POS AM: Post-effective amendment to a registration statement that is not immediately effective upon filing
Published on
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 2004
REGISTRATION NO. 333-103473
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
POST - EFFECTIVE AMENDMENT NO. 3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Exact Name of Registrant)
NEW JERSEY
(State or other jurisdiction of incorporation or organization)
22-2426091
(I.R.S. Employer Identification Number)
C/O PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-7333
(Address and telephone number of principal executive offices)
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THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4780
(Name, address and telephone number of agent for service)
Copies to:
C. CHRISTOPHER SPRAGUE
VICE PRESIDENT, CORPORATE COUNSEL
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4940
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Approximate date of commencement of proposed sale to the public--As soon as
possible after this registration statement is declared effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box .............................[X]
* Securities are not issued in predetermined units
** Registration fee for these securities was paid at the time they were
originally registered on Form S-3 as filed by Pruco Life Insurance Company of
New Jersey on February 27, 2003. The current amount of registered, but unsold,
securities is reported quarterly by the Registrant on Form 10-Q and annually on
Form 10-K.
The risk factors associated with these securities are discussed in the
prospectuses included within this registration statement. The exhibit index
appears in Part II of this registration statement. Prudential Investment
Management Services LLC distributes these securities on a best efforts basis.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
STRATEGIC PARTNERS(SM)
ANNUITY ONE 3
VARIABLE ANNUITY
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PROSPECTUS: MAY 1, 2004
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO LIFE OF NEW JERSEY). PRUCO
LIFE OF NEW JERSEY IS AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
THE FUNDS
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Strategic Partners Annuity One offers a wide variety of investment choices,
including variable investment options that invest in underlying mutual funds
managed by these leading asset managers:
PRUDENTIAL INVESTMENTS LLC
JENNISON ASSOCIATES LLC
A I M CAPITAL MANAGEMENT, INC.
ALLIANCE CAPITAL MANAGEMENT, L.P.
CALAMOS ASSET MANAGEMENT, INC.
DAVIS ADVISORS
DEUTSCHE ASSET MANAGEMENT INVESTMENT SERVICES LIMITED
THE DREYFUS CORPORATION
GE ASSET MANAGEMENT, INCORPORATED
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
HOTCHKIS AND WILEY CAPITAL MANAGEMENT LLC
INVESCO FUNDS GROUP, INC.
JANUS CAPITAL MANAGEMENT LLC
J.P. MORGAN INVESTMENT MANAGEMENT INC.
MASSACHUSETTS FINANCIAL SERVICES COMPANY (MFS)
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC (PIMCO)
SALOMON BROTHERS ASSET MANAGEMENT INC.
You may choose between two basic versions of Strategic Partners Annuity One. One
version, the Contract With Credit, provides for a bonus credit that we add to
each purchase payment you make. If you choose this version of Strategic Partners
Annuity One, some charges and expenses may be higher than if you choose the
version without the credit. Those higher charges could exceed the amount of the
credit under some circumstances, particularly if you withdraw purchase payments
within a few years of making those purchase payments.
PLEASE READ THIS PROSPECTUS
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Please read this prospectus before purchasing a Strategic Partners Annuity One
variable annuity contract, and keep it for future reference. The current
prospectuses for the underlying mutual funds contain important information about
the mutual funds. When you invest in a variable investment option that is funded
by a mutual fund, you should read the mutual fund prospectus and keep it for
future reference. The Risk Factors section relating to the market value
adjustment option appears on page 13 of this prospectus.
TO LEARN MORE ABOUT STRATEGIC PARTNERS ANNUITY ONE
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To learn more about the Strategic Partners Annuity One variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2004. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life of New Jersey also files
other reports with the SEC. All of these filings can be reviewed and copied at
the SEC's offices, and can also be obtained from the SEC's Public Reference
Section, 450 5th Street N.W., Washington, D.C. 20549-0102. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
(202) 942-8090. The SEC maintains a Web site (http://www.sec.gov) that contains
the Strategic Partners Annuity One SAI, material incorporated by reference, and
other information regarding registrants that file electronically with the SEC.
The Table of Contents of the SAI is on page 70 of this prospectus.
FOR A FREE COPY OF THE SAI CALL US AT:
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- - (888) PRU-2888 or write to us at:
- - Prudential Annuity Service Center
P.O. Box 7960
Philadelphia, PA 19101
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS ANNUITY ONE IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
STRATEGIC PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA. ORD01182NY
CONTENTS
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PART I SUMMARY
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
5
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
GLOSSARY
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WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract adjusted
for any market value adjustment minus any charge we impose for premium taxes and
withdrawal charges.
ANNUITANT
The person whose life determines the amount of income payments that we will pay.
If the annuitant dies before the annuity date, the co-annuitant (if any) becomes
the annuitant if the contract's requirements for changing the annuity date are
met. If, upon the death of the annuitant, there is no surviving eligible
co-annuitant, and the owner is not the annuitant, then the owner becomes the
annuitant.
ANNUITY DATE
The date when income payments are scheduled to begin.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirements for
changing the annuity date are met. No co-annuitant may be designated if the
owner is a non-natural person.
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
CONTRACT OWNER, OWNER, OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
CONTRACT WITH CREDIT
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make. This version has higher withdrawal charges and
insurance and administrative costs, and may provide lower interest rates for
fixed rate options than the Contract Without Credit.
CONTRACT WITHOUT CREDIT
A version of the annuity contract that does not provide a credit and has lower
withdrawal charges and insurance and administrative costs than the Contract With
Credit.
CREDIT
If you choose the Contract With Credit, this is the bonus amount that we
allocate to your account each time you make a purchase payment. The amount of
the credit is a percentage of the purchase payment. Bonus credits generally are
not recaptured once the free look period expires. Our reference in the preceding
sentence to "generally are not recaptured" refers to the fact that we have the
contractual right to deduct, from the death benefit we pay, the amount of any
credit corresponding to a purchase payment made within one year of death.
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive, at a
minimum, the total invested purchase payments, reduced by withdrawals, or a
potentially greater amount related to market appreciation. The Guaranteed
Minimum Death Benefit is available for an additional charge. See "What Is The
Death Benefit?" on page 49.
DOLLAR COST AVERAGING FIXED RATE OPTION (DCA FIXED RATE OPTION)
An investment option that offers a fixed rate of interest for a selected period
during which periodic transfers are automatically made to selected variable
investment options or to the one-year fixed interest rate option.
FIXED INTEREST RATE OPTIONS
Investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic transfers
are made to selected variable investment options or to the one-year fixed rate
option.
GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
GUARANTEE PERIOD
A period of time during which your invested purchase payment in the market value
adjustment option earns interest at the declared rate. We may offer one or more
guarantee periods.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain GMDB
protected value.
GMDB PROTECTED VALUE
The amount guaranteed under the Guaranteed Minimum Death Benefit, which equals
the GMDB step-up value. The GMDB protected value will be subject to certain age
restrictions and time durations, however, it will still increase by subsequent
invested purchase payments and reduce by the effect of withdrawals.
GMDB STEP-UP
We use the GMDB step-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. Generally speaking, the GMDB step-up
establishes a "high water mark" of protected value that we would pay upon death,
even if the contract value has declined. For example, if the GMDB step-up were
set at $100,000 on a contract anniversary, and the contract value subsequently
declined to $80,000 on the date of death, the GMDB step-up value would
nonetheless remain $100,000 (assuming no additional purchase payments or
withdrawals).
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
An optional feature available for an additional charge that guarantees that the
income payments you receive during the income phase will be no less than a
certain GMIB protected value applied to the GMIB guaranteed annuity purchase
rates.
GMIB PROTECTED VALUE
We use the GMIB protected value to calculate annuity payments should you
annuitize under the Guaranteed Minimum Income Benefit.
The value is calculated daily and is equal to the GMIB roll-up, until the
GMIB roll-up either reaches its cap or if we stop applying the annual interest
rate based on the age of the annuitant, number of contract anniversaries or
number of years since last GMIB reset. At such point, the GMIB protected value
will be increased by any subsequent invested purchase payments. Any withdrawals
in subsequent contract years will proportionally reduce the GMIB protected
value. The GMIB protected value is not available as a cash surrender benefit or
a death benefit, nor is it used to calculate the cash surrender value or death
benefit.
GMIB RESET
You may elect to "step-up" or "reset" your GMIB protected value if your contract
value is greater than the current
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GLOSSARY CONTINUED
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
GMIB protected value. Upon exercise of the reset provision, your GMIB protected
value will be reset to equal your current contract value.
GMIB ROLL-UP
We will use the GMIB roll-up value to compute the GMIB protected value of the
Guaranteed Minimum Income Benefit. The GMIB roll-up is equal to the invested
purchase payments (after a reset, the contract value at the time of the reset)
compounded daily at an effective annual interest rate starting on the date each
invested purchase payment is made, subject to a cap, and reduced by the effect
of withdrawals.
