PwC Actuarial Services Newsletter – March 2016

The PwC Actuarial Services Newsletter is a joint venture of three of our worldwide PwC actuarial practices. In recent years, there have been a number of collaborations on client projects, initiatives and content development between the three entities, Switzerland, Germany and the Netherlands. This newsletter will examine current topics of the industry from different regional and thematic perspectives, and is aimed at insurance professionals working in or closely with actuarial departments.

Topic 1: Help! We are getting older…

We are getting older. However, we do not know exactly how much older. The impact of an update in mortality projections on life insurers and pension funds may be dramatic. Insurers and pension funds are seeking ways to mitigate the impact of new updates in mortality projections on their liabilities. This article provides an introduction to new ways to manage longevity risks.

Topic 2: ALM in a solvency driven world

Asset liability management (ALM) is to an insurance company what diplomacy is between countries. The goal is to align the asset side with the liability side, or at least to enhance the understanding between the two. This has proven to be a difficult task, with different approaches followed by asset management and risk management.

Topic 3: Model validation – Being your own toughest critic

Every model is only as good as its validation. More regulatory requirements and an increased risk awareness drive the need for high-quality model results and thus more thorough model validation. The relevance of models in insurance companies is growing, not just because of new dimensions of data and modelling performance capabilities, but also the tendency towards analytics-driven decision making.

Read more

Read the last newsletter here.

Please contact me for any further information or if you would like to discuss one of the topics.

MiFID II delay until 3 January 2018 officially confirmed

We welcome the certainty which the announcement that the MiFID II package will be delayed by one year brings for firms in the EU. Since ESMA’s request last October that parts of MiFID II be delayed, firms have had to continue their MiFID II implementation plans with the uncertainty of the delay to all or part of the package hanging over them.

On 10 February 2016, the Commission proposed a one year extension to the entry into application of MiFID II and MiFIR. The entire MiFID II package, comprising the recast directive and MiFIR will therefore not come into effect on 3 January 2017, but on 3 January 2018. It was decided to follow a “full delay”, i.e. MiFID II and MiFIR are delayed entirely and not only certain parts of it. This will come as a relief to firms as it provides greater certainty than a more complex delay of only parts of the legislation. The new deadline will now need to be approved by the European Council and the European Parliament.

The extension of entry into application should not impact adoption of delegated acts and technical standards. The Commission should adopt these measures in accordance with the procedure envisaged in order to allow the industry to set up and adjust internal systems to ensure compliance with new requirements.

There have been some rumours in the past about a potential delay of MiFID II and MiFIR. However, the scope (both from a time and content perspective) of such delay was unclear until now. The delay is especially caused by the complex technical infrastructure that needs to be set up for the MiFID II package to work effectively. ESMA has to collect data from about 300 trading venues on about 15 million financial instruments. The European Commission was informed by ESMA that neither the competent authorities nor the market participants would have the necessary systems ready by 3 January 2017.

Firms should use the additional time they have to implement MiFID II wisely. The scale of the challenge remains considerable, so firms should not see the delay as a reason to put their implementation plans on hold, particularly where technology changes are required. Rather, they should seek to use the additional time available to perform the deep impact analysis required to facilitate strategic decision making.

Despite the greater clarity that the announcement brings, some areas of uncertainty remain for firms. As MAR is set to enter into application on 3 July 2016, there is already a provision in it, which ensures that before the originally foreseen date of entry into application of MiFID II, concepts and rules of MiFID I will apply. However, the interaction with PRIIPs still remains unclear.

Besides that, it seems at this stage that national legislators will not be given an extension to the June deadline for national transposition. On the one hand, the timetable for national legislators is now very tight to consult on draft rules and create the necessary legislation. On the other, a delay to this process would begin to undermine the reason for the delay to the whole package. We would urge clarity on these issues as soon as possible so that firms are able to proceed with confidence with their regulatory reform programmes.

You can find the press release here.

The directive amending MiFID can be found here.

The regulation amending MiFIR can be found here.

