity
Valuation with an assumed investment return at the rate of 2.5% per
annum. The first annuity payment is determined by multiplying the
benefit per $1,000 of value shown in the Contract tables by the
number of thousands of dollars of value accumulated under the
Variable Account Value. These annuity tables vary according to the
form of annuity selected and according to the age of the Contract
Owner at his/her Annuity Commencement Date.
The 2.5% interest rate stated above is the measuring point for
subsequent annuity payments. If the actual Net Investment Rate
(annualized) exceeds 2.5%, the payment will increase at a rate equal
to the amount of such excess. Conversely, if the actual rate is
less than 2.5%, annuity payments will decrease. If the assumed rate
of interest were to be increased, annuity payments would start at a
higher level but would increase more slowly or decrease more
rapidly.
The amount of the second and subsequent payments is determined
by multiplying the credited fixed number of Annuity Units by the
appropriate Annuity Unit value for the fifth Valuation Period
preceding the date that payment is due. The Annuity Unit value at
the end of any Valuation Period is determined by multiplying the
Annuity Unit value for the immediately preceding Valuation Period by
the product of:
(a) the Net Investment Factor of the Variable Sub-Account for
the Valuation Period for which the Annuity Unit is being
determined, and
(b) a factor of .999932 to neutralize the assumed investment
return of 2.5% per year used in the annuity table.
The value of each Variable Sub-Account's Annuity Unit is set
initially at $1.00.
The value of the Annuity Units is determined as of a Valuation
Period five (5) days' prior to the payment in order to permit
calculation of amount of annuity payments and mailing of checks in
advance of their due date.
Fixed Annuity Payments
The guaranteed level of fixed annuity payments will be
determined on the basis of: (i) the Guaranteed Account Value prior
to the Annuity Commencement Date; (ii) the annuity tables contained
in the Contract which reflects the age of the Contract Owner; and
(iii) the type of annuity option(s) elected. The payment amount may
be greater, however, if GWL&A is using a more favorable table as of
a Contract Owner's Annuity Commencement Date.
Combination Variable and Fixed Annuity Payments
If an election is made to receive annuity payments on a
combination variable and fixed basis, the Variable Account Value
will be applied to the variable annuity option elected and the
Guaranteed Account Value to the fixed annuity option.
Proof of Age and Survival
GWL&A may require proof of age and survival of any payee upon
whose age or survival payments depend.
Frequency and Amount of Annuity Payments
Variable annuity payments will be paid as monthly
installments; fixed annuity payments will be paid annually,
semiannually, quarterly or monthly, as requested. However, if any
payment to be made under any annuity option will be less than $100
GWL&A may make the payments in the most frequent interval which
produces a payment of at least $100. If the net amount available to
apply under any Annuity Option is less than $2,000, GWL&A may pay it
in one lump sum. The maximum amount that may be applied under an
Annuity Option without the prior written consent of GWL&A is
$1,000,000.00.
FEDERAL TAX CONSEQUENCES
Introduction
The ultimate effect of Federal income taxes on the Contract
Value, on annuity payments and on the economic benefit to the
Contract Owner, beneficiary or other payee depends on GWL&A's tax
status, and upon the tax and employment status of the individual
concerned. The Series Account is taxed as a part of GWL&A; not as
a "regulated investment company" under Part I of Subchapter M of the
Code. GWL&A is taxed as a life insurance company as described
below.
TAXATION OF GWL&A
GWL&A is taxed on its insurance business in the United States
as a life insurance company in accordance with Part I of Subchapter
L of the Code. Investment income and realized capital gains on the
assets of the Series Account are reinvested and are taken into
account in determining the Contract Value. Under existing federal
income tax law, such amounts do not result in any tax to GWL&A which
will be chargeable to the Contract Owner or the Series Account.
GWL&A reserves the right to make a deduction from the Contract
Owner's account balance for taxes, if any, imposed with respect to
such items in the future.
INDIVIDUAL RETIREMENT ANNUITIES (IRAs)
Set forth below are some general comments concerning
individual retirement annuities (IRAs) under Sections 72 and 408 of
the Code. It should be understood that the following discussion is
not exhaustive, and that special rules may apply to certain
situations not discussed here. The Contract Owner and beneficiaries
are responsible for determining that contributions, distributions
and other transactions with respect to the contract comply with
applicable laws. No representation is made regarding the likelihood
of the continuation of present federal income tax law or of the
current interpretations of the Internal Revenue Service. No
discussion of state or other tax laws is provided. For further
information, consult a qualified tax adviser.
To qualify as an IRA under Section 408 of the Code, the
annuitant must at all times be the owner of the contract. The
entire interest of the Contract Owner is nonforfeitable and
nontransferable. Contributions may not exceed the limitations
allowable under the Code. The Contract Owner may not borrow from
the contract or pledge the annuity or any portion of it as security
for a loan. If the Contract Owner borrows money under the Contract,
including a policy loan, or pledges any portion of the Contract as
security for a loan, the Contract ceases to qualify as an IRA as of
the first day of the year and the fair market value of the Contract
is includable in the Contract Owner's gross income for the year.
Rollovers
Generally, an owner of an IRA may receive a distribution of
any amount from the IRA and within 60 days roll that amount, or any
part of it, over into any other IRA. Amounts properly rolled over
will not be included in gross income until a distribution is taken
from the new IRA. Only one rollover from a particular IRA to any
other IRA may be made in any one-year period. Certain other
restrictions apply.
An owner may receive a distribution from an IRA and within 60
days roll it over into a qualified plan only if all the funds in the
IRA are attributable to a previous rollover distribution from a
qualified plan. Section 408(d)(3)(A)(ii). If the Contract Owner
ever mixes a rollover contribution from a qualified plan with other
contributions or funds from other sources, the right to roll it back
into a qualified plan is forfeited.
Required Beginning Date/Minimum Distribution Requirements
The Contract Owner's entire interest in the contract must be
distributed, or begin to be distributed, by April 1 following the
calendar year in which the Contract Owner reaches age 70 1/2. For
each succeeding year, a distribution must be made on or before
December 31.
If the amount distributed does not meet the minimum
distribution and incidental death benefit requirements, of Section
401(a)(9) and the regulations thereunder, a 50% penalty tax on the
amount which was required to be, but was not, distributed may be
imposed upon the Contract Owner under Section 4974.
Federal Taxation of IRAs
A Contract Owner who is a natural person generally is not
taxed on increases (if any) in the value of the Contract until
distribution occurs. Code Section 408(d)(1) provides that
distributions, from IRAs, including total or partial withdrawals and
annuity payments, are generally taxed for federal income tax
purposes under Code Section 72. Under these rules, a portion of the
distribution may be excludable from income if any nondeductible
contributions were made. However, since the initial contribution to
this IRA was entirely from pre-tax contributions to a qualified
plan, the entire amount distributed generally will be taxable to the
Contract Owner as ordinary income in the year distributed. There is
no special averaging treatment for lump sum distributions.
Penalty Taxes
Distributions made before the Contract Owner attains age 59
1/2 are premature distributions and subject to an additional tax
equal to 10% of the amount of the distributions which is includable
in gross income in the tax year. However, under Code Section 72(t)
the penalty tax will not apply to distributions: (i) made to a
beneficiary on or after the death of the employee; (ii) attributable
to the employee's being disabled within the meaning of code Section
72(m)(7); or (iii) made as a part of a series of substantially equal
periodic payments (at least annually) for the life or life
expectancy of the employee or the joint lives or life expectancies
of the employee and his designated beneficiary.
If the penalty tax does not apply to a distribution as a
result of the application of item (iii) above, and the series of
payments are subsequently modified (other than by reason of death or
disability), (a) before the close of the period which is 5 years
from the date of the first payment and after the employee attains
age 59 1/2, or (b) before the employee attains age 59 1/2, the tax
for the first year when the modification occurs will be increased by
an amount (determined by the regulations) equal to the tax that
would have been imposed but for item (iii) above, plus interest for
the deferral period.
If the aggregate of all retirement distributions including
those from qualified plans, in a calendar year exceeds $150,000, a
penalty tax of 15% may be imposed on the Contract Owner in addition
to any ordinary tax on the excess portion of the distributions. If
the penalty tax on excessive distributions and the penalty tax on
premature distributions apply to the same distribution, the penalty
tax on excessive distributions is reduced by the amount of penalty
tax on the premature distribution.
Distributions on Death of Contract Owner
Distributions made to a beneficiary upon the Contract Owner's
death must be made pursuant to the rules contained in Section
401(a)(9) of the Code. Generally, if the Contract Owner dies while
receiving annuity payments or other required minimum distribution,
but before the entire interest in the annuity has been distributed,
the remainder of his interest must generally be distributed to the
beneficiary at least as rapidly as under the method in effect as of
the Contract Owner's date of death.
If the Contract Owner dies before payments have begun, his
entire interest must generally be distributed in full on or before
December 31 of the calendar year that contains the fifth anniversary
of the date of the Contract Owner's death, unless the Contract Owner
has named an individual beneficiary. If an individual other than
the surviving spouse has been designated as beneficiary, payments
may be made over the life of that individual or over a period not
extending beyond the life expectancy of the beneficiary so long as
payments begin on or before December 31 of the year following the
year of death. If the beneficiary is the Contract Owner's spouse,
distributions are not required to begin until the date the Contract
Owner would have attained age 70 1/2. If the spouse dies before
distributions begin, the rules discussed above will apply as if the
spouse were the Contract Owner.
However, the surviving spouse, if the beneficiary, may elect
to treat the entire annuity as his or her own IRA regardless of
whether distributions had begun to the deceased Contract Owner or
have begun to the surviving spouse. As the new Contract Owner, the
surviving spouse may make contributions to the IRA and make
rollovers from it. Such an election is deemed made if any amounts
required to be distributed on the Contract Owner's death under these
rules have not been distributed or any additional amounts are
contributed to the annuity.
Contract Owners and beneficiaries should seek competent tax or
legal advice about the tax consequences of distributions.
Federal Income Tax Withholding on Distributions
Taxable distributions from an IRA are subject to income tax
withholding; if the distribution is in the form of an annuity or
similar periodic payments, amounts are withheld as though each
distribution were a payment of wages pursuant to the recipient's
Form W-4; in the case of any other kind of distribution, a flat 10%
is withheld, unless the recipient elects not to have the tax
withheld.
VOTING RIGHTS
GWL&A will vote the shares held by the Investment Divisions of
the Series Account at regular and special meetings of shareholders
of Maxim. The Investment Company Act of 1940 (the "1940 Act") and
the regulations thereunder, as presently interpreted, require that
the shares of the applicable underlying mutual fund be voted in
accordance with instructions received from persons having voting
interests in the Variable Sub-Accounts and, accordingly, GWL&A will
do so. However, if the 1940 Act or any regulation thereunder should
be amended, or if the present interpretation thereof should change,
and as a result GWL&A determined that it is permitted to vote the
shares at its own discretion, it may elect to do so.
Prior to the Annuity Commencement Date, the Contract Owner has
the voting interest in the Variable Sub-Account. After annuity
payments begin under a variable annuity option, the payee will have
the voting interest.
The number of votes which a person has the right to cast will
be determined by applying his/her percentage interest in a Variable
Sub-Account to the total number of votes attributable to the Sub-
Account. In determining the number of votes, fractional shares will
be recognized. During the annuity payment period, the number of
votes attributable to a Contract will decrease as the assets held to
fund the annuity payments decrease.
Voting rights held in respect of a Variable Sub-Account of
this Series Account as to which no timely instructions are received
and shares that are not otherwise attributable to persons having
voting interests in the Variable Sub-Accounts of this Series
Account, will be voted by GWL&A in proportion to the voting
instructions which are received with respect to all Contracts
participating in that Sub-Account of this Series Account. Voting
instructions to abstain on any item to be voted upon will be applied
on a pro rata basis to reduce the votes eligible to be cast.
Each person having a voting interest will receive proxy
materials, reports and other materials relating to the applicable
underlying mutual fund.
DISTRIBUTION OF THE CONTRACTS
Great-West is the principal underwriter and the distributor of
the Contracts. Great-West is registered with the Securities and
Exchange Commission under the Securities and Exchange Act of 1934 as
a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. ("NASD"). Applications for the Contracts
will be solicited by duly-licensed insurance agents of Great-West.
No commissions will be paid to any person for the sale of
Contracts.
RETURN PRIVILEGE
Within 10 days (20 days in Idaho and North Dakota) after the
Contract is first received, it may be canceled for any reason by
delivering or mailing it together with a written request to cancel
to GWL&A's Administrative Offices. Upon cancellation, GWL&A will
pay the Contract Owner the initial purchase payment. No
administrative termination fee will be deducted.
STATE REGULATION
As a life insurance company organized and operated under
Colorado law, GWL&A is subject to provisions governing such
companies and to regulation by the Colorado Commissioner of
Insurance.
GWL&A's books and accounts are subject to review and
examination by the Colorado Division of Insurance at all times and
a full examination of its operations is conducted by the National
Association of Insurance Commissioners ("NAIC") at least once every
three years.
REPORTS
As presently required by the Investment Company Act of 1940
(the "1940 Act") and regulations promulgated thereunder, all
Contract Owners will be furnished, at lease semi-annually, reports
containing such information as may be required under the 1940 Act or
by any other applicable law or regulation. In addition, all
Contract Owners will be furnished not less frequently than annually
a statement of the Contract Value established in his/her name.
LEGAL PROCEEDINGS
The Series Account is not engaged in any litigation. GWL&A is
not involved in any litigation which would have material adverse
effect on the ability of GWL&A to perform its contract with the
Series Account.
LEGAL MATTERS
The organization of GWL&A, its authority to issue variable
annuity contracts and the validity of the Contracts have been passed
upon by R.B. Lurie, Vice-President, Counsel and Associate Secretary
of GWL&A. Certain legal matters relating to the federal securities
laws have been passed upon for GWL&A by Jorden Burt Berenson &
Johnson, LLP .
REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities
and Exchange Commission, under the Securities Act of 1933 as
amended, with respect to the Contracts offered hereby. This
Prospectus does not contain all the information set forth in the
Registration Statement and amendments thereto and exhibits filed as
a part thereof, to all of which reference is hereby made for further
information concerning the Series Account, GWL&A and the Contracts.
Statements contained in this Prospectus as to the content of
Contracts and other legal instruments are summaries. For a complete
statement of the terms thereof reference is made to such instruments
as filed.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific
information and financial statements relating to the Series Account
and GWL&A. The Table of Contents of the Statement of Additional
Information is set forth below:
1. Custodian and Independent Auditors
2. Underwriter
3. Calculation of Performance Data
4. Financial Statements
Inquiries and requests for a Statement of Additional
Information should be directed to GWL&A in writing at 8515 E.
Orchard Road, Englewood, Colorado 80111, or by
telephoning GWL&A at (800) 495-4952.
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
RETIREMENT PLAN SERIES ACCOUNT
Individual Flexible Premium Variable Annuity Contracts
issued by
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
Telephone: (800) 495-4952
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a Prospectus
and should be read in conjunction with the Prospectus, dated April
30, 1996 , which is available without charge by contacting Great-West
Life & Annuity Insurance Company ("GWL&A") at the above address or
at the above telephone number.
April 30, 1996
TABLE OF CONTENTS
Page
CUSTODIAN AND INDEPENDENT AUDITORS. . . . . . . . . . . . . . .B-3
UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . . .B-3
CALCULATION OF PERFORMANCE DATA . . . . . . . . . . . . . . . . B-3
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . B-4
CUSTODIAN AND INDEPENDENT AUDITORS
A. Custodian
The assets of Retirement Plan Series Account (the
"Series Account") are held by GWL&A. The assets of the Series
Account are kept physically segregated and held separate and apart
from the general account of GWL&A. GWL&A maintains records of all
purchases and redemptions of share of the Fund. Additional
protection for the assets of the Series Account is afforded by
blanket fidelity bonds issued to The Great-West Life Assurance
Company ("Great-West") in the amount of $25 million, which cover all
officers and employees of GWL&A.
B. Independent Auditors
The accounting firm of Deloitte & Touche LLP performs
certain accounting and auditing services for GWL&A and the Series
Account. The principal business address of Deloitte & Touche LLP is
555 Seventeenth Street, Suite 3600, Denver, Colorado 80202-3942.
The consolidated financial statements of GWL&A at
December 31, 1995 and 1994 and each of the three years in the period
ended December 31, 1995, as well as the financial statements of the
Series Account at December 31, 1995, included in this Statement of
Additional Information have been audited by Deloitte & Touche LLP,
independent auditors, as set forth in their reports appearing herein
and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
UNDERWRITER
The offering of the Contracts is made on a continuous basis by
Great-West, an affiliate of GWL&A. For sales of the Contracts,
Great-West was paid and retained the following amounts during the
years indicated:
Year Paid and
Retained
1994 -0-
1995 -0-
CALCULATION OF PERFORMANCE DATA
A. Yield and Effective Yield Quotations for the Money Market
Investment Division
The yield quotation for the Money Market Investment Division
set forth in the Prospectus is for the seven-day period ended
December 31, 1995 and is computed by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one Accumulation Unit in the
Money Market Investment Division at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from
Participant accounts, and dividing the difference by the value of
the account at the beginning of the base period to obtain the base
period return, and then multiplying the base period return by
(365/7) with the resulting yield figure carried to the nearest
hundredth of one percent.
The effective yield quotation for the Money Market Investment
Division set forth in the Prospectus is for the seven-day period
ended December 31, 1995 and is carried to the nearest hundredth of
one percent, computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account
having a balance of one Accumulation Unit in the Money Market
Investment Division at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from Participant accounts,
and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and
then compounding the base period return by adding 1, raising the sum
to a power equal to 365 divided by 7, and subtracting 1 from the
result, according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN +1 365/7]-1.
For purposes of the yield and effective yield computations,
the hypothetical charge reflects all deductions that are charged to
all Participant accounts in proportion to the length of the base
period, and for any fees that vary with the size of the account, the
account size is assumed to be the Money Market Investment Division's
mean account size. The specific percentage applicable to a
particular withdrawal would depend on a number of factors including
the length of time the Contract Owner has participated under the
Contracts. (See "Charges and Deductions" on page 24 of the
Prospectus.) No deductions or sales loads are assessed upon
annuitization under the Contracts. Realized gains and losses from
the sale of securities and unrealized appreciation and depreciation
of the Money Market Investment Division and the Fund are excluded
from the calculation of yield.
B. Total Return Quotations for All Investment Divisions
The total return quotations for all Investment Divisions,
other than the Money Market, set forth in the Prospectus are average
annual total return quotations for the one-year period ended
December 31, 1995. The quotations are computed by finding the
average annual compounded rates of return over the relevant periods
that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of
$1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the particular
period at the end of the particular
period
For purposes of the total return quotations for these Investment
Divisions, the calculations take into effect all fees that are
charged to the Contract Value , and for any fees that vary with the
size of the account, the account size is assumed to be the
respective Investment Divisions' mean account size. The
calculations also assume a complete redemption as of the end of the
particular period.
FINANCIAL STATEMENTS
The financial statements of GWL&A as contained herein should
be considered only as bearing upon GWL&A's ability to meet its
obligations under the Contracts, and they should not be considered
as bearing on the investment performance of the Series Account. The
interest of Contract Owners under the Contract is affected solely by
the investment results of the Series Account.
RETIREMENT PLAN SERIES ACCOUNT
FINANCIAL STATEMENTS FOR THE PERIOD
FROM JUNE 1, 1995 (INCEPTION) TO
DECEMBER 31,1995 AND INDEPENDENT AUDITORS' REPORT
RETIREMENT PLAN SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Financial Statements for the
Period from June 1, 1995
(Inception) to December 31, 1995
and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Contract Owners
of Retirement Plan Series Account
of Great-West Life & Annuity Insurance Company:
We have audited the accompanying statement of assets and
liabilities of Retirement Plan Series Account of
Great-West Life & Annuity Insurance Company as of
December 31, 1995, and the related statements of
operations and changes in net assets for the period June
1, 1995 (Inception) to December 31, 1995 including each
of the investment divisions. These financial statements
are the responsibility of the Series Account's
management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, such financial statements present fairly,
in all material respects, the financial position of the
Retirement Plan Series Account of Great-West Life &
Annuity Insurance Company at December 31, 1995 and the
results of its operations and the changes in its net
assets for the period June 1, 1995 (Inception) to
December 31, 1995, in conformity with generally accepted
accounting principles.
February 7, 1996
RETIREMENT PLAN SERIES ACCOUNT GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1995
ASSETS
Shares Cost Value
Investments in affiliated mutual funds:
Maxim Series Fund, Inc. - Corporate Bond 266,314 $
303,508 $ 306,831
Maxim Series Fund, Inc. - Foreign Equity 75,940 73,317
74,962
Maxim Series Fund, Inc. - Growth Index 366,167 479,639
492,810
Maxim Series Fund, Inc. - Investment Grade Corporate Bond
66,565 86,099 87,605
Maxim Series Fund, Inc. - Money Market 474,754 475,075
475,075
Maxim Series Fund, Inc. - Small-Cap Aggressive Growth
132,520 156,656 153,790
Maxim Series Fund, Inc. - Small-Cap Index 245,049
284,289 286,210
Maxim Series Fund, Inc. - Small-Cap Value 107,364
114,294 114,546
Maxim Series Fund, Inc. - Stock Index 499,925 957,573
989,668
Maxim Series Fund, Inc. - Total Return 93,343 121,602
121,058
Maxim Series Fund, Inc. - U.S. Government Mortgage
Securities 132,208 154,007 155,822
Maxim Series Fund, Inc. - Value Index 358,167 439,897
452,096
Total investments $ 3,645,956 $ 3,710,473
Other assets and liabilities:
Premium due and accrued 188,659
Due to Great-West Life & Annuity Insurance Company
(28)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL
(Note 5) $ 3,899,104
See notes to financial statements.
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
PERIOD FROM JUNE 1, 1995 (INCEPTION) TO DECEMBER 31, 1995
Aggressive Short Aggressive Aggressive Bond
International Growth Bond Term Growth Growth Fund
III Fund II Fund IV Fund II Fund II Fund V Fund III
Investment Investment Investment Investment
Investment Investment Investment Division Division
Division Division Division Division Division
INVESTMENT INCOME $ 9,946 $ 38 $ 4,889 $ 1,936 $ 11,015
$ 12,554 $ 6,941
EXPENSES - mortality and expense risks by category:
A 11 39 34 9 47 16 26 O 13 14 86 7 3 82 64
U 8 12 41 13 4 2 16 Z
NET INVESTMENT INCOME (LOSS)
9,914 (27) 4,728 1,907 10,961 12,454
6,835
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 4 (33) 543 28
766 685
Net change in unrealized appreciation on investments
3,321 1,645 13,171 1,506 (2,865) 1,921
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
3,325 1,612 13,714 1,534 (2,099) 2,606
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
$ 13,239 $ 1,585 $ 18,442 $ 3,441 $ 10,961 $ 10,355
$ 9,441
See notes to financial statements.
(Continued)
RETIREMENT PLAN SERIES ACCOUNT GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY STATEMENT OF OPERATIONS PERIOD FROM
JUNE 1, 1995 (INCEPTION) TO DECEMBER 31, 1995
Growth & Growth & Growth Growth Income Bond
Income Fund IV Fund II Fund I Fund I Fund III
Total Investment Investment Investment Investment
Investment Retirement Division Division Division
Division Division Plan
INVESTMENT INCOME
$ 5,911 $ 12,459 $ 4,575 $ 3,526 $ 9,848 $ 83,638
EXPENSES - mortality and expense risks by category:
A 9 52 18 4 16 281
O 16 100 56 61 51 553 U 22 104 12 16 67 317
Z
NET INVESTMENT INCOME
5,864 12,203 4,489 3,445 9,714 82,487
NET REALIZED AND UNREALIZED:
GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments
284 2 4 335 2,618
Net change in unrealized appreciation (depreciation) on
investments
252 32,095 (544) 1,815 12,199 64,516
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
252 32,379 (542) 1,819 12,534 67,134
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$ 6,116 $ 44,582 $ 3,947 $ 5,264 $ 22,248 $ 149,621
See notes to financial statements.
(Concluded)
RETIREMENT PLAN SERIES ACCOUNT GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM JUNE 1, 1995 (INCEPTION) TO DECEMBER 31, 1995
Aggressive Bond International Aggressive Bond
Short-Term Growth Aggressive Fund III Fund II
Growth Fund IV Fund II Fund II Fund V Growth Fund III
Investment Investment Investment Investment
Investment Investment Investment Division Division
Division Division Division Division Division 1995
1995 1995 1995 1995 1995 1995
FROM OPERATIONS:
Net investment income (loss)
$ 9,914 $ (27) $ 4,728 $ 1,907 $ 10,961 $ 12,454 $ 6,835
Net realized gain (loss) on investments
4 (33) 543 28 766 685
Net change in unrealized appreciation (depreciation) in
investments
3,321 1,645 13,171 1,506 (2,865) 1,921
Increase in net assets derived from operations
13,239 1,585 18,442 3,441 10,961 10,355 9,441
FROM UNIT TRANSACTIONS: (by category)
Purchase payments:
A 8,659 31,067 38,071 7,720 24,206 13,813 31,319
O 26,054 16,858 115,047 13,484 9,252 66,146 67,527
U 17,491 22,036 106,432 25,929 14,436 16,272 38,383
Z 242,784 11,933 249,766 76,149 442,787 73,099
183,954
Redemptions: A (2,857) (865) (1,699) (6,016)
O (1,673) (830)
U (322) (322) (471)
Z (1,077) (21,273) (21,950) (21,776)
Net transfers from (to) other annuity contracts:
A O U Z
(29,350) 29,434
Increase in net assets derived from unit transactions
293,589 79,037 479,101 122,960 498,842 144,008
292,090
INCREASE IN NET ASSETS
306,828 80,622 497,543 126,401 509,803 154,363
301,531
NET ASSETS
Beginning of period
End of period
$ 306,828 $ 80,622 $ 497,543 $ 126,401 $ 509,803
$ 154,363 $ 301,531
See notes to financial statements.
(Continued)
RETIREMENT PLAN SERIES ACCOUNT GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM JUNE 1, 1995 (INCEPTION) TO DECEMBER 31, 1995
Growth Growth Growth & Income Bond Growth & Income
Fund IV Fund II Fund I Fund I Fund III Total
Investment Investment Investment Investment
Investment Retirement Division Division Division
Division Division Plan 1995 1995 1995 1995 1995
1995
FROM OPERATIONS:
Net investment income
$ 5,864 $ 12,203 $ 4,489 $ 3,445 $ 9,714 $ 82,487
Net realized gain on investments
284 2 4 335 2,618
Net change in unrealized appreciation (depreciation) in
investments
252 32,095 (544) 1,815 12,199 64,516
Increase in net assets derived from operations
6,116 44,582 3,947 5,264 22,248 149,621
FROM UNIT TRANSACTIONS: (by category)
Purchase payments:
A 8,133 45,210 12,486 7,565 21,043 249,292
O 14,145 130,516 55,013 63,033 82,281 659,356
U 57,348 207,611 31,635 16,799 132,683 687,055
Z 28,804 632,102 49,715 74,595 222,207 2,287,895
Redemptions:
A (2,537) (13,974)
O (3,000) (5,503)
U (640) (316) (321) (639) (3,031)
Z (22,725) (22,890) (111,691)
Net transfers from other annuity contracts:
A O U Z 84
Increase in net assets derived from unit transactions
108,430 992,074 148,533 158,671 432,148 3,749,483
INCREASE IN NET ASSETS
114,546 1,036,656 152,480 163,935 454,396 3,899,104
NET ASSETS
Beginning of period
End of period
$ 114,546 $ 1,036,656 $ 152,480 $ 163,935 $ 454,396
$ 3,899,104
See notes to financial statements.