INCOME APPRECIATOR BENEFIT (IAB)
An optional feature that may be available for an additional charge that may
provide a supplemental income benefit based on earnings under the contract.
IAB AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
A series of payments consisting of a portion of your contract value and Income
Appreciator Benefit paid to you in equal installments over a 10 year period,
which you may choose, if you elect to receive the Income Appreciator Benefit
during the accumulation phase.
IAB CREDIT
An amount we add to your contract value that is credited in equal installments
over a 10 year period, which you may choose, if you elect to receive the Income
Appreciator Benefit during the accumulation phase.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INCOME PHASE
The period during which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract. The joint owner may be the owner's spouse, but need
not be.
MARKET VALUE ADJUSTMENT
An adjustment to your contract value or withdrawal proceeds that is based on the
relationship between interest you are currently earning within the market value
adjustment option and prevailing interest rates. This adjustment may be positive
or negative.
MARKET VALUE ADJUSTMENT OPTION
Under the Contract Without Credit, this investment option may offer various
guarantee periods and pays a fixed rate of interest with respect to each
guarantee period. We impose a market value adjustment on withdrawals or
transfers that you make from this option prior to the end of its guarantee
period.
NET PURCHASE PAYMENTS
Your total purchase payments less any withdrawals you have made.
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19101. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
888-PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life of New Jersey Flexible Premium Variable
Annuity Account. The separate account is set apart from all of the general
assets of Pruco Life of New Jersey.
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners Annuity One variable annuity. We have filed the Statement of Additional
Information with the Securities and Exchange Commission and it is legally a part
of this prospectus. To learn how to obtain a copy of the Statement of Additional
Information, see the front cover of this prospectus.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
"What Are The Tax Considerations Associated With The Strategic Partners Annuity
One Contract," on page 62.
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life of New Jersey that invests in a particular mutual fund is referred to
in your contract as a subaccount.
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-9
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FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE VARIABLE ANNUITY?
The Strategic Partners Annuity One variable annuity is a contract between you,
the owner, and us, the insurance company, Pruco Life Insurance Company of New
Jersey (Pruco Life of New Jersey, we or us). The contract allows you to invest
on a tax-deferred basis in variable investment options, fixed interest rate
options, and the market value adjustment option. The contract is intended for
retirement savings or other long-term investment purposes and provides for a
death benefit.
There are two basic versions of the Strategic Partners Annuity One variable
annuity.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges and insurance and administrative costs than the
Contract Without Credit,
- - may provide lower interest rates for fixed interest rate options than the
Contract Without Credit, and
- - does not offer the market value adjustment option.
Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges and insurance and administrative costs than the
Contract With Credit.
- - may provide higher interest rates for fixed interest rate options than the
Contract With Credit, and
- - offers the market value adjustment option.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value
including an investment in the Prudential Series Fund Money Market Portfolio
variable investment option.
The fixed interest rate options offer a guaranteed interest rate. While your
money is allocated to one of these options, your principal amount will not
decrease and we guarantee that your money will earn at least a minimum interest
rate annually.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed and
the interest amount that your money will earn is guaranteed by us to be at least
3%.
You may make up to 12 free transfers each contract year among the investment
options. Certain restrictions apply to transfers involving the fixed interest
rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
- - During the accumulation phase, any earnings grow on a tax-deferred basis and
are generally only taxed as income when you make a withdrawal.
- - The income phase starts when you begin receiving regular payments from your
contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you will receive during the
income phase. Other factors will affect the amount of your payments, such as
age, gender, and the payout option you select.
The contract offers a choice of income and death benefit options, which may
also be available to you.
We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
If you change your mind about owning Strategic Partners Annuity One, you may
cancel your contract within 10 days after receiving it (or whatever period is
required by applicable law). This time period is referred to as the "Free Look"
period.
Pruco Life of New Jersey offers several different annuities which your
representative may be authorized to offer to you. Each annuity has different
features and
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
benefits that may be appropriate for you based on your financial situation, your
age and how you intend to use the annuity. The different features and benefits
include variations in death benefit protection and the ability to access your
annuity's contract value. The fees and charges under the annuity contract and
compensation paid to your representative may also be different between each
annuity. If you are purchasing the contract as a replacement for existing
variable annuity or variable life coverage, you should consider, among other
things, any surrender or penalty charges you may incur when replacing your
existing coverage.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in any or all of the following variable investment
options:
The Prudential Series Fund, Inc.
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP Aggressive Growth Asset Allocation Portfolio
SP AIM Aggressive Growth Portfolio
SP AIM Core Equity Portfolio
SP Alliance Large Cap Growth Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Davis Value Portfolio
SP Deutsche International Equity Portfolio
SP Goldman Sachs Small Cap Value Portfolio (formerly SP Small/Mid Cap Value
Portfolio)
SP Growth Asset Allocation Portfolio
SP INVESCO Small Company Growth Portfolio
SP Jennison International Growth Portfolio
SP Large Cap Value Portfolio
SP MFS Capital Opportunities Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Strategic Partners Focused Growth Portfolio
SP Technology Portfolio (formerly SP Alliance Technology Portfolio)
Janus Aspen Series
Growth Portfolio -- Service Shares
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
You may also invest your money in fixed interest rate options or in a market
value adjustment option.
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
For an additional fee, you may also choose, if it is available under your
contract, the Guaranteed Minimum Income Benefit (GMIB) and the Income
Appreciator Benefit. The Guaranteed Minimum Income Benefit provides that once
the income period begins, your income payments will be no less than a value that
is based on a certain "GMIB protected value " applied to the GMIB guaranteed
annuity purchase rates. The Income Appreciator Benefit may provide an additional
income amount during the accumulation phase or upon annuitization. See "What
Kind Of Payments Will I Receive During The Income Phase" on page 41.
SECTION 4
WHAT IS THE DEATH BENEFIT?
In general, if the sole owner or first to die of the owner or joint owner dies
before the income phase of the contract begins, the person(s) or entity that you
have chosen as your beneficiary will receive, at a minimum, the greater of (i)
the contract value, (ii) either the base death benefit or, for a higher
insurance and administra-
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SUMMARY FOR SECTIONS 1-9 CONTINUED
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
tive cost, a potentially larger Guaranteed Minimum Death Benefit. The base death
benefit equals the total invested purchase payments proportionally reduced by
withdrawals. The Guaranteed Minimum Death Benefit (GMDB) is equal to the "GMDB
protected value." On the date we receive proof of death, in lieu of paying a
death benefit, we will allow the surviving spouse to continue the contract by
exercising the Spousal Continuance Benefit, if in addition to certain other
conditions:
(1) there is only one owner of the contract and there is only one beneficiary
who is the owner's spouse; or
(2) there are an owner and joint owner of the contract, and the owner's spouse
is both the joint owner and the beneficiary under the contract.
The benefit is described on page 49.
SECTION 5
HOW CAN I PURCHASE A STRATEGIC PARTNERS ANNUITY ONE CONTRACT?
You can purchase this contract under most circumstances with a minimum initial
purchase payment of $10,000, but not greater than $1,000,000 absent our prior
approval. Generally, you can make additional purchase payments of $500 ($100 if
made through electronic funds transfer) or more at any time during the
accumulation phase of the contract. Your representative can help you fill out
the proper forms. The Contract With Credit provides for the allocation of a
credit with each purchase payment.
You may purchase this contract only if the oldest of the owner, joint owner
or annuitant are age 85 or younger on the contract date. In addition, certain
age limits apply to certain features and benefits described herein.
SECTION 6
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY ONE
CONTRACT?
The contract has insurance features and investment features, both of which have
related costs and charges.
- - Each year (or upon full surrender) we deduct a contract maintenance charge if
your contract value is less than $75,000. This charge is currently equal to
the lesser of $30 or 2% of your contract value. We do not impose the contract
maintenance charge if your contract value is $75,000 or more.
- - For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable investment
options, depending on the death benefit option that you choose. The daily
cost is equivalent to an annual charge, as follows:
-- 1.4% if you choose the base death benefit,
-- 1.65% if you choose the step-up Guaranteed Minimum Death Benefit option.
We impose an additional insurance and administrative charge of 0.10% annually
for the Contract With Credit.
- - We will deduct an additional charge if you choose the Guaranteed Minimum
Income Benefit. We deduct this annual charge from your contract value on the
contract anniversary and upon certain other events. The charge for this
benefit is equal to 0.50% for contracts sold on or after May 1, 2004 (0.45%
for all other contracts) of the average GMIB protected value.
- - We will deduct an additional charge if you choose the Income Appreciator
Benefit. We deduct this charge from your contract value on the contract
anniversary and upon certain other events. The charge for this benefit is
based on an annual rate of 0.25% of your contract value.
- - There are also expenses associated with the mutual funds. For 2003, the fees
of these funds ranged on an annual basis from % to % of fund assets,
which are reduced by expense reimbursements or waivers to % to %. These
reimbursements or waivers may be terminated at any time.