MiFID II and MiFIR can be obtained at the following websites:



 If you have any further questions, please feel free to contact Günther Dobrauz, Michael Taschner or Philipp Rosenauer.

Switzerland signs declarations on introduction of AEOI with 5 countries

It was announced by the Swiss government on 20 January 2016 that Switzerland has signed joint declarations on the introduction of the automatic exchange of information (AEOI) in tax matters on a reciprocal basis with Jersey, Guernsey, the Isle of Man, Iceland and Norway. Switzerland and these countries intend to start to exchange data in 2018, after the necessary legal basis has been created in the various countries.

The joint declarations signed by Switzerland and these countries meet the criteria set by the Federal Council in the negotiation mandates of 8 October 2014. Aside from the EU and the United States, the negotiations initially concern countries with which there are close economic ties and which provide their taxpayers with sufficient scope for regularisation. Switzerland has already signed a joint declaration of this nature with Australia and an agreement on the introduction of the AEOI has already been concluded with the EU.

It is notable that the Swiss government’s announcement of these agreements also states that

  • These five countries have prepared scope for regularisation for their taxpayers, and that
  • Iceland and Norway have reiterated their intention to start talks on market access for Swiss financial service providers.

The Federal Council authorised the Federal Department of Finance (FDF) to initiate a consultation on introducing the AEOI with the other countries following the signing of the declarations with the various countries. Thereafter, the corresponding federal decrees will be submitted to Parliament for approval.

Please see the link below for more details.

We will keep you updated on relevant AEOI developments as they occur.

January 2016 FATCA Developments

Extension of Aggregated US Account Reporting Deadline for Swiss FIs

On 20 January the Swiss State Secretariat for International Financial Matters (SIF) published an update (German, French) regarding the aggregated report that is due on 31 January for US account holders that have not provided consent to be reported.

Similar to last year, the update from the SIF notes that the SIF has spoken with the US and agreed that Swiss FIs will not be considered to be significantly noncompliant under Article 11 Section 2 of the Swiss IGA if they are unable to report the required aggregated information by 31 January of this year. Instead, Swiss FIs will have until 31 March 2016 to submit the required aggregated information. This deadline extension for filling the aggregated reporting is a one time exception and does not apply to future years.  Furthermore, this exception only applies to the non-consenting US accounts and does not apply to the non-consenting NPFFI accounts (i.e., if applicable, the aggregate information regarding accounts held by non-consenting NPFFIs is still due by 31 January).

A Swiss FI that wishes to make use of the extended deadline is required to inform the FTA. The Swiss Banking Association recommends that such a notification is made to the FTA on or before 31 January 2016.

Deferral of Deadline for Pre-existing Account Due Diligence Certification

Section 8.03(A) of the FFI agreement and regulation §1.1471-4(c)(7) require Reporting Swiss FIs to certify to the IRS that they have complied with the due diligence procedures for preexisting accounts within the applicable timeframe for complying with such procedures.  According to the regulation, this certification must be made no later than 60 days following the date that is two years after the effective date of the FFI agreement (e.g., Aug 29, 2016 for FFI agreements effective on July 1, 2014).

On 19 January 2016, the IRS announced (via Notice 2016-08) that this certification will be deferred and will be submitted at the same time that the Reporting Swiss FI is required to submit its first periodic certification of compliance (i.e., by July 1, 2018).

The change to the timing of the certification does not affect the deadlines for a Reporting Swiss FI to complete the due diligence procedures for preexisting accounts.  As part of the certification to be made in 2018, Reporting Swiss FIs will be required to certify to the completion of those procedures within the time prescribed in the Swiss IGA.

For additional information regarding this deferral as well as information regarding reporting on NPFFI accounts and the ability of a Swiss FI to rely on an electronically provided Forms W-8 or Form W-9, please see Notice 2016-08.