(Concluded)
RETIREMENT PLAN SERIES ACCOUNT GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY [FN] NOTES TO FINANCIAL STATEMENTS
PERIOD FROM JUNE 1, 1995 (INCEPTION) TO DECEMBER 31, 1995
1. HISTORY OF THE SERIES ACCOUNT
The Retirement Plan Series Account of Great-West Life &
Annuity Insurance Company (the Series Account) is a
separate account of Great-West Life & Annuity Insurance
Company (the Company) established under Colorado law.
The Series Account commenced operations on June 1, 1995.
The Series Account is registered with the Securities and
Exchange Commission as a unit investment trust under the
provisions of the Investment Company Act of 1940, as
amended.
The Series Account has various investment divisions which
invest in shares of an open-end management investment
companies (the Funds) as follows:
Retirement Plan Series Investment Division Mutual
Fund Investment Aggressive Growth Fund III Maxim
Series Fund, Inc. - Small-Cap Index Aggressive Growth
Fund IV Maxim Series Fund, Inc. - Growth Index
Aggressive Growth Fund V Maxim Series Fund, Inc. -
Small-Cap Aggressive Growth Bond Fund I Maxim Series
Fund, Inc. - U.S. Government Mortgage Securities Bond
Fund II Maxim Series Fund, Inc. - Investment Grade
Corporate Bond Bond Fund III Maxim Series Fund, Inc. -
Corporate Bond Growth Fund II Maxim Series Fund, Inc.
- - Stock Index Growth Fund IV Maxim Series Fund, Inc. -
Small-Cap Value Growth & Income Fund I Maxim Series
Fund, Inc. - Total Return Growth & Income Fund III
Maxim Series Fund, Inc. - Value Index International Fund
II Maxim Series Fund, Inc. - Foreign Equity Short Term
Fund II Maxim Series Fund, Inc. - Money Market
2. SIGNIFICANT ACCOUNTING POLICIES The following is a
summary of significant accounting policies of the Series
Account which are in accordance with the accounting
principles generally accepted in the investment company
industry: Security Transactions - Security transactions
are recorded on the trade date. Cost of investments sold
is determined on the basis of identified cost. Dividend
income is accrued as of the ex-dividend date and expenses
are accrued on a daily basis.
Security Valuation - The investments in shares of the
Funds are valued at the closing net asset value per share
as determined by the appropriate fund/portfolio at the
end of each day.
The cost of investments represents shares of the Funds
which were purchased by the Series Account. Purchases
are made at the net asset value from net purchase
payments or through reinvestment of all distributions
from the Fund.
Federal Income Taxes - The Series Account income is
automatically applied to increase contract reserves.
Under the existing federal income tax law, this income is
not taxed to the extent that it is applied to increase
reserves under a contract. The Company reserves the
right to charge the Series Account for federal income
taxes attributable to the Series Account if such taxes
are imposed in the future.
3. CHARGES UNDER THE CONTRACT
Charges Incurred for Total or Partial Surrenders - The
administrative surrender fee is $50 if the contract is
surrendered in whole during the first 12 months and $25
if the contract is surrendered in part during the first
12 months.
Deductions for Premium Taxes - The Company presently
intends to pay any premium tax levied by any governmental
entity as a result of the existence of the participant
accounts or the Series Account.
Deductions for Variable Asset Charge - The Company
deducts an amount, computed daily, from the net asset
value of the Series Account investments, equal to an
annual rate of .75% (category A), .50% (category O), .25%
(category U), and .00% (category Z), depending on the
size of the contract. This charge is designed to
compensate the Company for its assumption of certain
mortality, death benefit and expense risks.
If the above proves insufficient to cover actual costs
and assumed risks, the loss will be borne by the Company;
conversely, if the amount deducted proves more than
sufficient, the excess will be a profit to the Company.
4. RELATED PARTY SERVICES
The Company's parent, The Great-West Life Assurance
Company, serves as investment advisor to Maxim Series
Fund, Inc. Fees are assessed against the average daily
net asset value of the Funds to compensate The Great-West
Life Assurance Company for investment advisory services.
5. COMPONENTS OF NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL
The following is a summary of the net assets applicable
to outstanding units of capital, depending on the
variable asset change, at December 31, 1995 for each
investment division:
Total Variable
Annuity Contract
Units Unit Price
Liabilities Net Assets Applicable to Outstanding Units
of Capital:
Bond Fund III
Category A 821.904884 10.949251 8,999
Category O 2,425.205966 11.029525 26,749
Category U 1,650.004616 10.911618 18,004
Category Z 22,880.135549 11.060962 253,076
International Fund II:
Category A 2,788.664825 10.302761 28,731
Category O 1,670.767119 10.266556 17,153
Category U 2,190.942345 10.261732 22,483
Category Z 1,192.467268 10.276613 12,255
Aggressive Growth Fund IV
Category A 3,339.103141 11.689177 39,031
Category O 10,056.692537 11.706101 117,725
Category U 9,367.330327 11.723289 109,816
Category Z 19,673.408979 11.740268 230,971
5. COMPONENTS OF NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL (Continued)
Total Variable
Annuity Contracts
Units Unit Price
Liabilities Net Assets Applicable to Outstanding Units
of Capital:
Bond Fund II
Category A 756.561718 10.475492 7,925
Category O 1,298.144628 10.546598 13,691
Category U 2,523.644829 10.453319 26,380
Category Z 7,411.716394 10.578512 78,405
Short-Term Fund II
Category A 2,395.983293 10.225472 24,500
Category O 926.685896 10.017734 9,283
Category U 1,445.292031 10.051674 14,528
Category Z 44,935.085775 10.270189 461,492
Aggressive Growth Fund V
Cateogry A 1,064.472924 11.927781 12,697
Category O 5,718.097844 11.946018 68,308
Category U 1,398.808213 11.958605 16,728
Category Z 4,726.926694 11.980335 56,630
Aggressive Growth Fund III:
Category A 2,240.540136 11.604409 26,000
Category O 5,959.109889 11.615539 69,218
Category U 3,318.139919 11.632399 38,598
Category Z 14,397.060165 11.649285 167,715
Growth Fund IV
Category A 773.205332 11.019784 8,521
Category O 1,371.506696 11.037995 15,139
Category U 5,416.352624 11.053651 59,870
Category Z 2,801.917000 11.069583 31,016
Growth Fund II:
Category A 4,042.629955 11.590370 46,856
Category O 11,673.470133 11.550683 134,837
Category U 18,708.731033 11.567617 216,415
Category Z 55,122.003243 11.584266 638,548
Growth & Income Fund I
Category A 1,177.799373 10.887181 12,823
Category O 5,184.261417 10.902751 56,523
Category U 2,940.801963 10.918643 32,110
Category Z 4,666.318440 10.934527 51,024
Bond Fund I
Category A 731.019872 10.451024 7,640
Category O 5,864.006662 10.519428 61,686
Category U 1,624.613386 10.535307 17,116
Category Z 7,344.936462 10.550600 77,493
Growth & Income Fund III
Category A 1,666.789255 11.546020 19,245
Category O 7,395.183689 11.561775 85,501
Category U 12,134.890697 11.578831 140,508
Category Z 18,036.451251 11.595504 209,142
TOTAL $ 3,899,104
6. SELECTED DATA The following is a summary of
selected data for a unit of capital of the Series Account
at the beginning and end of the year and the number of
units outstanding at December 31, 1995:
Corporate Corporate Corporate Corporate Foreign Foreign
Foreign Foreign Bond Bond Bond Bond Equity Equity
Equity Equity
A O U Z A O U Z 1995
Beginning Unit Value $ 10.00 $ 10.00 $ 10.00 $ 10.00
$ 10.00 $ 10.00 $ 10.00 $ 10.00
Ending Unit Value $ 10.95 $ 11.03 $ 10.91 $ 11.06
$ 10.30 $ 10.27 $ 10.26 $ 10.28
Number of Units Outstanding
821.90 2,425.21 1,650.00 22,880.14 2,788.66 1,670.77
2,190.94 1,192.47
Continued)
6. SELECTED DATA (continued)
The following is a summary of selected data for a
unit of capital of the Series Account at the beginning
and end of the year and the number of units outstanding
at December 31, 1995:
Investment Investment Investment Investment Grade
Grade Grade Grade Growth Growth Growth Growth Corporate
Corporate Corporate Corporate Index Index Index Index
Bond Bond Bond Bond
A O U Z A O U Z 1995
Beginning Unit Value
$ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $
10.00 $ 10.00
Ending Unit Value $ 11.69 $ 11.71 $11.72 $ 11.74
$10.48 $10.55 $ 10.45 $10.58
Number of Units Outstanding 3,339.10 10,056.69 9,367.33
19,673.41 756.56 1,298.14 2,523.64 7,411.72
(Continued)
6. SELECTED DATA (continued)
The following is a summary of selected data for a unit of
capital of the Series Account at the beginning and end of
the year and the number of units outstanding at December
31, 1995:
Small-Cap Small-Cap Small-Cap Small-Cap
Aggressive Aggressive Aggressive Aggressive
Money Money Money Money
Market Market Market Market
Growth Growth Growth Growth
A O U Z A O U Z 1995
Beginning Unit Value
$ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
$ 10.00 $ 10.00
Ending Unit Value
$ 10.23 $ 10.02 $ 10.05 $ 10.27 $ 11.93 $ 11.95
$ 11.96 $ 11.98
Number of Units Outstanding
2,395.98 926.69 1,445.29 44,935.09 1,064.47 5,718.10
1,398.81 4,726.93
(Continued)
6. SELECTED DATA (continued)
The following is a summary of selected data for a unit of
capital of the Series Account at the beginning and end of
the year and the number of units outstanding at December
31, 1995:
Small-Cap Small-Cap Small-Cap Small-Cap Small-Cap
Small-Cap Small-Cap Small-Cap
Index Index Index Index
Value Value Value Value
A O U Z A O U Z 1995
Beginning Unit Value
$ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
$ 10.00 $ 10.00
Ending Unit Value
$ 11.60 $ 11.62 $ 11.63 $ 11.65 $11.02 $ 11.04
$ 11.05 $ 11.07
Number of Units Outstanding
2,240.54 5,959.11 3,318.14 14,397.06 773.21 1,371.51
5,416.35 2,801.92
(Continued)
6. SELECTED DATA (continued)
The following is a summary of selected data for a unit of
capital of the Series Account at the beginning and end of
the year and the number of units outstanding at December
31, 1995:
Stock Stock Stock Stock Total Total Total Total Index
Index Index Index Return Return Return Return
A O U Z A O U Z 1995
Beginning Unit Value
$ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
$ 10.00 $ 10.00
Ending Unit Value $ 11.59 $ 11.55 $ 11.57 $ 11.58
$ 10.89 $ 10.90 $ 10.92 $ 10.93
Number of Units Outstanding
4,042.63 11,673.47 18,708.73 55,122.00 1,177.80 5,184.26
2,940.80 4,666.32
(Continued)
6. SELECTED DATA (continued)
The following is a summary of selected data for a unit of
capital of the Series Account at the beginning and end of
the year and the number of units outstanding at December
31, 1995:
U.S. U.S. U.S. U.S.
Government Government Government Government
Mortgage Mortgage Mortgage Mortgage
Securities Securities Securities Securities
Value Value Value Value
Index Index Index Index
A O U Z A O U Z 1995
Beginning Unit Value
$ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
$ 10.00 $ 10.00
Ending Unit Value
$ 10.45 $ 10.52 $ 10.54 $ 10.55 $ 11.55 $ 11.56
$ 11.58 $ 11.60
Number of Units Outstanding
731.02 5,864.01 1,624.61 7,344.94 1,666.79 7,395.18
12,134.89 18,036.45
(Concluded)
7. CHANGE IN SHARES The following is a summary of the
net change in total investment shares held in each of the
respective mutual funds:
For the Year Ended December 31, 1995
Maxim Series Fund, Inc. - Corporate Bond 266,314
Maxim Series Fund, Inc. - Foreign Equity 75,940
Maxim Series Fund, Inc. - Growth Index 366,167
Maxim Series Fund, Inc. - Investment Grade Corporate Bond
66,565
Maxim Series Fund, Inc. - Money Market 474,754
Maxim Series Fund, Inc. - Small-Cap Aggressive Growth
132,520
Maxim Series Fund, Inc. - Small-Cap Index 245,049
Maxim Series Fund, Inc. - Small-Cap Value 107,364
Maxim Series Fund, Inc. - Stock Index 499,925
Maxim Series Fund, Inc. - Total Return 93,343
Maxim Series Fund, Inc. - U.S. Government Mortgage
Securities 132,208
Maxim Series Fund, Inc. - Value Index 358,167
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 1995, 1994 AND 1993
AND INDEPENDENT AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
of Great-West Life & Annuity Insurance Company:
We have audited the accompanying consolidated balance
sheets of
Great-West Life & Annuity Insurance Company (a
wholly-owned
subsidiary of The Great-West Life Assurance Company) and
subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, stockholder's
equity, and cash flows for each of the three years in the
period ended December 31, 1995. These financial
statements are the responsibility of the Company's
management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such consolidated financial statements
present fairly, in all material respects, the financial
position of Great-West Life & Annuity Insurance Company
and subsidiaries as of December 31, 1995 and 1994, and
the results of their operations and their cash flows for
each of the three years in the period ended December 31,
1995 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 19, 1996
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(Dollars in Thousands)
ASSETS
1995
1994
INVESTMENTS:
Fixed Maturities:
Held-to-maturity, at amortized cost
(fair value $2,158,043 and $4,135,248)
$ 2,054,204
$4,293,985
Available for sale, at fair value
(amortized cost $6,087,969 and $2,997,087)
6,263,187
2,824,703
Common stock
9,440
5,222
Mortgage loans on real estate
1,713,195
2,011,059
Real estate
60,454
43,663
Policy loans
2,237,745
1,905,013
Short-term investments
134,835
706,920
Total Investments
12,473,060
11,790,565
Cash
90,939
131,621
Reinsurance receivable
333,924
295,148
Deferred policy acquisition costs
278,526
297,092
Investment income due and accrued
211,922
195,817
Other assets
40,038
55,579
Premiums in course of collection
85,990
84,478
Deferred income taxes
168,941
210,407
Separate account assets
3,998,878
2,554,836
TOTAL ASSETS
$17,682,218
$15,615,543
See notes to consolidated financial statements.