- - If you withdraw money less than seven contract anniversaries after making a
purchase payment, then you may have to pay a withdrawal charge on all or part
of the withdrawal. This charge ranges from 1-7% for the Contract Without
Credit and 5-8% for the Contract With Credit.
For more information, including details about other possible charges under
the contract, see "Summary of
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
Contract Expenses" on page 14 and "What Are The Expenses Associated With The
Strategic Partners Annuity One Contract?" on page 55.
SECTION 7
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. For the Contract Without Credit, if
you withdraw money less than seven contract anniversaries after making a
purchase payment, we may impose a withdrawal charge ranging from 1-7%. For the
Contract With Credit, we may impose a withdrawal charge ranging from 5-8%.
Under the market value adjustment option, you will be subject to a market
value adjustment if you make a withdrawal or transfer from the option prior to
the end of a guarantee period.
SECTION 8
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY
ONE CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, the tax laws treat the withdrawal as a withdrawal
of earnings, which are taxed as ordinary income. If you are younger than age
59 1/2 when you take money out, you may be charged a 10% federal tax penalty on
the earnings in addition to ordinary taxation. A portion of the payments you
receive during the income phase is considered a partial return of your original
investment and therefore will not be taxable as income. Generally, all amounts
withdrawn from an Individual Retirement Annuity (IRA) contract (excluding Roth
IRAs) are taxable and subject to the 10% penalty if withdrawn prior to age
59 1/2.
SECTION 9
OTHER INFORMATION
This contract is issued by Pruco Life Insurance Company of New Jersey (Pruco
Life of New Jersey), an indirect subsidiary of The Prudential Insurance Company
of America, and sold by registered representatives of affiliated and
unaffiliated broker/dealers.
RISK FACTORS
There are various risks associated with an investment in the market value
adjustment option that we summarize below.
Issuer Risk. The market value adjustment option, fixed interest rate options,
and the contract's other insurance features are available under a contract
issued by Pruco Life of New Jersey, and thus backed by the financial strength of
that company. If Pruco Life of New Jersey were to experience significant
financial adversity, it is possible that Pruco Life of New Jersey's ability to
pay interest and principal under the market value adjustment option and fixed
interest rate options and to fulfill its insurance guarantees could be impaired.
Risks Related to Changing Interest Rates. You do not participate directly in
the investment experience of the bonds and other instruments that Pruco Life of
New Jersey holds to support the market value adjustment option. Nonetheless, the
market value adjustment formula (which is detailed in the appendix to this
prospectus) reflects the effect that prevailing interest rates have on those
bonds and other instruments. If you need to withdraw your money prior to the end
of a guarantee period and during a period in which prevailing interest rates
have risen above their level when you made your purchase, you will experience a
"negative" market value adjustment. When we impose this market value adjustment,
it could result in the loss of both the interest you have earned and a portion
of your purchase payments. Thus, before you commit to a particular guarantee
period, you should consider carefully whether you have the ability to remain
invested throughout the guarantee period. In addition, we cannot, of course,
assure you that the market value adjustment option will perform better than
another investment that you might have made.
Risks Related to the Withdrawal Charge. We may impose withdrawal charges on
amounts withdrawn from the market value adjustment option. If you anticipate
needing to withdraw your money prior to the end of a guarantee period, you
should be prepared to pay the withdrawal charge that we will impose.
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
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THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS AND EXPENSES
YOU WILL PAY FOR STRATEGIC PARTNERS ANNUITY ONE. THE FOLLOWING TABLES DESCRIBE
THE MAXIMUM FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING, AND
SURRENDERING THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT
YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT, SURRENDER THE CONTRACT, OR
TRANSFER CASH VALUE BETWEEN INVESTMENT OPTIONS.
For more detailed information, including additional information about current
and maximum charges, see "What Are The Expenses Associated With The Strategic
Partners Annuity One Contract?" on page 55. The individual fund prospectuses
contain detailed expense information about the underlying mutual funds.
CONTRACTOWNER TRANSACTION EXPENSES
1: Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We will waive the withdrawal charge
if we pay a death benefit or under certain other circumstances. See "Withdrawal
Charge" on page 56.
2: Currently, we charge $25 for each transfer after the twelfth in a contract
year. As shown in the table, we can raise that charge up to a maximum of $30,
but have no current intention to do so. We will not charge you for transfers
made in connection with Dollar Cost Averaging and Auto-Rebalancing and do not
count them toward the limit of 12 free transfers per year.
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The next table describes the fees and expenses that you will pay periodically
during the time that you own the contract, not including underlying mutual fund
fees and expenses.
3: We currently assess a fee of $30 against contracts valued less than $75,000
(or 2% of contract value, if less).
4: We impose this additional charge of 0.10% annually on the Contract With
Credit, irrespective of which death benefit option you choose.
5: We impose this charge only if you choose the Guaranteed Minimum Income
Benefit. This charge is equal to 0.50% for contracts sold on or after May 1,
2004 (0.45% for all other contracts), of the average GMIB protected value, which
is calculated daily and generally is equal to the GMIB roll-up value. The fee is
withdrawn from each variable investment option in the same proportion as the
contract value allocated to that variable investment option represents to the
total contract value in all variable investment options. Subject to certain age
or duration restrictions, the roll-up value is the total of all invested
purchase payments (after a reset, the contract value at the time of the reset)
compounded daily at an effective annual rate of 5%, subject to a 200% cap of all
invested purchase payments. Withdrawals reduce both the roll-up value and the
200% cap. When the GMIB roll-up is increasing at an effective annual interest
rate of 5%, the reduction is equal to the amount of the withdrawal for the first
5% of the roll-up value, calculated as of the latest contract anniversary (or
contract date). The amount of the withdrawal in excess of 5% of the roll-up
value further reduces the roll-up value and 200% cap proportionally to the
additional reduction in contract value after the first 5% withdrawal occurs. See
"Effect of Withdrawals" on page 42. We assess this fee each contract anniversary
and when you begin the income phase of your contract. We also assess this fee if
you make a full withdrawal, but prorate the fee based on the portion of the
contract year that has elapsed since the full annual fee was most recently
deducted. If you make a partial withdrawal, we will assess the prorated fee if
the remaining contract value after the withdrawal would be less than the amount
of the prorated fee; otherwise we will not assess the fee at that time.
6: We impose this charge only if you choose the Income Appreciator Benefit. The
charge for this benefit is based on an annual rate of 0.25% of your contract
value. The Income Appreciator Benefit charge is calculated: on each contract
anniversary, on the annuity date, upon the death of the sole owner or first to
die of the owner or joint owner prior to the annuity date, upon a full or
partial withdrawal, and upon a subsequent purchase payment. The fee is based on
the contract value at the time of the calculation, and is prorated based on the
portion of the contract year since the date that the charge was last deducted.
Although it may be calculated more often, it is deducted only: on each contract
anniversary, on the annuity date, upon the death of the sole owner or first to
die of the owner or joint owner prior to the annuity date, upon a full
withdrawal, and upon a partial withdrawal if the contract value remaining after
such partial withdrawal is not enough to cover the then-applicable charge. With
respect to full and partial withdrawals, we prorate the fee based on the portion
of the contract year that has elapsed since the full annual fee was most
recently deducted. We reserve the right to calculate and deduct the fee more
frequently than annually, such as quarterly.
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SUMMARY OF CONTRACT EXPENSES CONTINUED
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) charged by the
underlying mutual funds that you may pay periodically during the time that you
own the contract. More detail concerning each underlying mutual fund's fees and
expenses is contained below and in the prospectus for each underlying mutual
fund. The minimum and maximum total operating expenses depicted below are based
on historical fund expenses for the year ended December 31, 2003. Fund expenses
are not fixed or guaranteed by the Strategic Partners Annuity One contract, and
may vary from year to year.
* Actual expenses for the mutual funds are lower due to certain expense
reimbursements or waivers. Expense reimbursements or waivers are voluntary and
may be terminated at any time. The minimum and maximum expenses, with expense
reimbursements are 0.37% and 1.30%, respectively.
16
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
1. Each "SP" Portfolio of The Prudential Series Fund, Inc., has expense
reimbursements in effect. These expense reimbursements are voluntary and may be
terminated at any time. The expenses of each Series Fund Portfolio, including
the effect of any expense reimbursements, are as follows:
[to be added]
2. Each asset allocation portfolio invests in a combination of underlying
portfolios of The Prudential Series Fund, Inc. The Total Expenses for each asset
allocation portfolio are calculated as a blend of the fees of the underlying
portfolios, plus a 0.05% advisory fee payable to the investment adviser,
Prudential Investments LLC.
3.
4.