New Draft Form W-8BEN-E

On 12 January 2016, the IRS published a new draft version of Form W-8BEN-E and corresponding draft instructions.  Some of the revisions include:

  • A new checkbox for payees to check regarding accounts they hold that are not financial accounts;
  • More information regarding how Nonreporting IGA FFIs should use Form W-8BEN-E; and
  • A new requirement for a taxpayer to specify which Limitations on Benefits test it meets under its applicable treaty in order to claim a reduced rate of withholding

We will continue to keep you updated on further developments as they occur.

The Netherlands issues further information on CRS

On 30 and 31 December 2015, the Dutch Ministry of Finance published further information on CRS. This included a CRS Decree as well as the lists of participating CRS jurisdictions for (1) the CRS identification obligations for pre-existing accounts and (2) the ‘look-through approach’ for investment entities. Please find attached a Newsletter for further details and observations.

It is interesting to see that the two lists of participating jurisdictions are not identical.  Moreover, the United States is not on either list.

Other countries, such as the UK, have also published a list of participating jurisdictions. However, since the lists of the different countries do not all contain the same jurisdictions, FIs from one country may have to obtain more information from an investment entity account holder than FIs from another country. This could lead to an uneven playing field.

We will keep you informed of future CRS developments.

You can read some more information here.

The Gamechangers: Regulatory sonic boom

PwC invites you to the next event in our Gamechanger series:

“The regulatory sonic boom – breaking through to the other side”
on Wednesday, 13 January 2016.


More Information and Registration here.

Much has been said of late in regards to FIDLEG and MiFID I and II, but what do these as well as other developing regulations really mean in terms of impact to the financial services sector? What is the bigger picture? Important questions need to be addressed such as –

  • What is the impact on your current as well as future operations?
  • What is the impact on your clients?
  • What is the Impact on your current way of doing business?
  • What options do you have?
  • What are the tax implications?
  • How have others in the EU responded?

Feedback so far tells us that there hasn’t been a great deal of clarity given on these as well as other questions in the wake of several regulatory waves.

During this seminar, we will not only provide valuable updates on key regulations such as FIDLEG, MiFID II, FinFrag and the revised AML rules, but also provide perspectives from clients implementing, operationalising and living day to day with these regulations.

Swiss pension plans are changing – your views

Swiss “1e” pension plans allow individuals to choose their own savings investments from a pool of pre-defined investment choices for contributions paid on earnings above CHF 126’900 a year. These plans face change in 2016. These changes are likely to make these plans more attractive to employers and result in changes to current employer pension funds. You can find more details in the overview below.

If you represent an employer or pension fund, whether that is in fund management, HR or finance, we’d like to hear your views on these plans. This will help you and our other corporate and pension fund clients and contacts make decisions about them. The short survey is currently available in English and German and should take around 5 minutes to complete.

English: 1e pension plan survey

Deutsch: Umfrage über 1e Vorsorgepläne

Please note:

  • The survey will only ask questions based on your knowledge today.
  • Some pages are skipped depending on the answers you give.
  • The survey is anonymous, but by including your email address at the end we can ensure you get the results as soon as they are available.

An overview of the changes



New rules for the Swiss financial centre in the form of FinSA and FinIA – an update

The Swiss financial centre is facing a fundamental restructuring of its regulation. No less than three new pieces of legislation (the Financial Market Infrastructure Act, FMIA, the Financial Services Act, FinSA, and the Financial Institutions Act, FinIA) are set to replace large parts of the previous regulatory regime. The FMIA has already been passed by the Swiss parliament and will enter into force on 1 January 2016 together with the relevant implementing ordinances.

The Federal Council also opened the consultation on FinSa and FinIA on 27 June 2014. The consultation closed on 17 October 2014. At the time we informed you in a brochure about the impact of these two regulatory texts. The Federal Council has now drafted the FinSA and FinIA bills, which were published on 4 November 2015. It will be very interesting to see how the parliamentary debate unfolds. Following the publication of the FinSA and FinIA bills we enclose an updated version of our brochure.