LIABILITIES AND STOCKHOLDER'S EQUITY
1995
1994
POLICY BENEFIT LIABILITIES:
Policy reserves
$10,845,935
$10,334,456
Policy and contract claims
359,791
338,515
Policyholders' funds
154,872
144,262
Experience refunds
83,562
70,359
Provision for policyholders'dividends
47,760
41,840
GENERAL LIABILITIES:
Due to Parent Corporation
149,974
159,117
Repurchase agreements
372,965
564,160
Commercial paper
84,854
89,686
Other liabilities
453,889
420,154
Undistributed earnings on
participating business
136,617
120,927
Separate account liabilities
3,998,878
2,554,836
Total Liabilities
16,689,097
14,838,312
STOCKHOLDER'S EQUITY:
Preferred stock, $1 par value,
50,000,000 shares authorized:
Series A, cumulative,
1500 shares authorized, liquidation value of
$100,000 per share, 600 shares issued and
outstanding 60,000 60,000
Series B, cumulative,
1500 shares authorized, liquidation value of
$100,000 per share, 200 shares issued and
outstanding 20,000 20,000
Series C, cumulative,
1500 shares authorized, none outstanding
Series D, cumulative,
1500 shares authorized, none outstanding
Series E, non-cumulative,
2,000,000 shares authorized,
liquidation value of $20.90
41,800 41,800
per share, issued, and outstanding
Common stock, $1 par value;
50,000,000 shares authorized;
7,032,000 shares issued and
outstanding 7,032 7,032
Additional paid-in capital
657,265
657,265
Net unrealized gains (losses) on
securities available-for-sale
58,763
(78,427)
Retained earnings
148,261
69,561
Total Stockholder's Equity
993,121
777,231
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY
$17,682,218
$15,615,543
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994,
AND 1993
(Dollars in Thousands)
1995
1994
1993
REVENUES:
Annuity contract charges and
premiums
$79,816
$61,122
$63,210
Life, accident, and health premiums
earned (net of premiums ceded totaling
$60,880,
$48,115
and $254,969)
987,611
938,947
632,961
Net investment income
835,046
767,646
791,424
Net realized gains (losses) on
investments
7,465
(71,939)
25,342
1,909,938
1,695,776
1,512,937
BENEFITS AND EXPENSES:
Life and other policy benefits (net
of reinsurance recoveries totaling
$43,574,
$18,937,
and $151,598)
557,469
548,950
390,562
Increase in reserves
98,797
64,834
59,873
Interest paid or credited to
contractholders
562,263
529,118
623,417
Provision for policyholders' share
of earnings (losses)
on participating business
2,027
(725)
(1,498)
Dividends to policyholders
48,150
42,094
34,474
1,268,706
1,184,271
1,106,828
Commissions
122,926
120,058
90,472
Operating expenses
314,810
261,311
196,820
Premium taxes
26,884
27,402
23,129
1,733,326
1,593,042
1,417,249
INCOME BEFORE INCOME TAXES
176,612
102,734
95,688
PROVISION FOR INCOME TAXES:
Current
88,366
65,070
76,672
Deferred
(39,434)
(36,614)
(45,620)
48,932
28,456
31,052
NET INCOME
$127,680
$74,278
$64,636
See notes to consolidated financial
statements.
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S
EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994, AND
1993 (Dollars in Thousands)
Net Additional
Unrealized Retained
Preferred Stock
Common Stock
Paid-In
Gains
Earnings
Shares
Amount
Shares
Amount
Capital
(Losses)
(Deficit)
Total
BALANCE, JANUARY 1, 1993
2,000,800
$121,800
7,028,217
$7,028
$647,199
$0
$(7,063)
$768,964
Issuance of common stock
3,783
4
496
500
Capital contributions
9,098
9,098
Dividends
(21,852)
(21,852)
Net income
64,636
64,636
BALANCE, DECEMBER 31, 1993
2,000,800
121,800
7,032,000
7,032
656,793
0
35,721
821,346
Adjustment to beginning
balance for change in
accounting method for investment
securities
6,515
6,515
Change in net unrealized
gains (losses)
(84,942)
(84,942)
Capital contributions
472
472
Dividends
(40,438)
(40,438)
Net income
74,278
74,278
BALANCE, DECEMBER 31, 1994
2,000,800
121,800
7,032,000
7,032
657,265
(78,427)
69,561
777,231
Change in net unrealized
gains (losses)
137,190
137,190
Dividends
(48,980)
(48,980)
Net income
127,680
127,680
BALANCE, DECEMBER 31,
1995
2,000,800
$121,800
7,032,000
$7,032
$657,265
$58,763
$148,261
$993,121
See notes to consolidated financial
statements.
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994,
AND 1993
(Dollars in Thousands)
1995
1994
1993
OPERATING ACTIVITIES:
Net income
$127,680
$74,278
$64,636
Adjustments to reconcile net
income to net cash provided by
operating activities:
Gain (loss) allocated to
par policyholders
2,027
(725)
(1,498)
Amortization of investments
26,725 36,978 36,782
Realized losses (gains) on
disposal of investments
and write-downs of mortgage loans and real estate
(7,465) 71,939 (25,342)
Amortization
49,464 29,197 34,115
Deferred income taxes
(39,763) (38,631) (56,959)
Changes in assets and liabilities:
Policy benefit liabilities
346,975 93,998 438,809
Reinsurance receivable
(38,776) (25,868) 352,106
Accrued interest and other receivables
(17,617) (26,032) (19,817)
Other, net
8,834 96,950 119,284
Net cash provided by operating activities
458,084 312,084 942,116
INVESTING ACTIVITIES:
Proceeds from sales, maturities, and redemptions of
investments:
Fixed maturities
4,744,309
Held-to-maturity
Sales
18,821 16,014
Maturities and redemptions
655,993 1,034,324
Available-for-sale
Sales
4,211,649 1,753,445
Maturities and redemptions
253,747 141,299
Mortgage loans
260,960 291,102 339,406
Real estate
4,401 29,868 22,974
Common stock
178
Purchases of investments:
Fixed maturities
(5,494,534)
Held-to-maturity
(490,228) (673,567)
Available-for-sale
(4,932,566) (2,606,028)
Mortgage loans
(683) (9) (52,917)
Real estate
(5,302) (9,253) (14,303)
Common stock
(4,218) (2,063)
Net cash used in investing activities
(27,426) (24,690) (455,065)
(Continued)
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994,
AND 1993
(Dollars in Thousands)
1995 1994 1993
FINANCING ACTIVITIES:
Contract withdrawals, net of deposits
$(217,190) $(238,166) $(590,118)
Due to Parent Corporation
(9,143) (13,078) (149,510)
Dividends paid
(48,980) (40,438) (21,852)
Net commercial paper (repayments) borrowings
(4,832) 89,686
Net repurchase agreements (repayments) borrowings
(191,195) (39,244) 311,937
Net cash used in financing activities
(471,340) (241,240) (449,543)
NET INCREASE IN CASH
(40,682) 46,154 37,508
CASH, BEGINNING OF YEAR
131,621 85,467 47,959
CASH, END OF YEAR
$90,939 $131,621 $85,467
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for:
Income taxes
$83,841 $68,892 $87,778
Interest
17,016 12,229 7,438
See notes to consolidated financial
statements.
(Concluded)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - Great-West Life & Annuity Insurance
Company
(the Company) is a wholly-owned subsidiary of The
Great-West Life Assurance Company (the Parent Corporation). The Company is an
insurance company domiciled in the State of Colorado.
The Company offers a wide range of life insurance, health insurance,
and retirement and investment products to individuals,
businesses, and other private and public organizations throughout the
United States.
Basis of Presentation - The preparation of
financial statements in conformity with generally accepted
accounting principles equires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates. The consolidated
financial statements include the accounts of the Company
and its subsidiaries. All material intercompany
transactions and balances have been eliminated.
Certain reclassifications have been made to the 1994
and 1993 financial statements to conform with the basis of
presentation used in 1995.
Investments - Investments are reported as follows:
1. Management determines the classification of
fixed maturities at the time of purchase. Fixed maturities are
classified as held-to-maturity when the Company has the
positive intent and ability to hold the securities to
maturity. Held-to-maturity securities are stated at amortized cost
unless fair value is less than cost and the decline is
deemed to be other than temporary, in which case they are
written down to fair value and a new cost basis is established. Fixed
maturities not classified as held-to-maturity are
classified as available-for-sale. Available-for-sale
securities are carried at fair value, with the net
unrealized gains and losses reported as a separate
component of stockholder's equity. The net unrealized
gains and losses in derivative financial instruments used
to hedge available-for-sale securities is included in the separate
component of stockholderns equity.
The amortized cost of fixed maturities
classified as held-to-maturity or available-for-sale is adjusted for
amortization of premiums and accretion of discounts using
the effective interest method over the life of the
related bonds. Such amortization is included in interest income from
investments. Realized gains and losses, and declines in
value judged to be other-than-temporary are included in
net realized gains (losses) on investments.
2. Mortgage loans on real estate are carried at
their unpaid balances adjusted for any unamortized
premiums or discounts and any valuation reserves.
Interest income is accrued on the unpaid principal
balance. Discounts and premiums are amortized to income
using the effective interest method. Accrual of interest
is discontinued on any impaired loans where collection of
interest is doubtful.
The Company maintains an allowance for credit
losses at a level that, in managementns opinion, is sufficient to
absorb possible credit losses on its impaired loans and
to provide adequate provision for any possible future
losses in the portfolio. Managementns judgement is based
on past loss experience, current and projected economic
conditions, and extensive situational analysis of each
individual loan.
Effective January 1, 1995, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 114
"Accounting by Creditors for Impairment of a Loan" and
SFAS No. 118 "Accounting by Creditors for Impairment of
a Loan-Income Recognition and Disclosures". In
accordance with these standards, a mortgage loan is
considered to be impaired when it is probable that the
Company will be unable to collect all amounts due
according to the contractual terms of the loan agreement.
The measurement of impaired loans is based on the fair
value of the collateral. As the Company was already
providing for impairment of loans through an allowance
for credit losses, the implementation of these statements
had no material effect on the Company's financial
statements.
3. Real estate is carried at the lower of cost or
fair value. In March 1995, the FASB issued SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" to be effective for fiscal
years beginning after December 15, 1995. The effect of
adopting this statement is not expected to be material.
4. Policy loans are carried at their unpaid
balances.
5. Short-term investments include securities
purchased with initial maturities of one year or less and
are carried at amortized cost. The Company considers
short-term investments to be available-for-sale and
amortized cost approximates fair value.
Gains and losses realized on disposal of investments
are determined on a specific identification basis.
Cash - Cash includes only amounts in demand deposit
accounts.
Deferred Policy Acquisition Costs - Policy
acquisition costs, which consist of sales commissions and other costs that
vary with and are primarily related to the production of new and
renewal business, have been deferred to the extent recoverable.
Deferred costs associated with the annuity products are
being amortized over the life of the contracts in
proportion to the emergence of gross profits.
Retrospective adjustments of these amounts are made
when the Company revises its estimates of current or
future gross profits. Deferred costs associated with
traditional life insurance are amortized over the premium paying period of
the related policies in proportion to premium revenues
recognized. Amortization of deferred policy acquisition
costs totalled $48,054, $28,199, and $32,611 in 1995,
1994, and 1993, respectively.
Separate Account - Separate account assets and
related liabilities are carried at fair value. The
Companyns separate accounts invest in shares of Maxim
Series Fund, Inc., a diversified, open-end management
investment company which is an affiliate of the Company,
shares of other external mutual funds, or government or
corporate bonds.
Life Insurance and Annuity Reserves - Life insurance
and annuity policy reserves with life contingencies of
$4,675,175, and $3,995,927 at December 31, 1995 and 1994,
respectively, are computed on the basis of estimated
mortality, investment yield, withdrawals, future
maintenance and settlement expenses, and retrospective
experience rating premium refunds. Annuity contract
reserves without life contingencies of $6,170,760, and
$6,338,529 at December 31, 1995 and 1994, respectively,
are established at the contractholder's account value.
Reinsurance - Policy reserves ceded to other
insurance companies are carried as reinsurance receivable
on the balance sheet (See Note 3).
The cost of reinsurance related to long-duration
contracts is accounted for over the life of the
underlying reinsured policies using assumptions
consistent with those used to account for the underlying
policies.
Policy and Contract Claims - Policy and contract
claims include provisions for reported claims in process
of settlement, valued in accordance with the terms of the related
policies and contracts, as well as provisions for claims incurred and
unreported based primarily on prior experience of the
Company.