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EXPENSE EXAMPLES
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THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND EXPENSES.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS
INDICATED. THE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH
YEAR AND ASSUME THE MAXIMUM FEES AND EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH
DO NOT REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXAMPLE 1a: Contract With Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Withdraw
All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit,
- - You choose the Step-Up Guaranteed Minimum Death Benefit,
- - You choose the Guaranteed Minimum Income Benefit (for contracts sold on or
after May 1, 2004),
- - You choose the Income Appreciator Benefit,
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses,
- - The investment has a 5% return each year,
- - The mutual fund's total operating expenses remain the same each year, and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 1b: Contract With Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
EXAMPLE 2a: Contract With Credit: Base Death Benefit, and You Withdraw All Your
Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit,
- - You do not choose a Guaranteed Minimum Death Benefit, Guaranteed Minimum
Income Benefit or Income Appreciator Benefit,
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses,
- - The investment has a 5% return each year,
- - The mutual fund's total operating expenses remain the same each year, and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 2b: Contract With Credit: Base Death Benefit, and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 3a: Contract Without Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Withdraw
All Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 3b: Contract Without Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 1b except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 4a: Contract Without Credit: Base Death Benefit; and You Withdraw All
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 4b: Contract Without Credit: Base Death Benefit; and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 2b except that it
assumes that you invest in the Contract Without Credit.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Note that withdrawal charges (which are reflected in Examples 1a, 2a, 3a and 4a)
are assessed in connection with some annuity options, but not others.
The values shown in the 10 year column are the same for Example 1a and 1b, 2a
and 2b, 3a and 3b, and 4a and 4b. This is because if 10 years have elapsed since
your last purchase payment, we would no longer deduct withdrawal charges when
you make a withdrawal.
The examples use an average contract maintenance charge, which we calculated
based on our estimate of the total contract fees we expect to collect in 2004.
Based on these estimates, the contract maintenance charge is included as an
annual charge of 0.035% of contract value.
Your actual fees will vary based on the amount of your contract and your
specific allocation among the investment options.
A table of accumulation unit values appears in the Appendix to this prospectus.
19
EXPENSE EXAMPLES CONTINUED
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
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PART II
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1:
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE
VARIABLE ANNUITY?
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THE STRATEGIC PARTNERS ANNUITY ONE VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU,
THE OWNER, AND US, PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO LIFE OF NEW
JERSEY, WE OR US).
Under our contract, in exchange for your payment to us, we promise to pay you a
guaranteed income stream that can begin any time on or after the first contract
anniversary. Your annuity is in the accumulation phase until you decide to begin
receiving annuity payments. The date you begin receiving annuity payments is the
annuity date. On the annuity date, your contract switches to the income phase.
This annuity contract benefits from tax deferral. Tax deferral means that you
are not taxed on earnings or appreciation on the assets in your contract until
you withdraw money from your contract. (If you purchase the annuity contract in
a tax-favored plan such as an IRA, that plan generally provides tax deferral
even without investing in an annuity contract. Therefore, before purchasing an
annuity in a tax-favored plan, you should consider whether its features and
benefits beyond tax deferral meet your needs and goals. You may also want to
consider the relative features, benefits and costs of these annuities compared
with any other investment that you may use in connection with your retirement
plan or arrangement.)
There are two basic versions of Strategic Partners Annuity One variable
annuity.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges and insurance and administrative costs than the
Contract Without Credit,
- - may provide a lower interest rate for the fixed interest rate options than
the Contract Without Credit, and
- - does not offer the market value adjustment option.
Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges and insurance and administrative costs than the
Contract With Credit,
- - may provide a higher interest rate for the fixed interest rate options than
the Contract With Credit, and
- - offers the market value adjustment option.
Unless we state otherwise, when we use the word contract, it applies to both
versions.
Because of the higher withdrawal charges, if you choose the Contract With
Credit and you withdraw a purchase payment, depending upon the performance of
the investment options you choose, you may be worse off than if you had chosen
the Contract Without Credit. We do not recommend purchase of either version of
Strategic Partners Annuity One if you anticipate having to withdraw a
significant amount of your purchase payments within a few years of making those
purchase payments.
Strategic Partners Annuity One is a variable annuity contract. During the
accumulation phase, you can allocate your assets among the variable investment
options, guaranteed fixed interest rate options and a market value adjustment
option. The market value adjustment option is only available in the Contract
Without Credit. If you select variable investment options, the amount of money
you are able to accumulate in your contract during the accumulation phase
depends upon the investment performance of the underlying mutual fund(s)
associated with that variable investment option.
Because the mutual funds' portfolios fluctuate in value depending upon market
conditions, your contract value can either increase or decrease. This is
important, since the amount of the annuity payments you receive during the
income phase depends upon the value of your contract at the time you begin
receiving payments.
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-9
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person whose life is used to determine how much and
how long (if applicable) the annuity payments will continue once the annuity
phase begins. On or after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners Annuity One, you may
cancel your contract within 10 days after receiving it (or whatever period is
required by applicable law). You can request a refund by returning the contract
either to the representative who sold it to you, or to the Prudential Annuity
Service Center at the address shown on the first page of this prospectus. You
will receive:
- - the amount equal to the portion of the purchase payments including any fees
or other charges, allocated to any of the fixed interest rate options, and
- - the sum of (i) the difference between purchase payments received, including
any fees or other charges, and the amounts allocated to the variable
investment options, and (ii) the contract value as of the date the contract
is mailed or delivered to us or to the representative who sold it to you.
This amount will be reduced by any applicable federal and state income tax
withholding and may be more or less than your original payment.
If you have purchased the Contract With Credit, we will deduct any credit we
had added to your contract value.
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-9
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
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THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY
ONE OR MORE OF THE VARIABLE INVESTMENT OPTIONS, FIXED INTEREST RATE OPTIONS, AND
A MARKET VALUE ADJUSTMENT OPTION.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their shares
to both variable annuity and variable life separate accounts of different
insurance companies, which could create the kinds of risk that are described in
more detail in the current prospectus for the underlying mutual fund. The
current prospectuses for the underlying mutual funds also contain other
important information about the mutual funds. When you invest in a variable
investment option that is funded by a mutual fund, you should read the mutual
fund prospectus and keep it for future reference.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment of
their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective (in italics) and
a short, summary description of their key policies to assist you in determining
which portfolios may be of interest to you. There is no guarantee that any
portfolio will meet its investment objective. The name of the adviser/subadviser
for each portfolio appears next to the description.
All the portfolios on the following chart, except for the Janus Aspen
Series -- Growth Portfolio are Prudential Series Fund portfolios. The Jennison
Portfolio, Prudential Equity Portfolio, Prudential Global Portfolio, Prudential
Money Market Portfolio, Prudential Stock Index Portfolio and Prudential Value
Portfolio, and each "SP" Portfolio of the Prudential Series Fund, are managed by
an indirect wholly-owned subsidiary of Prudential Financial, Inc. called
Prudential Investments LLC (PI) under a "manager-of-managers" approach. The SP
Aggressive Growth Asset Allocation Portfolio, SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio invest in other Prudential Series Fund Portfolios, and are
managed by PI.
Under the manager-of-managers approach, PI has the ability to assign subadvisers
to manage specific portions of a portfolio, and the portion managed by a
subadviser may vary from 0% to 100% of the portfolio's assets. The subadvisers
that manage some or all of a Prudential Series Fund portfolio are listed on the
following chart.
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual fund.
An affiliate of each of the funds may compensate Pruco Life of New Jersey based
upon an annual percentage of the average assets held in the fund by Pruco Life
of New Jersey under the contracts. These percentages may vary by fund and/or
portfolio, and reflect administrative and other services we provide. With regard
to its variable annuity contracts generally, Pruco Life of New Jersey receives
fees that range from 0.05% to 0.40% annually for providing such services.
As detailed in the Prudential Series Fund prospectus, although the Series Fund
Money Market Portfolio is designed to be a stable investment option, it is
possible to lose money in that portfolio. For example, when prevailing
short-term interest rates are very low, the yield on the Money Market Portfolio
may be so low that, when separate account and contract charges are deducted, you
experience a negative return.
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PART II
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FIXED INTEREST RATE OPTIONS
We offer two fixed interest rate options:
- - a one-year fixed interest rate option, and
- - a dollar cost averaging fixed rate option (DCA Fixed Rate Option).
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, they
will not be less than 1.5% for the one-year fixed interest rate option, or 3%
for the dollar cost averaging fixed rate option. We may offer lower interest
rates for Contracts With Credit than for Contracts Without Credit.
Payments allocated to the fixed interest rate options become part of Pruco
Life of New Jersey's general assets.
ONE-YEAR FIXED INTEREST RATE OPTION
We set a one-year base guaranteed annual interest rate for the one-year fixed
interest rate option. Additionally, we may provide a higher interest rate on
each purchase payment allocated to this option for the first year after the
payment. This higher interest rate will not apply to amounts transferred from
other investment options within the contract or amounts remaining in this option
for more than one year.