Read more: New rules for the Swiss financial centre in the Financial Services Act and the Financial Institutions Act – November 2015 update

Financial Institutions Act (FinIA)

One of the main new features of the FinIA bill is a proposed ‘authorisation hierarchy’ and the inclusion of independent asset managers and trustees within this hierarchy. Authorisation on a particular level of the hierarchy will encompass authorisation for all activities at lower levels. This means that unlike today, a bank will no longer need to obtain additional authorisation as a securities dealer (or as it is now termed, an investment firm) if it engages in securities dealing.

By consolidating the regulations into a single law, materially unjustifiable differences that existed between the different forms of authorisation will be eliminated. The introduction of an explicit ‘clean money’ strategy subject to regulatory enforcement was proposed in the original FinIA consultation draft but has been dropped again in the Federal Council bill.

Independent asset managers and trustees are to be subject to an authorisation requirement for the first time. As this will involve additional costs for independent asset managers (who often have just one or a small number of employees), this change will probably have an impact on the market (closures, mergers).

Financial Services Act (FinSA)

In the past, regulation has largely been confined to institutions and players based in Switzerland. The activities of market players without an actual presence in Switzerland (in the form of a representative office, branch or subsidiary) were unaffected. This is set to change in part through the introduction of a registration requirement for client advisors at these market players. The new registration requirement will at least partly offset the competitive disadvantage of Swiss financial institutions in their international business, and gives the supervisory authorities an overview of the financial services being offered cross-border in Switzerland, which were previously completely uncontrolled.

The treatment of trailer fees that has been repeatedly confirmed by the Federal Supreme Court in recent years is enshrined in law in the FinSA bill. This also applies to execution-only activities.

Other changes:

  • Increased disclosure, documentation and explanatory obligations for all financial services providers
  • New training requirements for client advisors
  • Product-specific documentation requirements (prospectus, basic information sheet)

As one of the objectives of FinSA is an improvement in customer protection, the draft bill also contains a number of changes relating to the assertion of customer claims against financial institutions. Based on a comprehensive right to documentation and access to an ombudsman, more favourable cost arrangements for clients in civil proceedings are to be introduced.

If you have any further questions please contact:

Guenther Dobrauz, Partner
Leader Legal FS Regulatory & Compliance Services
Office: +41 58 792 14 97
PricewaterhouseCoopers AG Birchstrasse 160 | Postfach | CH-8050 Zurich

Simon Schären, Manager
Legal FS Regulatory & Compliance Services
Office: +41 58 792 14 63
PricewaterhouseCoopers AG Birchstrasse 160 | Postfach | CH-8050 Zurich

Action required: the new regulations on OTC

Action required: the new regulations on OTC derivatives will enter into force on 1 January 2016, affecting entities in all industries – including non-financial services.

The new Swiss Financial Market Infrastructure Act (FMIA) will impose new obligations on entities in many industries, such as (but not limited to) banking, finance, pharmaceuticals, chemicals, consumer goods and others with derivatives on their books. The first obligations of the FMIA will begin to take affect as soon as 1 January 2016.

Which derivatives are affected?

All derivatives, meaning financial contracts whose value depends on one or several underlying assets and which are not cash transactions, are subject to the clearing, reporting and risk-mitigation obligations, with the exception of:

  • Structured products
  • Securities lending and borrowing as well as repurchase agreements
  • Commodities derivatives if physically delivered, not traded on a venue, and not settled in cash upon unilateral choice
  • Currency swaps and forwards settled on a payment versus payment basis (the reporting obligation however still applies)

Will I be affected?

You will be affected if you are either a (small) financial counterparty or a (small) non-financial counterparty. A financial counterparty (FC) is any (Swiss-domiciled) bank, securities dealer, insurance and re-insurance company, parent company of a financial or insurance group or financial or insurance conglomerate, fund management company, or asset manager of collective investment schemes, collective investment schemes, occupational pension schemes and investment foundations (art. 48 et seq. OPA). To be classed as small, an FC requires a rolling average for its gross position in all outstanding OTC-derivatives transactions, calculated over 30 working days, that is below the threshold of CHF 8 billion of all outstanding OTC derivatives of all group companies.