Participating Fund Account - Participating life and
annuity policy reserves are $3,339,316 and $2,917,273 at December
31, 1995 and 1994, respectively. Participating business
approximates 46% of the Company's ordinary life insurance in force and 84%
of ordinary life insurance premium income at December 31,
1995.
The liability for undistributed earnings on
participating business was increased by $15,690 in 1995, which
represented $2,027 of earnings on participating business
and adjustments of $13,663 to reflect the net unrealized gains on securities
classified as available-for-sale, net of certain
adjustments to policy reserves and income taxes.
The amount of dividends to be paid from
undistributed earnings on participating business is determined annually by the
Board of Directors. Amounts allocable to participating
policyholders are consistent with established Company
practice.
The Company has established a Participating
Policyholder Experience Account (PPEA) for the benefit of
all participating policyholders which is included in the
accompanying consolidated balance sheet. Earnings
associated with the operation of the PPEA are credited to
the benefit of all participating policyholders. In the
event that the assets of the PPEA are insufficient to
provide contractually guaranteed benefits, the Company
must provide such benefits from its general assets.
The Company has also established a Participation
Fund Account
(PFA) for the benefit of the participating policyholders
previously transferred to the Company from the Parent
under an assumption reinsurance transaction. The PFA is
part of the PPEA. The assets and liabilities associated
with these policies are segregated in the accounting
records of the Company to assure the continuation of
current policyholder dividend expectations. Earnings
derived
from the operation of the PFA accrue solely for the
benefit of the acquired participating policyholders.
Recognition of Premium Income and Benefits and
Expenses - Life insurance premiums are recognized as
earned. Annuity premiums
with life contingencies are recognized as received.
Accident and
health premiums are earned on a monthly pro rata basis.
Revenues for annuity and other contracts without
significant life
contingencies consist of contract charges for the cost of
insurance, contract administration, and surrender fees
that have been assessed against the contract account
balance during the period. Benefits and expenses on
policies with life contingencies are associated with
premium income by means of the provision for future
policy benefit reserves, resulting in recognition of
profits over the life of the contracts. The average
crediting rate on annuity products was approximately 7.2%
in 1995.
Income Taxes - Income taxes are recorded using the
asset and
liability approach which requires, among other
provisions, the recognition of deferred tax assets and
liabilities for expected future tax consequences of
events that have been recognized in the Company's
financial statements or tax returns. In estimating
future tax consequences, all expected future events
(other than the enactments or changes in the tax laws or
rules) are considered. Deferred tax assets are recorded
net of a valuation allowance to the extent that
management estimates that recovery of the asset is not
more likely than not.
Repurchase Agreements - The Company enters into
repurchase agreements with third-party broker-dealers in
which the Company sells securities and agrees to
repurchase substantially similar securities at a
specified date and price. Such agreements are accounted
for as collateralized borrowings. Interest expense on
repurchase agreements is recorded at the coupon interest
rate on the underlying securities. The repurchase fee
received or paid is amortized over the term of the
related agreement and recognized as an adjustment to
investment income.
Derivatives - The Company engages in hedging
activities to
manage interest rate and foreign exchange risk (See Note
6).
2. RELATED-PARTY TRANSACTIONS
Reinsurance Transactions - The Company entered
into a series of reinsurance transactions with the Parent
Corporation during 1993 and prior years intended to make
the Company the underwriter and administrator of all life
and health insurance, annuity products, and related
services with respect to United States policyholders.
A May 1, 1993, reinsurance transaction resulted in
the Company recapturing certain group life and health
business previously ceded to the Parent under a
coinsurance agreement, as follows:
Assets
Liabilities and Stockholder's Equity
Bonds
$217,254
Policy reserves
$253,479
Mortgage loans
27,182
Cash and short-term
investments
5,607
Investment income
due & accrued
3,436 $253,479 $253,479
In addition, effective December 31, 1993, the
Company recaptured certain participating life business
also previously ceded to the Parent Corporation, as
follows:
Assets
Liabilities and Stockholder's Equity
Bonds
$171,005
Policy reserves
$180,000
Cash and short-term
investments
8,087
Investment income
due & accrued
908 $180,000 $180,000
From 1989 to 1993, the Company has assumed most of
the United States business of the Parent Corporation.
During this period, the Parent Corporation had recorded
estimated tax liabilities for certain United States
federal income taxes in its financial statements. On
December 31, 1993 and December 30, 1994, the Parent
Corporation transferred assets with an estimated fair
value of $82,800 and $9,391, respectively, to the Company
in exchange for the Company agreeing to assume the
estimated tax liabilities of the Parent Corporation, and
the issuance of shares of the Company's common stock.
Fees and Expenses - The Company and the Parent
Corporation have a number of service agreements whereby
the Parent Corporation administers, distributes, and
underwrites business for the Company and administers the
Company's investment portfolio. Certain operating
expenses represent allocations made by the Parent
Corporation to the Company for services provided pursuant
to these service agreements. These transactions are
summarized as follows:
Years Ended December 31,
1995 1994 1993
Investment management expense
(included in net investment income)
$15,182 $13,841 $17,767
Administrative and underwriting
payments (included in operating expenses)
301,529 269,020 199,947
Other - At December 31, 1995 and 1994, due to Parent
Corporation includes $27,814 and $35,388 due on demand
and $122,160 and $123,729 of notes payable which bear
interest and mature at
various dates. These notes may be prepaid in whole or in
part at any time without penalty; the issuer may not
demand payment before the maturity date. The Company
also has available an arrangement to obtain advances from
the Parent Corporation to fund short-term liquidity
needs. The due on demand to the Parent Corporation bears
interest at the public bond rate (6.4% and 8.5% at
December 31, 1995 and 1994, respectively) while the
remainder bear interest at various rates.
3. REINSURANCE
In the normal course of business, the Company seeks
to limit
its exposure to loss on any single insured and to recover
a
portion of benefits paid by ceding risks to other
insurance enterprises under excess coverage and
co-insurance contracts. The Company retains a maximum of
$1.5 million of coverage per individual life.
Reinsurance contracts do not relieve the Company
from its obligations to policyholders. Failure of
reinsurers to honor their obligations could result in
losses to the Company; consequently, allowances are
established for amounts deemed uncollectible. The
Company evaluates the financial condition of its
reinsurers
and monitors concentrations of credit risk arising from
similar geographic regions, activities, or economic
characteristics of
the reinsurers to minimize its exposure to significant
losses from reinsurer insolvencies. At December 31, 1995
and 1994, reinsurance
receivables with a carrying value of $333,924, and
$295,148, respectively, were due primarily from the
Parent Corporation.
Total reinsurance premiums assumed from the Parent
Corporation
were $1,606 and $2,438, and $0, in 1995, 1994, and 1993,
respectively.
The Company considers all accident and health
policies to be
short-duration contracts. The following schedule details
life insurance in force and life and accident/health
premiums:
Assumed
Ceded
Primarily
Percentage
Primarily to
From
of
Amount
Gross
the Parent
Other
Net
Assumed
to
Amount
Corporation
Companies
Amount
Net
December 31, 1995:
Life insurance in force:
Individual
$22,388,520
$7,200,882
$3,476,784
$18,664,422
18.6%
Group
48,415,592
1,954,313
50,369,905
3.9%
Total
$70,804,112
$7,200,882
$5,431,097
$69,034,327
Premiums:
Life insurance
$339,342
$51,688
$21,028
$308,682
6.8%
Accident/health
623,626
9,192
64,495
678,929
9.5%
Total
$962,968
$60,880
$85,523
$987,611
December 31, 1994:
Life insurance in force:
Individual
$21,461,590
$7,411,811
$3,415,596
$17,465,375
19.6%
Group
48,948,669
2,102,228
51,050,897
4.1%
Total
$70,410,259
$7,411,811
$5,517,824
$68,516,272
Premiums:
Life insurance
$322,263
$42,946
$22,009
$301,326
7.3%
Accident/health
579,650
5,169
63,140
637,621
9.9%
Total
$901,913
$48,115
$85,149
$938,947
December 31, 1993:
Life insurance in force:
Individual
$17,131,994 $7,797,389 $3,142,723 $12,477,328
25.2%
Group
37,789,859 2,108,314 39,898,173
5.3%
Total
$54,921,853 $7,797,389 $5,251,037 $52,375,501
Premiums:
Life insurance
$283,707 $112,798 $18,753 $189,662
9.9%
Accident/health
524,747 142,171 60,723 443,299
13.7%
Total
$808,454 $254,969 79,476 $632,961
4. NET INVESTMENT INCOME
Net investment income is summarized as follows:
Years Ended December 31,
1995 1994 1993
Investment income:
Bonds and short-term investments
$592,062 $555,103 $545,926
Mortgage loans on real estate
171,008 182,544 220,477
Real estate
3,936 5,700 9,265
Policy loans
163,547 116,060 91,529 930,553 859,407
867,197
Investment expenses,
including interest on amounts charged by the
Parent Corporation
of $10,778, $11,145, and
$7,250
95,507 91,761 75,773
Net investment income
$835,046 $767,646 $791,424
5. NET REALIZED GAINS (LOSSES) ON
INVESTMENTS
Net realized gains (losses) on
investments are as follows:
Years Ended December 31,
1995 1994 1993
Net realized gains (losses):
Bonds
$28,166 $(39,775) $68,884
Mortage loans on real estate
1,309 2,120 (98)
Real estate
(10) (102) (102)
Bond provisions
(5,000) (3,200) (4,456)
Mortgage loan provisions
(15,877) (27,918) (38,089)
Real estate provisions
(1,123) (3,064) (797)
Net realized gains
(losses) on investments
$7,465 $(71,939) $25,342
6. SUMMARY OF INVESTMENTS
Fixed maturities owned at December 31,
1995 are summarized as follows:
Gross
Gross
Estimated
Amortized
Unrealized
Unrealized
Fair
Carrying Cost
Gains
Losses
Value
Value
Held-to-Maturity:
U.S. Treasury Securities and
obligations of U.S. Government Agencies:
Collateralized mortgage obligations
$
$
$
$
$
Direct mortgage pass-through
certificates
Other
11,107 1,093 12,200 11,107
Collateralized mortgage obligations
Public utilities
269,671 22,084 95 291,660 269,671
Corporate bonds
1,732,046 83,583 5,867 1,809,762 1,732,046
Foreign governments
18,596 1,087 12 19,671 18,596
State and municipalities
22,784 1,966 24,750 22,784 $2,054,204
$109,813 $5,974 $2,158,043 $2,054,204
Available-for-Sale:
U.S. Treasury Securities and
obligations of U.S. Government Agencies:
Collateralized mortgage obligations
$561,475 $9,983 $1,948 $569,510 $569,510
Direct mortgage pass-through
certificates
794,056 11,980 2,233 803,803 803,803
Other
561,736 7,703 39 569,400 569,400
Collateralized mortgage obligations
490,074 18,044 3,304 504,814 504,814
Public utilities
581,482 16,607 2,425 595,664 595,664
Corporate bonds
2,943,918 121,537 26 3,065,429 3,065,429
Foreign governments
141,362 5,021 5,644 140,739 140,739
State and municipalities
13,866 22 60 13,828 13,828 $6,087,969
$190,897 $15,679 $6,263,187 $6,263,187
6.SUMMARY OF INVESTMENTS (Continued)
Fixed maturities owned at December 31, 1994 are
summarized as
follows:
Gross
Gross
Estimated
Amortized
Unrealized
Unrealized
Fair Carrying Cost
Gains
Losses
Value
Value
Held-to-Maturity:
U.S. Treasury
Securities and
obligations
of U.S.
Government Agencies:
Collateralized mortgage obligations
$521,408 $389 $33,018 $488,779 $521,408
Direct mortgage pass-through
certificates
69,559 617 1,001 69,175 69,559
Other
85,406 246 923 84,729 85,406
Collateralized mortgage obligations
309,869 1,205 14,208 296,866 309,869
Public utilities
457,758 2,898 14,340 446,316 457,758
Corporate bonds
2,757,612 14,701 111,410 2,660,903 2,757,612
Foreign governments
90,690 47 3,950 86,787 90,690
State and municipalities
1,683 10 1,693 1,683 $4,293,985 $20,113
$178,850 $4,135,248 $4,293,985
Available-for-Sale:
U.S. Treasury Securities and
obligations of U.S. Government Agencies:
Collateralized mortgage obligations
$80,531 $ $3,798 $76,733 $76,733
Direct mortgage pass-through
certificates
759,815 871 49,462 711,224 711,224
Other
198,651 9 2,654 196,006 196,006
Collateralized mortgage obligations
203,036 6,379 196,657 196,657
Public utilities
325,383 193 26,379 299,197 299,197
Corporate bonds
1,119,726 3,253 65,398 1,057,581
1,057,581
Foreign governments
298,597 17 21,826 276,788 276,788
State and municipalities
11,348 831 10,517 10,517 $2,997,087
$4,343 $176,727 $2,824,703 $2,824,703
Most of the collateralized mortgage obligations
consist of
planned amortization classes with final stated maturities
of three to thirty years and average lives of less than
one to twelve
years. Prepayments on all mortgage-backed securities are
monitored
monthly and amortization of the premium and/or the
accretion of the discount associated with the purchase of
such securities is adjusted by such prepayments.
The cumulative effect as of January 1, 1994 of
adopting SFAS
No. 115 "Accounting for Certain Investments in Debt and
Equity Securities," increased the opening balance of
stockholders'
equity by $6,515 to reflect the net unrealized gains on
securities classified as available-for-sale (previously
carried at the
lower of aggregate amortized cost or fair value) and the
corresponding adjustments to deferred policy acquisition
costs, policy reserves, and amounts allocable to the
liability for undistributed earnings on participating
business, all net of income taxes.