DOLLAR COST AVERAGING FIXED RATE OPTION
You may allocate all or part of any purchase payment to the DCA Fixed Rate
Option. Under this option, you automatically transfer amounts over a stated
period (currently, six or twelve months) from the DCA Fixed Rate Option to the
variable investment options and/or to the one-year fixed interest rate option,
as you select. We will invest the assets you allocate to the DCA Fixed Rate
Option in our general account until they are transferred. You may not transfer
from other investment options to the DCA Fixed Rate Option.
If you choose to allocate all or part of a purchase payment to the DCA Fixed
Rate Option, the minimum amount of the purchase payment you may allocate is
$2,000. The first periodic transfer will occur on the date you allocate your
purchase payment to the DCA Fixed Rate Option. Subsequent transfers will occur
on the monthly anniversary of the first transfer. Currently, you may choose to
have the purchase payments allocated to the DCA Fixed Rate Option transferred to
the other options in either six or twelve monthly installments, and you may not
change that number of monthly installments after you have chosen the DCA Fixed
Rate Option. You may allocate to both the six-month and twelve-month options.
(In the future, we may make available other numbers of transfers and other
transfer schedules--for example, quarterly as well as monthly.)
If you choose a six-payment transfer schedule, each transfer generally will
equal 1/6th of the amount you allocated to the DCA Fixed Rate Option, and if you
choose a twelve-payment transfer schedule, each transfer generally will equal
1/12th of the amount you allocated to the DCA Fixed Rate Option. In either case,
the final transfer amount generally will also include the credited interest. You
may change at any time the options into which the DCA Fixed Rate Option assets
are transferred. You may make a one time transfer of the remaining value out of
your DCA Fixed Rate Option, if you so choose. Transfers from the DCA Fixed Rate
Option do not count toward the maximum number of free transfers allowed under
the contract.
If you make a withdrawal or have a fee assessed from your contract, and all
or part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we
will recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
By investing amounts on a regular basis instead of investing the total amount
at one time, the DCA Fixed
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-9
Rate Option may decrease the effect of market fluctuation on the investment of
your purchase payment. Of course, dollar cost averaging cannot ensure a profit
or protect against loss in a declining market.
MARKET VALUE ADJUSTMENT OPTION
Under the market value adjustment option, we may offer one or more of several
guarantee periods provided that the interest rate we are able to declare will be
no less than 3% interest annually with respect to any guarantee period. This
option is only available in the Contract Without Credit.
IF AMOUNTS ARE WITHDRAWN FROM A GUARANTEE PERIOD, OTHER THAN DURING THE
30-DAY PERIOD IMMEDIATELY FOLLOWING THE END OF THE GUARANTEE PERIOD, THEY WILL
BE SUBJECT TO A MARKET VALUE ADJUSTMENT EVEN IF THEY ARE NOT SUBJECT TO A
WITHDRAWAL CHARGE.
You will earn interest on your invested purchase payment at the rate that we
have declared for the guarantee period you have chosen. You must invest at least
$1,000 if you choose this option.
We refer to interest rates as annual rates, although we credit interest
within each guarantee period on a daily basis. The daily interest that we credit
is equal to the pro rated portion of the interest that would be earned on an
annual basis. We credit interest from the business day on which your purchase
payment is received in good order at the Prudential Annuity Service Center until
the earliest to occur of any of the following events: (a) full surrender of the
contract, (b) commencement of annuity payments or settlement, (c) end of the
guarantee period, (d) transfer of the value in the guarantee period, (e) payment
of a death benefit, or (f) the date the amount is withdrawn.
During the 30-day period immediately following the end of a guarantee period,
we allow you to do any of the following, without the imposition of the market
value adjustment:
(a) withdraw or transfer the value of the guarantee period,
(b) allocate the value to another available guarantee period or other investment
option (provided that the new guarantee period ends prior to the annuity
date). You will receive the interest rate applicable on the date we receive
your instruction, or
(c) apply the value in the guarantee period to the annuity or settlement option
of your choice.
If we do not receive instructions from you concerning the disposition of the
contract value in your maturing guarantee period, we will reinvest the amount in
the Prudential Series Fund Money Market Portfolio investment option.
During the 30-day period immediately following the end of the guarantee
period, or until you elect to do (a), (b) or (c) listed immediately above, you
will receive the current interest rate applicable to the guarantee period having
the same duration as the guarantee period that just matured, which is offered on
the day immediately following the end of the matured guarantee period. However,
if at that time we do not offer a guarantee period with the same duration as
that which matured, you will then receive the current interest rate applicable
to the shortest guarantee period then offered.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed and
the interest amount that your money will earn is guaranteed by us to be at least
3%.
Payments allocated to the market value adjustment option are held as a
separate pool of assets. Any gains or losses experienced by these assets will
not directly affect the contracts. The strength of our guarantees under these
options is based on the overall financial strength of Pruco Life of New Jersey.
MARKET VALUE ADJUSTMENT
When you allocate a purchase payment or transfer contract value to a guarantee
period, we use that money to buy and sell securities and other instruments to
support our obligation to pay interest. Generally, we buy bonds for this
purpose. The duration of the bonds and other instruments that we buy with
respect to a particular guarantee period is influenced significantly by the
length of the guarantee period. For example, we typically would acquire
longer-duration bonds with respect to the 10 year guarantee period than we do
for the 3 year guarantee period. The value of these bonds is affected
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by changes in interest rates, among other factors. The market value adjustment
that we assess against your contract value if you withdraw or transfer outside
the 30-day period discussed above involves our attributing to you a portion of
our investment experience on these bonds and other instruments.
For example, if you make a full withdrawal when interest rates have risen
since the time of your investment, the bonds and other investments in the
guarantee period likely would have decreased in value, meaning that we would
impose a "negative" market value adjustment on you (i.e., one that results in a
reduction of the withdrawal proceeds that you receive). For a partial
withdrawal, we would deduct a negative market value adjustment from your
remaining contract value. Conversely, if interest rates have decreased, the
market value adjustment would be positive.
Other things you should know about the market value adjustment include the
following:
- - We determine the market value adjustment according to a mathematical formula,
which is set forth at the end of this prospectus under the heading
"Market-Value Adjustment Formula." In that section of the prospectus, we also
provide hypothetical examples of how the formula works.
- - A negative market value adjustment could cause you to lose not only the
interest you have earned but also a portion of your principal.
- - In addition to imposing a market value adjustment on withdrawals, we also
will impose a market value adjustment on the contract value you apply to an
annuity or settlement option, unless you annuitize within the 30-day period
discussed above.
YOU SHOULD REALIZE, HOWEVER, THAT APART FROM THE MARKET VALUE ADJUSTMENT, THE
VALUE OF THE BENEFIT IN YOUR GUARANTEE PERIOD UNDER YOUR CONTRACT DOES NOT
DEPEND ON THE INVESTMENT PERFORMANCE OF THE BONDS AND OTHER INSTRUMENTS THAT WE
HOLD WITH RESPECT TO YOUR GUARANTEE PERIOD. APART FROM THE EFFECT OF ANY MARKET
VALUE ADJUSTMENT, WE DO NOT PASS THROUGH TO YOU THE GAINS OR LOSSES ON THE BONDS
AND OTHER INSTRUMENTS THAT WE HOLD IN CONNECTION WITH A GUARANTEE PERIOD.
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and the one-year fixed interest rate option. In addition, you
can transfer your contract value out of a market value adjustment guarantee
period into another market value adjustment guarantee period, into a variable
investment option, or into a one-year fixed interest rate option, although a
market value adjustment will apply to any transfer you make outside the 30-day
period discussed above. You may transfer contract value into the market value
adjustment option at any time, provided it is at least $1,000.
In general, you may make your transfer request by telephone, electronically,
or otherwise in paper form to the Prudential Annuity Service Center. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following unauthorized
telephone or electronic instructions that we reasonably believed to be genuine.
Your transfer request will take effect at the end of the business day on which
it was received. Our business day generally closes at 4:00 p.m. Eastern time.
Transfer requests received after 4:00 p.m. Eastern time will take effect at the
end of the next business day.
With regard to the market value adjustment option, you can specify the
guarantee period from which you wish to transfer. If you request a transfer from
the market value adjustment option, but you do not specify the guarantee period
from which funds are to be taken, then we will transfer funds from the guarantee
period that has the least time remaining until its maturity date.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST RATE OPTION, OTHER THAN THE
DCA OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE ONE YEAR
INTEREST RATE PERIOD. TRANSFERS FROM THE DCA OPTION ARE MADE ON A PERIODIC BASIS
FOR THE PERIOD THAT YOU SELECT.
During the contract accumulation phase, you can make up to 12 transfers each
contract year, among the investment options, without charge. Currently we charge
$25 for each transfer after the twelfth in a contract year, and we have the
right to increase this
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charge up to $30. (Dollar Cost Averaging and Auto-Rebalancing transfers whether
or not part of the DCA fixed rate option are always free, and do not count
toward the 12 free transfers per year.)
