The switching process caters for the batch processing of investment switches captured by members via the Internet, or by admin staff. An investment switch is the transfer of a percentage of a member's investment in one investment portfolio into one or more other investment portfolios.
Note:
Depending on the configuration of the system, the switching procedures will either be done via the Member Website, the Processes > Switches functionality or the My Work functionality.
My Work is work management functionality that manages the allocation of work and the steps in a business process. For more information refer to
My Work
Process SR
Investment
Switching
Life Cycle Movements
New Life Cycle
In addition, refer to Switching Enquiry or Switching respectively in this document.
If the member captures switches or changes in allocation (or both), on the Member Website, an email will automatically be sent to the Team Address for the Administration Manager to arrange for the change(s) in the Investment portfolio(s) to be made.
Switches are processed as follows:
When a switch is captured, the due date is determined (based on the pricing period, fixed switching dates and notice period).
|
Example |
|
|
Date of capture of switch |
10/03/2003 |
|
Daily priced portfolio |
Due Date: 10/03/2003 |
|
Monthly priced portfolio |
Due Date: 01/04/2003 |
|
Daily priced with 30 day notice period |
Due Date: 09/04/2003 |
|
Monthly priced with fixed switch date 30/06 |
Due Date: 01/07/2003 |
|
Monthly priced with 30 day notice period |
Due Date: 01/05/2003 |
The estimated number of units that will be switched out of a portfolio will be determined and stored, and will be displayed on the switch report.
Note:
Once the estimated number of units has been calculated, it does not subsequently get updated.
On the due date, the switching batch process runs as follows:
A disinvestments advice is created to advise the asset manager of the sell. If the time is before the cut-off time, it is included in the disinvestment advice for that day. If the time is after the cut-off time, it is included in the disinvestment advice for the following day.
A sell switch record is created with a transaction date equal to the date derived above.
On the transaction date, the switching batch process looks for the unit price for that transaction date. If the unit price is not available, it will attempt to process it again when next the switching batch process runs. If the unit price is available, the value of the units sold is calculated and accounting transactions are created to record the sell switch on the member’s unitised investment account. The switching fee, if applicable, is deducted from the proceeds of the units sold and the accounting transactions are created to record the fee on the member’s account. The profit / loss on the units sold is calculated, and accounting transactions are created to record the profit / loss on the member’s account.
The settlement delay day's record for the sell portfolio is read and the scheme level transaction to record the disinvestment amount is created with a transaction date equal to the disinvestment advice date plus the settlement delay days.
Buy transactions are created for the net proceeds of the switch sell (proceeds of sell less switch fee). The transaction date will be the disinvestment advice date plus the settlement delay days.
An investment advice is created for the buy transactions. The date will be equal to the buy transaction dates.
The scheme level accounting transactions are created (using the buy transaction date) to record the amount to be invested in the scheme’s accounts.
The buy transactions are recorded on the member’s accounts, using the buy transaction date.
When the applicable unit price is available, the unitisation process calculates the number of units purchased for the amount invested for the buy transaction.
If a switch is processed and has a status of INPROGRESS, and a disinvestment advice is created, and no unit price available, then no accounting transactions are created (this situation occurs mostly in daily pricing where the unit price is not available).
During the processing of the switch, the balances are re-checked by the system. If a difference between the disinvestment advice and accounting transactions is found, the switching process continues, but writes a message to the error log to advise the administrator that there is a difference. This enables the administrator to make a decision and to advise the asset managers. This may also occur for the manual initiate process or a backdated IMIAT take-on.
Refer to
Investments
Investment Advice
The JU3RS_SWTLET Life Cycle Switch Notification Letters batch job runs every month and extracts the Members that will be moved into the Life Cycle investment model within a defined number of months in the future and Members who are currently in the Life Cycle model and will be moved into the next category so that they can be given the option to opt out of the Life Cycle.
Where Life Cycle is the default for the Scheme, the first Membership Group of the Life Cycle Investment Membership Groups will cover the period from the earliest possible age of joining to the age or number of years to retirement the transitioning to a more conservative investment model starts.
Where the Life Cycle model is based on years to NRD then it will be set for example as 99 years to 5 years. Where it is based on age it will be set for example to 16 to 55.
To find the Memberships that will effectively be moved into the actual Life Cycle model, i.e. the point at which the members’ investment allocations will change, the members’ age or number of years to NRD is compared to the Start Age/Years to NRD value of the second Membership Group.
When the batch job runs, the system will read the value for the Batch Parameter LIFECYCLENOTPER and for each Scheme for which the value for Life Cycle Investment Default is Y, find the Memberships for which their number of years to NRD or age is equal to the Start NRD Years value on the Investment Membership Group that is the second Membership Group in the Life Cycle Membership Groups for which the value for Life Cycle is Y less the value for the Batch Parameter LIFECYCLENOTPER.
If the Member has a Planned Retirement Date this date will be used to determine the number of years to NRD.
To determine which is the second Membership Group in the Life Cycle Membership Groups, if the value for Life Cycle Basis is YEARS TO NRD, the system will find the Membership Group for which the value for Start Age/NRD Years is the second lowest Start Age/NRD value in the group of Life Cycle Investment Membership Groups.
If the value for Life Cycle Basis is AGE, the system will find the Membership Group for which the value for Start Age/NRD Years is the second highest value.
For each of the Members found, the system will extract the following information:
· Scheme code
· Membership reference number
· Surname
· Initials
· Postal address
· Planned retirement date
· Normal retirement date
· Number of years to planned retirement date
· Current investment allocation
· New investment allocation
The system will create a Pending Life Cycle Transfers report and create a Service Request with a Process Type of NEW LIFE CYCLE and an Activity of REPORT NEW.
For more information refer to
Reports
Member
Pending Transfers to Life Cycle
Processing existing Life Cycle Member Changes
The system will find the Members that are currently allocated to the second or subsequent Investment Membership Group for which the value for Life Cycle is Y, in the Life Cycle Investment Membership Groups and for which their numbers of years to NRD plus the value for the Batch Parameter LIFECYCLENOTPER is less than the value for Age/End NRD Years of the Investment Membership Group to which they are currently linked i.e. they will be switched to the next Life Cycle Investment Group when the Life Cycle batch job runs for the current date plus the LIFECYCLENOTPER days.
Note:
As per the Processing potential New Life Cycle Members section above, the Members are treated as an existing Life Cycle Member if they are already in the second Membership Group of the Life Cycle Investment Membership Groups or any of the subsequent Membership Groups.
For each of the Members found, the system will extract the following information:
· Scheme code
· Membership reference number
· Surname
· Initials
· Postal Address
· Planned retirement date
· Normal retirement date
· Number of years to planned retirement date
· Investment membership group
· Current investment allocation
· New investment allocation
The system will create a Pending Life Cycle Switches report and create a Service Request with a Process Type of LIFE CYCLE OPT and an Activity of REPORT CURRENT.
For more information refer to
Reports
Member
Pending Life Cycle Switches
For more information refer to
Product Launch Requirements
Product Update
Product Update Type: Membership Group
For more information refer to
Accounting
Structure
Dates and Times
For examples of accounting transactions (T-accounts), refer to
Supplements
Accounting Transaction Examples