A non-financial company (NFC) is any company which operates outside the finance industry. To be classed as small, an NFC requires gross positions in relevant outstanding OTC-derivatives transactions, calculated over 30 working days, that are below the following thresholds: CHF 1.1 billion (equity and credit) and CHF 3.3 billion (interest rate, commodities and other derivatives).

 What are my obligations?

In general, companies trading in derivatives subject to the FMIA must comply with the following obligations:

  • Clearing: clearing of certain derivatives which are designated OTC derivatives by the Swiss Financial Market Supervisory Authority (FINMA) via a FINMA-approved or recognised central counterparty is required, unless a small FC/NFC is involved.
  • Reporting: all derivatives (including exchange-traded derivatives) must be reported to a trade repository no later than one working day following the transaction.
  • Risk mitigation: OTC derivatives not being cleared are generally subject to risk-mitigation duties such as confirmation, reconciliation, dispute resolution, portfolio compression, valuation and an exchange of financial guarantees, unless exemptions apply to the small FC/NFC in question.
  • Trading on a trading venue: certain FINMA-designated derivatives might, at some point in the future, be subject to the obligation to be traded on a trading venue.

When do my obligations enter into force?

According to the consultation documents, the first obligations under the FMIA will enter into force on 1 January 2016.

These obligations require written documents setting forth how you clear over a central counterparty, establish the thresholds, report to the trade repository, implement risk measures and carry out trading. In case of a bank, it must ensure that an arranged postponement of termination of contracts by FINMA (based on Art. 30a BA), is enforceable.

What are my key considerations?

  • An impact analysis of how your business activities/group will be affected by the FMIA.
  • To what extent will you be able to rely on the processes and documentation that have been set up for EMIR purposes?
  • To what extent will you be able to rely on foreign legislation to fulfil your obligations under the FMIA?
  • To what extent will you be able to outsource the fulfilment of your obligations to a group company or third party?
  • To what extent will you have non-cleared derivatives on your books requiring the implementation of complex risk-mitigation measures?
  • Which OTC-derivatives obligations are affecting your activities?
  • With which financial market infrastructure(s) in which jurisdiction(s) do you want to fulfil your obligations?
  • When will you have to implement these obligations?


Find out how the new regulations on OTC derivatives are affecting your business and contact:

Guenther Dobrauz, Partner
Leader Legal FS Regulatory & Compliance Services
Office: +41 58 792 14 97
PricewaterhouseCoopers AG Birchstrasse 160 | Postfach | CH-8050 Zurich

Martin Liebi, Senior Manager
Head Capital Markets within Legal FS Regulatory & Compliance Services
Office: +41 58 792 28 86
PricewaterhouseCoopers AG Birchstrasse 160 | Postfach | CH-8050 Zurich

Transitional FATCA Rules Extended and US Signs First Competent Authority Agreements

Treasury and IRS provide additional extension to fully implement FATCA

With certain FATCA transitional and reporting deadlines set to expire on 30 September 2015, 31 December 2015, and 31 December 2016, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) published Notice 2015-66 announcing their intention to provide additional time for withholding agents and FFIs to comply with certain aspects of FATCA. In addition to extending certain transition rules, the Notice describes the compliance timeline for jurisdictions that have signed or agreed in substance to a Model 1 intergovernmental agreement (IGA), but have not yet brought the IGA into force.

For more information about the transitional rules and the new applicable dates, please see our recent PwC Tax Insight.

U.S. signs first Competent Authority Arrangements

In late September and early October 2015, the U.S. signed Competent Authority Arrangements (“CAAs”) with Australia, the Czech RepublicHungaryIndiaLiechtenstein, Mauritius and the U.K. in accordance with the IGAs previously signed with these jurisdictions. In general, a Competent Authority Agreement is a bilateral agreement between the U.S. and a treaty partner to clarify or interpret treaty provisions These CAAs establish the procedures for the automatic exchange obligations and for the exchange of information between these jurisdictions.

For more information on these CAAs, please see our recent PwC Tax Insight.