ADDITIONAL TRANSFER RESTRICTIONS
Frequent transfers among investment options in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction costs,
or affect performance. For those reasons, the contract was not designed for
persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in any
contract year for all existing or new contract owners, and to take the other
actions discussed below. We also reserve the right to limit the number of
transfers in any contract year or to refuse any transfer request for an owner or
certain owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on accumulation unit values or the share prices of the
underlying mutual funds; or (b) we are informed by a fund (e.g., by the fund's
portfolio manager) that the purchase or redemption of fund shares must be
restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate amount
of a trade or trades represented a relatively large proportion of the total
assets of a particular underlying mutual fund. In furtherance of our general
authority to restrict transfers as described above, and without limiting other
actions we may take in the future, we have adopted the following specific
restrictions:
- - Once you have made 20 transfers during a contract year, we will accept any
additional transfer request during that year only if the request is submitted
to us in writing with an original signature and otherwise is in good order.
For purposes of this 20 transfer limit, we (i) do not view a facsimile
transmission as a "writing", (ii) will treat multiple transfer requests
submitted on the same business day as a single transfer, and (iii) do not
count transfers that involve one of our systematic programs, such as asset
allocation and automated withdrawals.
- - With respect to each variable investment option (other than the Prudential
Series Fund Money Market Portfolio), we track amounts exceeding a certain
dollar threshold that were transferred into the option. If you transfer such
amount into a particular variable investment option, and within 30 calendar
days thereafter transfer (the "Transfer Out") all or a portion of that amount
into another variable investment option, then upon the Transfer Out, the
former variable investment option becomes restricted (the "Restricted
Option"). Specifically, we will not permit subsequent transfers into the
Restricted Option for 90 calendar days after the Transfer Out if the
Restricted Option invests in a non-international fund, or 180 calendar days
after the Transfer Out if the Restricted Option invests in an international
fund. For purposes of this rule, we do not count transfers made in connection
with one of our systematic programs, such as asset allocation and automated
withdrawals. Even if an amount becomes restricted under the foregoing rules,
you are still free to redeem the amount from your contract at any time.
- - We reserve the right to effect exchanges on a delayed basis for all contracts.
That is, we may price an exchange involving a variable investment option on
the business day subsequent to the business day on which the exchange request
was received. Before implementing such a practice, we would issue a separate
written notice to contract owners that explains the practice in detail.
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- - If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
- - We will not implement these rules in jurisdictions that have not authorized us
to do so, or may implement different rules in certain jurisdictions if
required by such jurisdictions.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option into any other variable
investment option or the one-year fixed interest rate option. You can have these
automatic transfers occur monthly, quarterly, semiannually or annually. By
investing amounts on a regular basis instead of investing the total amount at
one time, dollar cost averaging may decrease the effect of market fluctuation on
the investment of your purchase payment. Of course, dollar cost averaging cannot
ensure a profit or protect against loss in a declining market.
Each dollar cost averaging transfer must be at least $100. Transfers will be
made automatically on the schedule you choose until the entire amount you chose
to have transferred has been transferred or until you tell us to discontinue the
transfers. If the remaining amount to be transferred drops below $100, the
entire remaining balance will be transferred on the next transfer date. You can
allocate subsequent purchase payments to be transferred under this option at any
time.
Your transfers will occur on the last calendar day of each transfer period
you have selected, provided that the New York Stock Exchange is open on that
date. If the New York Stock Exchange is not open on a particular transfer date,
the transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging feature
is available only during the contract accumulation phase.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you a
questionnaire to complete that will help determine a program that is appropriate
for you. Your asset allocation will be prepared based on your answers to the
questionnaire. You will not be charged for this service, and you are not
obligated to participate or to invest according to program recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns over
the long term. However, asset allocation does not guarantee a profit or protect
against a loss. You are not obligated to participate or to invest according to
the program recommendations. We do not intend to provide any personalized
investment advice in connection with these programs and you should not rely on
these programs as providing individualized investment recommendations to you.
The asset allocation programs do not guarantee better investment results. We
reserve the right to terminate or change the asset allocation programs at any
time. You should consult your representative before electing any asset
allocation program.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation percentage or to a subsequent allocation percentage you
select. We will rebalance only the variable investment options that you
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have designated. If you also participate in the DCA feature, then the variable
investment option from which you make the DCA transfers will not be rebalanced.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually, or annually. The rebalancing will occur on the last calendar day
of the period you have chosen, provided that the New York Stock Exchange is open
on that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of Auto-Rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by the
variable investment options. However, we vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote is
required, we will mail you a proxy which is a form that you need to complete and
return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own in our own right, in the same
proportion as shares for which we receive instructions from contract owners. We
may change the way your voting instructions are calculated if it is required or
permitted by federal or state regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in existing
funds. We would not do this without the approval of the Securities and Exchange
Commission (SEC) and any necessary state insurance departments. You will be
given specific notice in advance of any substitution we intend to make. We may
also stop allowing investments in existing variable investment options and their
underlying mutual funds.
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PAYMENT PROVISIONS
We can begin making annuity payments any time on or after the first contract
anniversary. Annuity payments must begin no later than the later of the contract
anniversary coinciding with or next following the annuitant's 90th birthday or
the tenth contract anniversary.
Upon annuitization, any value in a guarantee period of the market value
adjustment option may be subject to a market value adjustment.
The Strategic Partners Annuity One variable annuity contract offers an
optional Guaranteed Minimum Income Benefit, which we describe below. Your
annuity options vary depending upon whether you choose this benefit.
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT
We make the income plans described below available at any time before the
annuity date. These plans are called annuity options or settlement options.
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that your participation in the variable
investment options ends on the annuity date. If an annuity option is not
selected by the annuity date, the Life Income Annuity Option (Option 2,
described below) will automatically be selected unless prohibited by applicable
law. GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CANNOT BE
CHANGED AND YOU CANNOT MAKE WITHDRAWALS.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but not to exceed life expectancy). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the annuitant dies during the income phase, payments will continue to
the beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump-sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate will be at least 3% a year.
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
the present value of the remaining annuity payments in one lump sum, unless we
were specifically instructed that the remaining annuity payments continue to be
paid to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate will be at least 3% a year.
If an annuity option is not selected by the annuity date, you will
automatically select this option.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options that are offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, as discussed on page 64, you
should consider the minimum distribution requirements mentioned on page 66 when
selecting your annuity option.
If contracts are held in connection with "qualified" retirement plans (such
as a Section 401(k) plan), please note that if you are married at the time your
payments commence, you may be required by federal law to choose an income option
that provides at least a 50 percent joint and survivor annuity to your spouse,
unless your spouse waives that right. Similarly, if you are married at the time
of your death, federal law may require all or a portion of the death benefit to
be paid to your spouse, even if you designated someone else as your beneficiary.
For more information, consult the terms of your retirement arrangement.
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GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit (GMIB), is an optional feature that
guarantees that once the income period begins, your income payments will be no
less than the GMIB protected value applied to the GMIB guaranteed annuity
purchase rates. If you want the Guaranteed Minimum Income Benefit, you must
elect it when you make your initial purchase payment. Once elected, the
Guaranteed Minimum Income Benefit cannot be revoked.
The GMIB protected value is calculated daily and is equal to the GMIB roll-up
until the GMIB roll-up either reaches its cap or if we stop applying the annual
interest rate based on the age of the annuitant, number of contract
anniversaries, or number of years since the last GMIB reset, as described below.
At this point, the GMIB protected value will be increased by any subsequent
invested purchase payments and reduced proportionally by withdrawals.
The Guaranteed Minimum Income Benefit is subject to certain restrictions
described below.
- - The annuitant must be 75 or younger in order for you to elect the Guaranteed
Minimum Income Benefit.
- - If you choose the Guaranteed Minimum Income Benefit, we will impose an annual
charge equal to 0.50% for contracts sold on or after May 1, 2004 (0.45% for
all other contracts) of the average GMIB protected value described below.
- - Under the contract terms governing the GMIB, we can require GMIB participants
to invest only in designated underlying mutual funds or can require GMIB
participants to invest according to an asset allocation model.
- - TO TAKE ADVANTAGE OF THE GUARANTEED MINIMUM INCOME BENEFIT, YOU MUST WAIT A
CERTAIN AMOUNT OF TIME BEFORE YOU BEGIN THE INCOME PHASE. THE WAITING PERIOD
IS THE PERIOD EXTENDING FROM THE CONTRACT DATE TO THE 7TH CONTRACT
ANNIVERSARY BUT, IF THE GUARANTEED MINIMUM INCOME BENEFIT HAS BEEN RESET (AS
DESCRIBED BELOW), THE WAITING PERIOD IS THE 7 YEAR PERIOD BEGINNING WITH THE
DATE OF THE MOST RECENT RESET.