In November 1995, the Financial Accounting Standards
Board
issued a special report entitled nA Guide to
Implementation of SFAS
115 on Accounting for Certain Investments in Debt and
Equity
Securitiesn. In accordance with the adoption of this
guidance, the Company reassessed the classification of
its investment portfolio in December 1995 and reclassed
securities totalling $2,119,814
from held-to-maturity to available-for-sale. In
connection with
this reclassification, an unrealized gain, net of related
adjustments (see above), of $23,449 was recognized in
stockholderns equity at the date of transfer.
The estimated fair value of fixed maturities that
are publicly traded are obtained from an independent
pricing service. To determine fair value for fixed
maturities not actively traded, the Company utilized
discounted cash flows at determined current market spread
rates on investments of similar quality and term.
The amortized cost and estimated fair value of fixed
maturity investments at December 31, 1995, by projected
maturity, are shown below. Actual maturities will likely
differ from these projections because borrowers may have
the right to call or prepay obligations with or without
call or prepayment penalties.
Held-to- Maturity
Available-for-Sale
Amortized
Estimated
Amortized
Estimated
Cost
Fair Value Cost
Fair Value Due in one year or
less
$287,565 $293,666 $326,032 $337,792
Due after one year through five years
838,993 877,949 1,452,442 1,495,755
Due after five years through ten years
537,365 575,896 1,023,894 1,064,871
Due after ten years
159,064 173,487 522,002 542,559
Mortgage-backed securities
1,845,605 1,878,127
Asset-backed securities
231,217 237,045 917,994 944,083 $2,054,204
$2,158,043 $6,087,969 $6,263,187
During the years ended December 31, 1995 and 1994,
available-for-sale securities with a fair value at the
date of sale of $4,211,649 and $1,753,445 were sold. The
realized gains and losses on such sales totaled $39,755
and $15,516 for 1995 and $7,030 and $50,612 for 1994.
During 1995 and 1994, held-to-maturity securities with an
amortized cost of $18,087 and $15,300 were sold due to
credit deterioration with insignificant realized gains
and losses. Gains on securities which were called for
redemption by the respective issuers prior to maturity
were $2,990 and $3,093 in 1995 and 1994, respectively.
At December 31, 1995 and 1994, pursuant to fully
collateralized securities lending arrangements, the
Company had loaned $343,351 and $0 of fixed maturities,
respectively.
The Company makes limited use of derivative
financial
instruments to manage interest rate and foreign exchange
risk. Such hedging activity consists of interest rate
swap agreements, interest rate floors and caps, and
foreign currency exchange contracts. Interest rate
floors and caps are interest rate protection instruments
that require the payment by a counter-party to the
Company of an interest differential. This differential
represents the difference between current interest rates
and an agreed-upon rate, the strike rate, applied to a
notional principal amount. Interest rate swap agreements
are used to convert the interest rate on certain fixed
maturities from a floating rate to a fixed rate.
Interest rate swap transactions generally involve the
exchange of fixed and floating rate interest payment
obligations without the exchange of the underlying
principal amounts. Foreign currency exchange contracts
are used to hedge the foreign exchange rate risk
associated with bonds denominated in other than U.S.
dollars. The differential paid or received on interest
rate and amounts received under interest rate floor and
cap agreements are recognized as an adjustment to net
investment income on the accrual method. Gains and
losses on foreign exchange contracts are deferred and
recognized in net investment income when the hedged
transactions are realized.
Although derivative financial instruments taken
alone may
expose the Company to varying degrees of market and
credit risk when used solely for hedging purposes, these
instruments typically
reduce overall market and interest rate risk. The
Company controls
the credit risk of its financial contracts through credit
approvals, limits, and monitoring procedures. As the
Company generally enters nto transactions only with high
quality institutions, no losses associated with
non-performance on derivative financial instruments have
occurred or are expected to occur.
The following table summarizes the financial hedge
instruments:
Notional Strike/Swap
December 31, 1995
Amount Rate Maturity
Interest Rate Floor
$100,000 4.5% [LIBOR] 1999
Interest Rate Cap
100,000 11.0% [CMT] 2000
Interest Rate Swaps
165,000 6.203% to 9.35%
01/98 to 2/2002
Foreign Currency Exchange Contracts
66,650 N/A 10/96 to 09/98
Notional Strike
December 31, 1994
Amount Rate Maturity
Interest Rate Floor
$100,000 4.5% [LIBOR] 1999
Interest Rate Swaps
150,000 6.275% to 10.644%
01/95 -01/2000
Foreign Currency Exchange Contracts
70,991 N/A 10/96 - 09/98
LIBOR - London Interbank Offered Rate
CMT - Constant Maturity Treasury Rate
The Company has established specific investment
guidelines
designed to emphasize a diversified and geographically
dispersed
portfolio of mortgages collateralized by commercial and
industrial
properties located in the United States. The Company's
policy is to obtain collateral sufficient to provide
loan-to-value ratios of not greater than 75% at the
inception of the mortgages. At
December 31, 1995 approximately 28% and 11% of the
Company's mortgage loans were collateralized by real
estate located in California and Illinois, respectively.
At December 31, 1995, the recorded investment in
loans that
were considered to be impaired under SFAS No. 114 was
$23,678 including $3,254 of loans with a related
allowance for credit losses of $654. Additionally, loans
totaling $6,481 were on a non-accrual basis. The average
recorded investment in impaired loans during the year
ended December 31, 1995 was approximately $29,150. For
the year ended December 31, 1995, the Company recognized
interest income on those impaired loans of $675.
Interest income received and recorded using the cash
basis method of recognition during 1995 totalled $857.
As part of an active loan management policy and in
the
interest of maximizing the future return of each
individual loan, the Company may from time to time alter
the original terms of certain loans. These restructured
loans, all performing in accordance with their modified
terms, aggregated $89,160 and $102,538 at December 31,
1995 and 1994, respectively.
The following table presents changes in the
allowance for
credit losses since January 1, 1995 (date of the adoption
of SFAS No. 114):
Balance at January 1, 1995
$57,987
Provision for loan losses
15,877
Direct chargeoffs
(10,480)
Recoveries
610
Balance at December 31, 1995
$63,994
7. COMMERCIAL PAPER
The Company has a commercial paper program which is
partially supported by a $50,000 standby
letter-of-credit. At December 31, 1995, commercial paper
outstanding has maturities ranging from 25 to 160 days
and interest rates ranging from 5.7% to 5.9%. At
December 31, 1994, maturities ranged from 40 to 120 days
and interest rates ranged from 5.4% to 6.4%
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table provides estimated fair value
for all
assets and liabilities and hedge contracts considered to
be financial instruments:
December 31,
1995 1994
Estimated Carrying
Estimated Carrying
Fair Value Amount
Fair Value Amount
ASSETS:
Fixed maturities
and short-term investments
$8,452,226 $8,556,065 $7,825,608 $7,666,871
Mortgage loans on real estate
1,713,195 1,749,514 2,011,059 2,037,694
Policy loans
2,237,745 2,237,745 1,905,013 1,905,013
Common stock
9,440 9,440 5,222 5,222
LIABILITIES:
Annuity contract reserves
without life contingencies
6,170,760 6,268,749 6,338,529 6,286,966
Policyholders' funds
154,872 154,872 144,262 144,262
Due to Parent Corporation
149,974 152,347 159,117 159,334
Repurchase agreements
372,965 372,965 564,160 564,160
Commercial paper
84,854 84,854 89,686 89,686
HEDGE CONTRACTS:
Interest rate floor
84 1,320 88 76
Interest rate cap
90 90
Interest rate swaps
10,052 10,052 (771) (771)
Foreign currency exchange contracts
(4,604) (4,604) (4,345) (4,345)
The estimated fair value of financial instruments
has been determined using available market information
and appropriate valuation methodologies. However,
considerable judgement is necessarily required to
interpret market data to develop the estimates of
fair value. Accordingly, the estimates presented
are not necessarily indicative of the amounts the Company
could
realize in a current market exchange. The use of
different market assumptions and/or estimation
methodologies may have a material effect on the estimated
fair value amounts.
Mortgage loans fair value estimates generally are
based on a discounted cash flow basis. A discount rate
"matrix" is incorporated whereby the discount rate used
in valuing a specific mortgage generally corresponds to
that mortgage's remaining
term. The rates selected for inclusion in the discount
rate "matrix" reflect rates that the Company would quote
if placing loans representative in size and quality to
those currently in the portfolio.
Policy loans accrue interest generally at variable
rates with
no fixed maturity dates and, therefore, estimated fair
value approximates carrying value.
The fair value of annuity contract reserves without
life contingencies is estimated by discounting the cash
flows to maturity of the contracts, utilizing current
credited rates for similar products.
The estimated fair value of policyholder's funds is
the same
as the carrying amount as the Company can change the
crediting rates with 30 days notice.
The estimated fair value of due to Parent
Corporation is based
on discounted cash flows at current market spread rates
on high quality investments.
The carrying value of repurchase agreements and
commercial
paper is a reasonable estimate of fair value due to the
short-term
nature of the liabilities.
The estimated fair value of financial hedge
instruments, all
of which are held for other than trading purposes, is the
estimated amount the Company would receive or pay to
terminate the
agreement at each year-end, taking into consideration
current interest rates and other relevant factors.
Included in the net gain (loss) position for interest
rates swaps are $0 and $2,985 of
unrealized losses in 1995 and 1994, respectively.
Included in the net loss position for foreign currencies
exchange contracts are $5,497 and $4,504 loss exposures
in 1995 and 1994, respectvely.
See note 6 for additional information on policies
regarding estimated fair value of fixed maturities.
9. FEDERAL INCOME TAXES
The following is a reconciliation between the
federal income
tax rate and the Companyns effective rate:
1995 1994 1993
Federal tax rate
35.0% 35.0% 35.0%
Change in tax rate resulting
from:
Investment income not
subject to federal tax
(0.5) (1.0) (1.2)
Effect of tax rate change
on net deferred tax assets
(1.8)
Change in valuation
allowance
(7.8) (6.9) 1.0
State and environmental taxes
0.7 0.9
Other, net
0.3 (0.3) (0.5)
Total
27.7% 27.7% 32.5%
Temporary differences which give rise to the
deferred tax
assets
and liabilities as of December 31, 1995 and 1994 are
as
follows:
1995 1994
Deferred Tax Asset
Deferred Tax Liability
Deferred Tax Asset
Deferred Tax Liability
Policyholder reserves
$162,073 $ $119,764 $
Deferred policy acquisition costs
55,542 62,040
Deferred acquisition cost proxy tax
58,481
45,422
Investment assets
16,372 97,249
Net operating loss carryforwards
17,588
22,666
Tax credits and other
4,786
2,564
Subtotal
242,928 71,914 287,665 62,040
Valuation allowance
(2,073)
(15,218)
Total Deferred Taxes
$240,855 $71,914 $272,447 $62,040
Amounts related to investment assets above include
$33,735 and $(47,493) related to the unrealized gains
(losses) on the Company's fixed maturities
available-for-sale at December 31, 1995 and 1994,
respectively.
The Company files a separate tax return and,
therefore, losses incurred by subsidiaries cannot be
offset against operating income of the Company. At
December 31, 1995, the Companyns subsidiaries have
approximately $50,251 of net operating loss
carryforwards, expiring through the year 2010. The tax
benefit of subsidiariesn net operating loss
carryforwards, net of a valuation allowance of $419 are
included in the deferred tax assets.
The Company's valuation allowance was decreased in
1995 and
1994 by $13,145 and $6,278, respectively, primarily as a
result of
taxable income in subsidiaries which was greater than
expected and the resulting re-evaluation by management of
future estimated
taxable income in the subsidiaries.
Under pre-1984 life insurance company income tax
laws, a portion of life insurance company gain from
operations was not subject to current income taxation but
was accumulated, for tax purposes, in a memorandum
account designated as "policyholders' surplus account."
The aggregate accumulation in the account is $7,742 and
the Company does not anticipate any transactions which
would cause any part of the amount to become taxable.
Accordingly, no provision has been made for possible
future federal income taxes on this accumulation.
The Internal Revenue Service is currently auditing
tax years
1988 to 1991, inclusive. In the opinion of Company
management, amounts paid or accrued are adequate,
however, it is possible that the Companyns estimate may
change as a result of the completion of the IRS audits.
10. STOCKHOLDER'S EQUITY, DIVIDEND RESTRICTIONS, AND
OTHER MATTERS
All of the Company's outstanding series of preferred
stock are owned by the Parent Corporation. The dividend
rate on the Series A Stated Rate Auction Preferred Stock
(STRAPS) is 7.3% through December 30, 2002. The Series
A STRAPS are redeemable at the option of the Company on
or after December 29, 2002 at a price of $100,000 per
share, plus accumulated and unpaid dividends.
Through December 30, 1995, the Series B STRAPS had
a 7%
dividend rate. Thereafter, the Company will, at its
option, select
future dividend periods. Future dividend rates will be
fixed by a
market auction process with dividend rates dependent upon
the
Company. If auctions are undersubscribed or otherwise
unsuccessful, the dividend rate is fixed by formula. The
Company has the flexibility of specifying, before each
auction, the rights of redemption which it has during the
succeeding dividend period. These redemption rights are
factored into the auctions which set dividend rates.
The Series B STRAPS are redeemable at the option of
the
Company at a price of $100,000 per share, plus
accumulated and unpaid dividends.
The Company's Series E 7.5% non-cumulative preferred
shares
are redeemable by the Company after April 1, 1999. The
shares are
not redeemable at the option of the holder at any time.
The
shares are convertible into common shares at the option
of the holder on or after September 30, 1999, at a
conversion price negotiated between the holder and the
Company or at a formula determined conversion price in
accordance with the share conditions.
On December 31, 1993, the Company issued 3,783
shares of
common stock to the Parent Corporation in connection with
an
assumption of estimated tax liabilities. The Company
also received $472 and $9,098 of contributed capital in
the form of deferred tax
assets from the Parent Corporation during 1994 and 1993,
respectively, in connection with the 1993 reinsurance
transactions (see Note 2).
The Company's net income and capital and surplus, as
determined in accordance with statutory accounting
principles and practices for December 31 are as follows:
1995 1994 1993
(Unaudited)
Net Income
$114,931 $70,091 $55,995
Capital and Surplus
653,479 621,589 628,944
The maximum amount of dividends which can be paid to
stockholders by insurance companies domiciled in the
State of Colorado is subject to restrictions relating to
statutory surplus and statutory net gain from operations.
Statutory surplus and net gains from operations at
December 31, 1995 were $524,647 and $119,299 (unaudited),
respectively. The Company should be able to pay up to
$119,299 (unaudited) of dividends without regulatory
approval in 1996.
Dividends of $9,217, $7,475, and $9,335, were paid
on
preferred stock in 1995, 1994, and 1993, respectively.
In addition, dividends of $39,763, $32,963, and $12,517
were paid on common stock in 1995, 1994 and 1993,
respectively. Dividends are
paid as determined by the Board of Directors.
The Company is involved in various legal proceedings
which
arise in the ordinary course of its business. In the
opinion of
management, after consultation with counsel, the
resolution of these proceedings should not have a
material adverse effect on its financial position or
results of operations.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements for Retirement Plan
Series Account from June 1, 1995 (Inception) to
December 31, 1995 and the financial statements
for Great-West Life & Annuity Insurance Company
for the years ended December 31, 1995, 1994 and
1993 are included in Part B.
(b) Exhibits
Items (1) through (6) and Item (13) are
incorporated by reference to Registrant's Form N-
4 Registration Statement filed September 13,
1994.
(7) Not applicable
(8) Not applicable
(9) Copy of opinion of counsel
(10) (a) Written Consent of Jorden Burt
Berenson & Johnson, LLP
(b) Written Consent of Deloitte & Touche
LLP
(c) Written Consent of Ruth B. Lurie
(11) Not Applicable
(12) Not Applicable
Item 25. Directors and Officers of the Depositor
Position and Offices
Name Principal Business Address with Depositor
James Balog 2205 North Southwinds Boulevard Director
Vero Beach, Florida 39263
James W. Burns, O.C. (4) Director
Orest T. Dackow (3) Director
Paul Desmarais, Jr. (4) Director
Robert G. Graham 77 Avenue Road Director
Penthouse No. 6
Toronto, Ontario M5R 3R8
Robert Gratton (5) Chairman
N. Berne Hart 2552 East Alameda Avenue Director
Denver, Colorado 80209
Kevin P. Kavanagh (1) Director
William Mackness 61 Waterloo Street Director
Winnipeg, Manitoba R3N 053
William T. McCallum (3) Director, President and Chief
Executive Officer
Jerry E.A. Nickerson H.B. Nickerson & Sons Limited Director
P.O. Box 130
275 Commercial Street
North Sydney, Nova Scotia B2A 3M2
P. Michael Pitfield, P.C., Q.C. (4) Director
Michel Plessis-Belair, F.C.A. (4) Director
Ross J. Turner Genstar Investment Corporation Director
950 Tower Lane
Metro Tower, Suite 1170
Foster City, California 94404
Brian E. Walsh Trinity L.P. Director
115 Putnam Ave.
Greenwich, Connecticut 06830
Robert D. Bond (3) Senior Vice-
President,
Financial
Services
John T. Hughes (3) Senior Vice-
President,
Chief
Investment
Officer
D. Craig Lennox (3) Senior Vice-
President,
General
Counsel and
Secretary
Dennis Low (3) Executive
Vice-
President,
Financial
Services
Alan D. MacLennan (2) Executive
Vice-
President,
Employee
Benefits
James D. Motz (2) Senior Vice-
President,
Employee
Benefits
Operations
Douglas L. Wooden (3) Senior Vice-
President,
Chief
Financial
Officer and
Treasurer
________________________________________
(1) 100 Osborne Street North, Winnipeg, Manitoba, Canada R3C 3A5.
(2) 8505 East Orchard Road, Englewood, Colorado 80111.
(3) 8515 East Orchard Road, Englewood, Colorado 80111.
(4) Power Corporation of Canada, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
(5) Power Financial Corporation, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
Item 26. Persons controlled by or under common control with the
Depositor or Registrant
See attached organizational chart.
Item 27. Number of Contractowners
As of February 29, 1996, there were 202 contractowners.
Item 28. Indemnification
Provisions exist under the Colorado General Corporation
Code and the Bylaws of GWL&A whereby GWL&A may indemnify
a director, officer, or controlling person of GWL&A
against liabilities arising under the Securities Act of
1933. The following excerpts contain the substance of
these provisions:
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
ORGANIZATIONAL CHART
Power Corporation of Canada
100% - 171263 Canada Inc.
68.4% - Power Financial Corporation
86.4% - Great-West Lifeco Inc.
99.4% - The Great-West Life Assurance Company
100% - Great-West Life & Annuity Insurance Company
100% - GW Capital Management, Inc.
100% - Financial Administrative Services Corporation
100% - Employee Benefit Services, Inc.
100% - One Health Plan of Illinois, Inc.
100% - One Health Plan of Texas, Inc.
100% - One Health Plan of California, Inc.
100% - Great-West Benefit Services, Inc.
13% - Private Healthcare Systems, Inc.
100% - Benefits Communication Corporation
100% - BenefitsCorp Equities, Inc.
94% - Maxim Series Fund, Inc.
100% - GWL Properties Inc.
100% - Great-West Realty Investments Inc.
50% - Westkin Properties Ltd.
100% - Confed Admin Services, Inc.
Colorado Business Corporation Act
Article 109 - INDEMNIFICATION
Section 7-109-101. Definitions.
As used in this Article:
(1) "Corporation" includes any domestic or foreign
entity that is a predecessor of the corporation by
reason of a merger, consolidation, or other transaction
in which the predecessor's existence ceased upon
consummation of the transaction.
(2) "Director" means an individual who is or was a
director of a corporation or an individual who, while a
director of a corporation, is or was serving at the
corporation's request as a director, officer, partner,
trustee, employee, fiduciary or agent of another
domestic or foreign corporation or other person or
employee benefit plan. A director is considered to be
serving an employee benefit plan at the corporation's
request if his or her duties to the corporation also
impose duties on or otherwise involve services by, the
director to the plan or to participants in or
beneficiaries of the plan.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with
respect to a proceeding to pay a judgment, settlement,
penalty, fine, including an excise tax assessed with
respect to an employee benefit plan, or reasonable
expenses.
(5) "Official capacity" means, when used with respect
to a director, the office of director in the corporation
and, when used with respect to a person other than a
director as contemplated in Section 7-109-107, means the
office in the corporation held by the officer or the
employment, fiduciary, or agency relationship undertaken
by the employee, fiduciary, or agent on behalf of the
corporation. "Official capacity" does not include
service for any other domestic or foreign corporation or
other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is
threatened to be made a named defendant or respondent in
a proceeding.
(7) "Proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative and whether
formal or informal.
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this
section, a corporation may indemnify a person made a
party to the proceeding because the person is or was a
director against liability incurred in any proceeding
if:
(a) The person conducted himself or herself in
good faith;
(b) The person reasonably believed:
(I) In the case of conduct in an official
capacity with the corporation, that his or
her conduct was in the corporation's best
interests; or
(II) In all other cases, that his or her
conduct was at least not opposed to the
corporation's best interests; and
(c) In the case of any criminal proceeding, the
person had no reasonable cause to believe his or
her conduct was unlawful.
(2) A director's conduct with respect to an employee
benefit plan for a purpose the director reasonably
believed to be in the interests of the participants in
or beneficiaries of the plan is conduct that satisfies
the requirements of subparagraph (II) of paragraph (b)
of subsection (1) of this section. A director's conduct
with respect to an employee benefit plan for a purpose
that the director did not reasonably believe to be in
the interests of the participants in or beneficiaries of
the plan shall be deemed not to satisfy the requirements
of subparagraph (a) of subsection (1) of this section.
(3) The termination of any proceeding by judgment,
order, settlement, or conviction, or upon a plea of nolo
contendere or its equivalent, is not, of itself,
determinative that the director did not meet the
standard of conduct described in this section.
(4) A corporation may not indemnify a director under
this section:
(a) In connection with a proceeding by or in
the right of the corporation in which the
director was adjudged liable to the corporation;
or
(b) In connection with any proceeding charging
that the director derived an improper personal
benefit, whether or not involving action in his
official capacity, in which proceeding the
director was adjudged liable on the basis that he
or she derived an improper personal benefit.
(5) Indemnification permitted under this section in
connection with a proceeding by or in the right of a
corporation is limited to reasonable expenses incurred
in connection with the proceeding.
Section 7-109-103. Mandatory Indemnification of Directors.
Unless limited by the articles of incorporation,
a corporation shall be required to indemnify a person
who is or was a director of the corporation and who was
wholly successful, on the merits or otherwise, in
defense of any proceeding to which he was a party,
against reasonable expenses incurred by him in
connection with the proceeding.
Section 7-109-104. Advance of Expenses to Directors.
(1) A corporation may pay for or reimburse the
reasonable expenses incurred by a director who is a
party to a proceeding in advance of the final
disposition of the proceeding if:
(a) The director furnishes the corporation a
written affirmation of his good-faith belief that
he has met the standard of conduct described in
Section 7-109-102;
(b) The director furnishes the corporation a
written undertaking, executed personally or on
the director's behalf, to repay the advance if it
is ultimately determined that he or she did not
meet such standard of conduct; and
(c) A determination is made that the facts then
know to those making the determination would not
preclude indemnification under this article.
(2) The undertaking required by paragraph (b) of
subsection (1) of this section shall be an unlimited
general obligation of the director, but need not be
secured and may be accepted without reference to
financial ability to make repayment.
(3) Determinations and authorizations of payments
under this section shall be made in the manner specified
in Section 7-109-106.
Section 7-109-105. Court-Ordered Indemnification of
Directors.
(1) Unless otherwise provided in the articles of
incorporation, a director who is or was a party to a
proceeding may apply for indemnification to the court
conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application,
the court, after giving any notice the court considers
necessary, may order indemnification in the following
manner:
(a) If it determines the director is entitled
to mandatory indemnification under section 7-109-
103, the court shall order indemnification, in
which case the court shall also order the
corporation to pay the director's reasonable
expenses incurred to obtain court-ordered
indemnification.
(b) If it determines that the director is
fairly and reasonably entitled to indemnification
in view of all the relevant circumstances,
whether or not the director met the standard of
conduct set forth in section 7-109-102 (1) or was
adjudged liable in the circumstances described in
Section 7-109-102 (4), the court may order such
indemnification as the court deems proper; except
that the indemnification with respect to any
proceeding in which liability shall have been
adjudged in the circumstances described Section
7-109-102 (4) is limited to reasonable expenses
incurred in connection with the proceeding and
reasonable expenses incurred to obtain court-
ordered indemnification.
Section 7-109-106. Determination and Authorization of
Indemnification of Directors.
(1) A corporation may not indemnify a director under
Section 7-109-102 unless authorized in the specific case
after a determination has been made that indemnification
of the director is permissible in the circumstances
because he has met the standard of conduct set forth in
Section 7-109-102. A corporation shall not advance
expenses to a director under Section 7-109-104 unless
authorized in the specific case after the written
affirmation and undertaking required by Section 7-109-
104(1)(a) and (1)(b) are received and the determination
required by Section 7-109-104(1)(c) has been made.
(2) The determinations required to be made subsection
(1) of this section shall be made:
(a) By the board of directors by a majority
vote of those present at a meeting at which a
quorum is present, and only those directors not
parties to the proceeding shall be counted in
satisfying the quorum.
(b) If a quorum cannot be obtained, by a
majority vote of a committee of the board of
directors designated by the board of directors,
which committee shall consist of two or more
directors not parties to the proceeding; except
that directors who are parties to the proceeding
may participate in the designation of directors
for the committee.
(3) If a quorum cannot be obtained as contemplated in
paragraph (a) of subsection (2) of this section, and the
committee cannot be established under paragraph (b) of
subsection (2) of this section, or even if a quorum is
obtained or a committee designated, if a majority of the
directors constituting such quorum or such committee so
directs, the determination required to be made by
subsection (1) of this section shall be made:
(a) By independent legal counsel selected by a
vote of the board of directors or the committee
in the manner specified in paragraph (a) or (b)
of subsection (2) of this section or, if a quorum
of the full board cannot be obtained and a
committee cannot be established, by independent
legal counsel selected by a majority vote of the
full board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and evaluation as
to reasonableness of expenses shall be made in the same
manner as the determination that indemnification is
permissible; except that, if the determination that
indemnification is permissible is made by independent
legal counsel, authorization of indemnification and
advance of expenses shall be made by the body that
selected such counsel.
Section 7-109-107. Indemnification of Officers, Employees,
Fiduciaries, and Agents.
(1) Unless otherwise provided in the articles of
incorporation:
(a) An officer is entitled to mandatory
indemnification under section 7-109-103, and is
entitled to apply for court-ordered
indemnification under section 7-109-105, in each
case to the same extent as a director;
(b) A corporation may indemnify and advance
expenses to an officer, employee, fiduciary, or
agent of the corporation to the same extent as a
director; and
(c) A corporation may indemnify and advance
expenses to an officer, employee, fiduciary, or
agent who is not a director to a greater extent,
if not inconsistent with public policy, and if
provided for by its bylaws, general or specific
action of its board of directors or shareholders,
or contract.
Section 7-109-108. Insurance.