Once the waiting period has elapsed, you will have a 30-day period each year,
beginning on the contract anniversary (or in the case of a reset, the
anniversary of the most recent reset), during which you may begin the income
phase with the Guaranteed Minimum Income Benefit by submitting the necessary
forms in good order to the Prudential Annuity Service Center.
GMIB ROLL-UP
The GMIB roll-up is equal to the invested purchase payments (after a reset, the
contract value at the time of the reset), increased daily at an effective annual
interest rate of 5% starting on the date each invested purchase payment is made,
until the cap is reached (GMIB roll-up cap). We will reduce this amount by the
effect of withdrawals. The GMIB roll-up cap is equal to two times each invested
purchase payment (for a reset, two times the sum of (1) the contract value at
the time of the reset, and (2) any invested purchase payments made subsequent to
the reset).
Even if the GMIB roll-up cap has not been reached, we will nevertheless stop
increasing the GMIB roll-up value by the effective annual interest rate on the
latest of:
- - the contract anniversary coinciding with or next following the annuitant's
80th birthday,
- - the 7th contract anniversary, or
- - 7 years from the most recent GMIB reset (as described below).
However, even if we stop increasing the GMIB roll-up value by the effective
annual interest rate, we will still increase the GMIB protected value by
subsequent invested purchase payments, reduced proportionally by withdrawals.
EFFECT OF WITHDRAWALS.
In any contract year when the GMIB protected value is increasing at the rate of
5%, withdrawals will first reduce the GMIB protected value on a
dollar-for-dollar basis, by the same dollar amount of the withdrawal up to the
first 5% of GMIB protected value calculated on the contract anniversary (or,
during the first contract year, on the contract date). The GMIB roll-up cap is
also reduced by withdrawals in the same manner. Any withdrawals made after the
dollar-for-dollar limit has been reached will
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proportionally reduce the GMIB protected value. We calculate the proportional
reduction (after any dollar-for-dollar withdrawal) by dividing the contract
value after the withdrawal by the contract value immediately following the
withdrawal of any available dollar-for-dollar amount. The resulting percentage
is multiplied by both the GMIB protected value and GMIB roll-up cap after
subtracting from each the amount of the withdrawal that does not exceed 5%. In
each contract year during which the GMIB protected value has stopped increasing
at the 5% rate, withdrawals will reduce the GMIB protected value proportionally.
The following examples of dollar-for-dollar and proportional reductions
assume: 1.) the contract date and the effective date of the GMIB are May 1,
2004; 2.) an initial purchase payment of $250,000; 3.) an initial GMIB protected
value of $250,000; 4.) an initial 200% cap of $500,000; and 5.) an initial
dollar-for-dollar limit of $12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on June 1, 2004 (in the first contract year). No
prior withdrawals have been taken. Immediately prior to the withdrawal, the GMIB
protected value is $251,038.10 (the initial value accumulated for 31 days at an
annual effective rate of 5%). As the amount withdrawn is less than the dollar-
for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., by $10,000,
from $251,038.10 to $241,038.10).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$500,000 to $490,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of
the first contract year is also reduced by the amount withdrawn (from $12,500
to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on July 1, 2004 (still within the first
contract year). Immediately before the withdrawal, the contract value is
$220,000 and the GMIB protected value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - The GMIB protected value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64).
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or
$7,500).
- B is the contract value less the Remaining Limit ($220,000 - $2,500, or
$217,500). The resulting GMIB protected value is: $239,506.64 X (1 -
($7,500/$217,500)), or $231,247.79.
- The GMIB 200% cap is first reduced by the Remaining Limit, (from $490,000 to
$487,500).
- The GMIB 200% cap is then further reduced by the ratio of A to B above
($487,500 x (1-($7,500/$217,500)), or $470,689.66.
- - The Remaining Limit is set to zero (0) for the balance of the first contract
year.
EXAMPLE 3. DOLLAR-FOR-DOLLAR LIMIT IN SECOND CONTRACT YEAR
A $10,000 withdrawal is made on the first anniversary of the contract date, May
1, 2005 (second contract year). Prior to the withdrawal, the GMIB protected
value is $240,838.37. The dollar-for-dollar limit is equal to 5% of this amount,
or $12,041.92. As the amount withdrawn is less than the dollar-for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $240,838.37 to $230,838.37).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$470,689.66 to $460,689.66).
- - The Remaining Limit for the balance of the second contract year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
GMIB RESET FEATURE
You may elect to "reset" your GMIB protected value to equal your current
contract value twice over the life of
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the contract. You may only exercise this reset option if the annuitant has not
yet reached his or her 76th birthday. If you reset, you must wait a new 7-year
period from the most recent reset to exercise the Guaranteed Minimum Income
Benefit. Further, we will reset the GMIB roll-up cap to equal two times the GMIB
protected value as of such date. Additionally, if you reset, we will determine
the GMIB payout amount by using the GMIB guaranteed annuity purchase rates
(specified in your contract) based on the number of years since the most recent
reset. These purchase rates may be less advantageous than the rates that would
have applied absent a reset.
PAYOUT AMOUNT
The Guaranteed Minimum Income Benefit payout amount is based on the age and sex
of the annuitant (and, if there is one, the co-annuitant). After we first deduct
a charge for any applicable premium taxes that we are required to pay, the
payout amount will equal the greater of:
1) the GMIB protected value as of the date you exercise the GMIB payout option,
applied to the GMIB guaranteed annuity purchase rates (which are generally
less favorable than the annuity purchase rates for annuity payments not
involving GMIB) and based on the annuity payout option as described below, or
2) the adjusted contract value--that is, the value of the contract adjusted for
any market value adjustment minus any charge we impose for premium taxes and
withdrawal charges--as of the date you exercise the GMIB payout option
applied to the current annuity purchase rates then in use.
GMIB ANNUITY PAYOUT OPTIONS
We currently offer two Guaranteed Minimum Income Benefit annuity payout options.
Each option involves payment for at least a period certain of ten years. In
calculating the amount of the payments under the original version of GMIB we
apply certain assumed interest rates, equal to 2% annually for a waiting period
of 7-9 years, and 2.5% annually for waiting periods of 10 years or longer for
contracts sold on or after May 1, 2004 (and 2.5% annually for a waiting period
of 7-9 years, 3% annually for a waiting period of 10-14 years, and 3.5% annually
for waiting periods of 15 years or longer for all other contracts).
GMIB OPTION 1
SINGLE LIFE PAYOUT OPTION
We will make monthly payments for as long as the annuitant lives, with payments
for a period certain. We will stop making payments after the later of the death
of the annuitant or the end of the period certain.
GMIB OPTION 2
JOINT LIFE PAYOUT OPTION
In the case of an annuitant and co-annuitant, we will make monthly payments for
the joint lifetime of the annuitant and co-annuitant, with payments for a period
certain. If the co-annuitant dies first, we will continue to make payments until
the later of the death of the annuitant and the end of the period certain. If
the annuitant dies first, we will continue to make payments until the later of
the death of the co-annuitant and the end of the period certain, but if the
period certain ends first, we will reduce the amount of each payment to 50% of
the original amount.
You have no right to withdraw amounts early under either GMIB payout option.
We may make other payout frequencies available, such as quarterly, semi-annually
or annually.
Because we do not impose a new waiting period for each subsequent purchase
payment, if you choose the Guaranteed Minimum Income Benefit, we reserve the
right to limit subsequent purchase payments if we discover that by the timing of
your purchase payments, your GMIB protected value is increasing in ways we did
not intend. In determining whether to limit purchase payments, we will look at
purchase payments which are disproportionately larger than your initial purchase
payment and other actions that may artificially increase the GMIB protected
value. Certain state laws may prevent us from limiting your subsequent purchase
payments. You must exercise one of the GMIB payout options described above no
later than 30 days after the later of the contract anniversary coinciding with
or next
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following the annuitant's attainment of age 90 or the 10th contract anniversary.
You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event that your contract value declines
significantly due to negative investment performance. If your contract value is
not significantly affected by negative investment performance, it is unlikely
that the purchase of GMIB will result in your receiving larger annuity payments
than if you had not purchased GMIB. This is because the assumptions that we use
in computing the GMIB benefit, such as the annuity purchase rates, (which
include assumptions as to age-setbacks and assumed interest rates), are more
conservative than the assumptions that we use in computing annuity payout
options outside of GMIB. For example, assuming that a life income annuity option
were elected, if your adjusted contract value equaled the GMIB protected value,
the amount of each annuity payment that you would receive under the GMIB would
be less than the amount of each annuity payment that you would receive under our
standard annuity payout option. Therefore, in those situations where the GMIB's
insurance is not needed, because the annuity payments outside of the GMIB would
be greater than those offered under the GMIB, you would have paid a fee for the
GMIB without ever taking advantage of the benefit that it is designed to
provide. The GMIB, however, is an effective means of ensuring a minimum annuity
payout, regardless of the investment performance of the variable investment
options.