A corporation may purchase and maintain insurance
on behalf of a person who is or was a director, officer,
employee, fiduciary, or agent of the corporation and
who, while a director, officer, employee, fiduciary, or
agent of the corporation, is or was serving at the
request of the corporation as a director, officer,
partner, trustee, employee, fiduciary, or agent of any
other domestic or foreign corporation or other person or
of an employee benefit plan against any liability
asserted against or incurred by the person in that
capacity or arising out of his or her status as a
director, officer, employee, fiduciary, or agent whether
or not the corporation would have the power to indemnify
the person against such liability under the Section 7-
109-102, 7-109-103 or 7-109-107. Any such insurance may
be procured from any insurance company designated by the
board of directors, whether such insurance company is
formed under the laws of this state or any other
jurisdiction of the United States or elsewhere,
including any insurance company in which the corporation
has an equity or any other interest through stock
ownership or otherwise.
Section 7-109-109. Limitation of Indemnification of
Directors.
(1) A provision concerning a corporation's
indemnification of, or advance of expenses to, directors
that is contained in its articles of incorporation or
bylaws, in a resolution of its shareholders or board of
directors, or in a contract, except for an insurance
policy or otherwise, is valid only to the extent the
provision is not inconsistent with Sections 7-109-101 to
7-109-108. If the articles of incorporation limit
indemnification or advance of expenses, indemnification
or advance of expenses are valid only to the extent not
inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a
corporation's power to pay or reimburse expenses
incurred by a director in connection with an appearance
as a witness in a proceeding at a time when he or she
has not been made a named defendant or respondent in the
proceeding.
Section 7-109-110. Notice to Shareholders of Indemnification
of Director.
If a corporation indemnifies or advances expenses
to a director under this article in connection with a
proceeding by or in the right of the corporation, the
corporation shall give written notice of the
indemnification or advance to the shareholders with or
before the notice of the next shareholders' meeting. If
the next shareholder action is taken without a meeting
at the instigation of the board of directors, such
notice shall be given to the shareholders at or before
the time the first shareholder signs a writing
consenting to such action.
Bylaws of GWL&A
Article II, Section 11. Indemnification of Directors.
The Company may, by resolution of the Board of
Directors, indemnify and save harmless out of the funds of the
Company to the extent permitted by applicable law, any
director, officer, or employee of the Company or any member or
officer of any committee, and his heirs, executors and
administrators, from and against all claims, liabilities,
costs, charges and expenses whatsoever that any such director,
officer, employee or any such member or officer sustains or
incurs in or about any action, suit, or proceeding that is
brought, commenced, or prosecuted against him for or in
respect of any act, deed, matter or thing whatsoever made,
done, or permitted by him in or about the execution of his
duties of his office or employment with the Company, in or
about the execution of his duties as a director or officer of
another company which he so serves at the request and on
behalf of the Company, or in or about the execution of his
duties as a member or officer of any such Committee, and all
other claims, liabilities, costs, charges and expenses that he
sustains or incurs, in or about or in relation to any such
duties or the affairs of the Company, the affairs of such
Committee, except such claims, liabilities, costs, charges or
expenses as are occasioned by his own wilful neglect or
default. The Company may, by resolution of the Board of
Directors, indemnify and save harmless out of the funds of the
Company to the extent permitted by applicable law, any
director, officer, or employee of any subsidiary corporation
of the Company on the same basis, and within the same
constraints as, described in the preceding sentence.
Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 29. Principal Underwriter
(a) The Great-West Life Assurance Company ("Great-
West") currently distributes securities of FutureFunds
Series Account, Maxim Series Account, Pinnacle Series
Account and TNE Series (K) Account in addition to those
of the Registrant.
(b) Directors and Officers of Great-West.
Position and Offices
Name Principal Business Address with Underwriter
James W. Burns, O.C. (4) Chairman
Orest T. Dackow (3) Director
Andre Desmarais (4) Director
Paul Desmarais, C.C. (4) Director
Paul Desmarais, Jr. (4) Director
Robert G. Graham 77 Avenue Road Director
Penthouse #6
Toronto, Ontario M5R 3R8
Robert Gratton (5) Director
N. Berne Hart 2552 East Alameda Avenue Director
Denver, Colorado 80209
Charles H. Hollenberg, Ontario Cancer Treatment Director
M.D., O.C. and Research Foundation
620 University Avenue
Toronto, Ontario M5G 2L7
Kevin P. Kavanagh (1) Director
J. Blair MacAulay Fraser & Beatty Director
Barristers & Solicitors
P.O. Box 100
First Canadian Place
Toronto, Ontario M5X 1B2
William Mackness 61 Waterloo Street Director
Winnipeg, Manitoba R3N 053
The Right Hon. 5238 45 B Avenue Director
D.R. Mazankowski Vegreville, Alberta T9C 1S5
William T. McCallum (3) Director,
President and
Chief Executive
Officer, U.S.
Operations
Raymond L. McFeetors (1) Director,
President and
Chief Executive
Officer; President
and Chief
Executive Officer,
Canadian
Operations
Randall L. Moffat Moffat Communications Limited Director
3rd Floor, CKY Building
Winnipeg, Manitoba R3G 0L7
Jerry E.A. Nickerson H.B. Nickerson & Sons Limited Director
P.O. Box 130
275 Commercial Street
North Sydney, Nova Scotia B2A 3M2
P. Michael Pitfield, P.C., Q.C. (4) Director
Michel Plessis-Belair, F.C.A. (4) Director
Guy St-Germain, C.M. Placements Laugerma Inc. Director
48 Robert Street
Outremont, Quebec H3S 2P2
Robert D. Bond (3) Senior Vice-
President,
Financial
Services,
(U.S.)
Denis J. Devos (1) Senior Vice-
President,
Individual
Insurance
and
Investment
(Canada)
James R. Grant (1) Senior Vice-
President,
Group
(Canada)
Mitchell T.G. Graye (1) Senior Vice-
President,
Chief
Financial
Officer
(Canada)
John T. Hughes (3) Senior Vice-
President,
Chief
Investment
Officer
(U.S.)
D. Craig Lennox (3) Senior Vice-
President,
General
Counsel and
Secretary
Dennis Low (3) Executive
Vice-
President,
Financial
Services
(U.S.)
Alan D. MacLennan (2) Executive
Vice-
President,
Employee
Benefits
(U.S.)
David E. Morrison (1) Senior Vice-
President
and Actuary
(Canada)
James D. Motz (2) Senior Vice-
President,
Employee
Benefits
Operations
(U.S.)
Peter G. Munro (1) Senior Vice-
President,
Chief
Investment
Officer
(Canada)
Douglas L. Wooden (3) Senior Vice-
President,
Chief
Financial
Officer
(U.S.)
________________________________________
(1) 100 Osborne Street North, Winnipeg, Manitoba, Canada R3C 3A5.
(2) 8505 East Orchard Road, Englewood, Colorado 80111.
(3) 8515 East Orchard Road, Englewood, Colorado 80111.
(4) Power Corporation of Canada, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
(5) Power Financial Corporation, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
Great-West -0- -0- -0- -0-
Item 30. Location of Accounts and Records
All accounts, books, or other documents required to be
maintained by Section 31(a) of the 1940 Act and the
rules promulgated thereunder are maintained by the
Registrant through GWL&A, 8505 E. Orchard Road,
Englewood, Colorado 80111.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective
amendment to this Registration Statement as frequently
as is necessary to ensure that the audited financial
statements in the Registration Statement are never more
than 16 months old for so long as payments under the
variable annuity contracts may be accepted.
(b) Registrant undertakes to include either (1) as
part of any application to purchase a contract offered
by the Prospectus, a space that an applicant can check
to request a Statement of Additional Information, or (2)
a postcard or similar written communication affixed to
or included in the Prospectus that the applicant can
remove to send for a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement of
Additional Information and any financial statements
required to be made available under this form promptly
upon written or oral request.
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant certifies that it meets all the requirements
for effectiveness pursuant to Rule 485(b) and has duly
caused this Post-Effective Amendment No. 2 to its
Registration Statement to be signed on its behalf, in the
City of Englewood, State of Colorado on this 19 day of
April , 1996.
RETIREMENT PLAN SERIES ACCOUNT
(Registrant)
By: /s/ William T. McCallum
William T. McCallum, President and
Chief Executive Officer of Great-
West Life & Annuity Insurance Company
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
(Depositor)
By: /s/ William T. McCallum
William T. McCallum, President and
Chief Executive Officer
As required by the Securities Act of 1933, this
Registration Statement has been signed by the following
persons in the capacities with Great-West Life & Annuity
Insurance Company and on the dates indicated:
Signature and Title Date
/s/ Robert Gratton* April 19 , 1996
Director and Chairman of the Board
(Robert Gratton)
/s/ William T. McCallum April 19 , 1996
Director, President and Chief
Executive Officer (William T. McCallum)
Signature and Title Date
/s/ Douglas L. Wooden April 19 , 1996
Principal Financial Officer
(Douglas L. Wooden)
/s/ Douglas L. Wooden April 19 , 1996
Senior Vice-President and Treasurer
(Douglas L. Wooden)
/s/ James Balog* April 19 , 1996
Director, (James Balog)
/s/ James W. Burns* April 19 , 1996
Director, (James W. Burns)
/s/ Orest T. Dackow* April 19 , 1996
Director, (Orest T. Dackow)
/s/ Paul Desmarais, Jr.* April 19 , 1996
Director, (Paul Desmarais, Jr.)
/s/ Robert G. Graham* April 19 , 1996
Director, (Robert G. Graham)
/s/ N. Berne Hart* April 19 , 1996
Director, (N. Berne Hart)
Signature and Title Date
/s/ Kevin P. Kavanagh* April 19 , 1996
Director, (Kevin P. Kavanagh)
/s/ William Mackness* April 19 , 1996
Director, (William Mackness)
/s/ Jerry Edgar Alan Nickerson* April 19 , 1996
Director, (Jerry Edgar Alan Nickerson)
/s/ P. Michael Pitfield* April 19 , 1996
Director, (P. Michael Pitfield)
, 1996
Director, (Michel Plessis-Belair)
/s/ Ross J. Turner* April 19 , 1996
Director, (Ross J. Turner)
/s/ Brian E. Walsh* April 19 , 1996
Director, (Brian E. Walsh)
*By: /s/ D.C. Lennox April 19 , 1996
D.C. Lennox
Attorney-in-fact pursuant to Powers of
Attorney filed with the Registration Statement
on September 13, 1994 and Post-Effective
Amendment No. 2 to this Registration
Statment.
POWER OF ATTORNEY
RE
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, B.E.Walsh, a
Member of the Board of Directors of Great-West Life &
Annuity Insurance Company, a Colorado corporation, do
hereby constitute and appoint each of D.C. Lennox and
G.R. Derback as my true and lawful attorney and agent for
me and in my name and on my behalf to do, individually
and without the concurrence of the other attorney and
agent, any and all acts and things and to execute any and
all instruments which either said attorney and agent may
deem necessary or desirable to enable Great-West Life &
Annuity Insurance Company and Retirement Plan Series
Account, a separate and distinct fund governed under the
provisions of the Colorado Insurance Code by Great-West
Life & Annuity Insurance Company, to comply with the
Securities Act of 1933 and the Investment Company Act of
1940 and any rules, regulations, and requirements of the
Securities and Exchange Commission thereunder, in
connection with the registration under said Acts of
variable annuity contracts, including specifically, but
without limiting the generality of the foregoing, power
and authority to sign my name, in my capacity as a Member
of the Board of Directors of Great-West Life & Annuity
Insurance Company, to the Registration Statement (Form N-
4) of Great-West Life & Annuity Insurance Company and
Retirement Plan Series Account (Registration No. 33-
83928), and to any and all amendments thereto, and I
hereby ratify and confirm all that either said attorney
and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
this 20 day of October , 1995.
/s/ Brian E. Walsh
Member , Board of Directors
Great-West Life & Annuity
Insurance Company
Witness:
/s/ M. Canty
(10)(a)
WRITTEN CONSENT OF
JORDEN BURT BERENSON & JOHNSON, LLP
April 15, 1996
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
Ladies and Gentlemen:
We hereby consent to the use of our name under the
caption "Legal Matters" in the Prospectus contained in
Post-Effective Amendment No. 2 to the Registration
Statement on Form N-4 (File No. 33-83928) filed by Great-
West Life & Annuity Insurance Company and Retirement Plan
Series Account with the Securities and Exchange
Commission under the Securities Act of 1933 and the
Investment Company Act of 1940.
Very truly yours,
/s/ Jorden Burt Berenson & Johnson LLP
JORDEN BURT BERENSON & JOHNSON, LLP
(10)(b)
WRITTEN CONSENT OF
DELOITTE & TOUCHE, LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment
No. 2 to Registration Statement No. 33-83928 of
Retirement Plan Series Account on Form N-4 of our report
dated February 7, 1996 on the financial statements of
Retirement Plan Series Account and our report dated
January 19, 1996 on the consolidated financial statements
of Great-West Life & Annuity Insurance Company appearing
in the Statement of Additional Information, which is part
of such Registration Statement, and to the reference to
us under the caption "Independent Auditors" in such
Statement of Additional Information.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 17, 1996
EXHIBIT 10(c)
WRITTEN CONSENT OF
RUTH B. LURIE
April 16, 1996
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, CO 80111
Re: Retirement Plan Series Account
Ladies and Gentlemen:
I hereby consent to the use of my name under the
caption "Legal Opinions" in the Prospectus for Retirement
Plan Series Account contained in the Registration
Statement Form N-4 filed by Great-West Life & Annuity
Insurance Company and Retirement Plan Series Account with
the Securities and Exchange Commission under the
Securities Act of 1933 and the Investment Company Act of
1940 and the amendments thereto.
Sincerely,
/s/ Ruth B. Lurie
Ruth B. Lurie
Vice President, Counsel
and Associate Secretary
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