TERMINATING THE GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit cannot be terminated by the owner once
elected. The GMIB automatically terminates as of the date the contract is fully
surrendered, on the date the death benefit is payable to your beneficiary
(unless your surviving spouse elects to continue the contract), or on the date
that your contract value is transferred to begin making annuity payments. The
GMIB may also be terminated if you designate a new annuitant who would not be
eligible to elect the GMIB based on his or her age at the time of the change.
Upon termination of the GMIB, we will deduct the charge from your contract
value for the portion of the contract year since the prior contract anniversary
(or the contract date if in the first contract year).
INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit (IAB) is an optional, supplemental income benefit
that provides an additional income amount during the accumulation period or upon
annuitization. The Income Appreciator Benefit is designed to provide you with
additional funds in order to defray the impact taxes may have on distributions
from your contract. Because individual circumstances vary, you should consult
with a qualified tax advisor to determine whether it would be appropriate for
you to elect the Income Appreciator Benefit.
If you want the Income Appreciator Benefit, you generally must elect it when
you make your initial purchase payment. Once you elect the Income Appreciator
Benefit, you may not later revoke it.
- - The annuitant must be 75 or younger in order for you to elect the Income
Appreciator Benefit.
- - If you choose the Income Appreciator Benefit, we will impose an annual charge
equal to 0.25% of your contract value. See "What Are The Expenses Associated
With The Strategic Partners Annuity One Contract?" on page 55.
ACTIVATION OF THE INCOME APPRECIATOR BENEFIT
YOU CAN ACTIVATE THE INCOME APPRECIATOR BENEFIT AT ANY TIME AFTER IT HAS BEEN IN
FORCE FOR SEVEN YEARS. To activate the Income Appreciator Benefit, you must send
us a written request in good order.
Once activated, you can receive the Income Appreciator Benefit:
- - (IAB OPTION 1) at annuitization when determining an annuity payment;
- - (IAB OPTION 2) during the accumulation phase through the IAB automatic
withdrawal payment program; or
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- - (IAB OPTION 3) during the accumulation phase as an Income Appreciator Benefit
credit to your contract over a 10-year period.
More information about IAB Option 1 appears below. For information about IAB
Options 2 and 3, See "How Can I Access My Money?" on page .
Income Appreciator Benefit payments are treated as earnings and may be
subject to tax upon withdrawal. See "What Are The Tax Considerations Associated
With The Strategic Partners Annuity One Contract?" on page .
IF YOU DO NOT ACTIVATE THE BENEFIT PRIOR TO THE MAXIMUM ANNUITIZATION AGE YOU
MAY LOSE ALL OR PART OF THE IAB.
CALCULATION OF INCOME APPRECIATOR BENEFIT AMOUNT
We will calculate the Income Appreciator Benefit amount as of the date we
receive your written request in good order (or, for IAB Option 1, on the annuity
date). We do this by multiplying the current earnings in the contract by the
applicable Income Appreciator Benefit percentage based on the number of years
the Income Appreciator Benefit has been in force. For purposes of calculating
the Income Appreciator Benefit:
- - earnings are calculated as the difference between the contract value and the
sum of all purchase payments;
- - earnings do not include (1) any amount added to the contract value as a
result of the Spousal Continuance Benefit (explained on page 51), or (2) if
we were to permit you to elect the Income Appreciator Benefit after the
contract date, any earnings accrued under the contract prior to that
election;
- - withdrawals reduce earnings first, then purchase payments, on a
dollar-for-dollar basis;
- - the table below shows the Income Appreciator Benefit percentages
corresponding to the number of years the Income Appreciator Benefit has been
in force.
IAB OPTION 1 -- INCOME APPRECIATOR BENEFIT AT ANNUITIZATION
Under this option, if you choose to activate the Income Appreciator Benefit at
annuitization, we will calculate the Income Appreciator Benefit amount on the
annuity date and add it to the adjusted contract value for purposes of
determining the amount available for annuitization. You may apply this amount to
any annuity or settlement option over the lifetime of the annuitant, joint
annuitants, or a period certain of at least 15 years (but not to exceed life
expectancy).
UPON ANNUITIZATION, YOU MAY LOSE ALL OR A PORTION OF THE INCOME APPRECIATOR
BENEFIT IF YOU CHOOSE AN ANNUITY SETTLEMENT OPTION OTHER THAN ANY LIFETIME
PAYOUT OPTION OR PERIOD CERTAIN OPTION FOR AT LEAST 15 YEARS. IN SUCH INSTANCES,
WE WOULD NOT REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
EFFECT OF INCOME APPRECIATOR BENEFIT ON GUARANTEED MINIMUM INCOME BENEFIT
If you exercise the Guaranteed Minimum Income Benefit feature and an Income
Appreciator Benefit amount remains payable under your contract, the value we use
to calculate the annuity payout amount will be the greater of:
1. the adjusted contract value plus the remaining Income Appreciator Benefit
amount, calculated at current IAB annuitization rates; or
2. the GMIB protected value plus the remaining Income Appreciator Benefit
amount, calculated using the GMIB guaranteed annuity purchase rates shown in
the contract.
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If you exercise the Guaranteed Minimum Income Benefit feature and activate
the Income Appreciator Benefit at the same time, you must choose among the
Guaranteed Minimum Income Benefit annuity payout options available at the time.
TERMINATING THE INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit will terminate on the earliest of:
- - the date you make a total withdrawal from the contract;
- - the date a death benefit is payable if the contract is not continued by the
surviving spouse under the Spousal Continuance Benefit;
- - the date the Income Appreciator Benefit amount is reduced to zero (generally
ten years after activation) under IAB Options 2 and 3;
- - the date of annuitization; or
- - the date the contract terminates.
HOW WE DETERMINE ANNUITY PAYMENTS
Generally speaking, the annuity phase of the contract involves our distributing
to you in increments the value that you have accumulated. We make these
incremental payments either over a specified time period (e.g., 15 years)
("fixed period annuities") or for the duration of the life of the annuitant (and
possibly co-annuitant) ("life annuities"). There are certain assumptions that
are common to both fixed period annuities and life annuities. In each type of
annuity, we assume that the value you apply at the outset toward your annuity
payments earns interest throughout the payout period. For annuity options within
the GMIB, this interest rate ranges from 2% to 2.5% for contracts sold on or
after May 1, 2004 (and 2.5% to 3.5% for all other contracts). For non-GMIB
annuity options, the guaranteed minimum rate is 1.5% annually for contracts sold
on or after May 1, 2004 (and 3% for all other contracts). The GMIB guaranteed
annuity purchase rates in your contract depict the minimum amounts we will pay
(per $1000 of adjusted contract value). If our current annuity purchase rates on
the annuity date are more favorable to you than the guaranteed rates, we will
make payments based on those more favorable rates.
Other assumptions that we use for life annuities and fixed period annuities
differ, as detailed in the following overview:
FIXED PERIOD ANNUITIES
Currently, we offer fixed period annuities only under the Income Appreciator
Benefit and non-GMIB annuity options. Generally speaking, in determining the
amount of each annuity payment under a fixed period annuity, we start with the
adjusted contract value, add interest assumed to be earned over the fixed
period, and divide the sum by the number of payments you have requested. The
life expectancy of the annuitant and co-annuitant are relevant to this
calculation only in that we will not allow you to select a fixed period that
exceeds life expectancy.
LIFE ANNUITIES
There are more variables that affect our calculation of life annuity payments.
Most importantly, we make several assumptions about the annuitant's or co-
annuitant's life expectancy, including the following:
- - The Annuity 2000 Mortality Table is the starting point for our life expectancy
assumptions. This table anticipates longevity of an insured population based
on historical experience and reflecting anticipated experience for the year
2000.
GUARANTEED AND GMIB ANNUITY PAYMENTS
- - Because life expectancy has lengthened over the past few decades, and likely
will increase in the future, our life annuity calculations anticipate these
future improvements. We do this largely by making a hypothetical reduction in
the age of the annuitant (or co-annuitant), in lieu of using the annuitant's
(or co-annuitant's) actual age, in calculating the payment amounts. By using
such a reduced age, we base our calculations on a younger person, who
generally would live longer and therefore draw life annuity payments over a
longer time period. Given the longer pay-out period, the payments made to the
younger person would be less than those made to an older person. We make two
such age adjustments:
1) First, for all life annuities, we start with the age of the annuitant (or
co-annuitant) on his/her most
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recent birthday and reduce that age by either (a) two years, with respect to
guaranteed payments under life annuities not involving GMIB, as well as GMIB,
payments for contracts not described in (b) below, or (b) four years, for
life annuities under the GMIB sold in contracts on or after May 1, 2004 ( the
age reduction reduces annuity payments correspondingly. The four-year age
reduction mentioned here causes a greater reduction in annuity payments than
the two-year age reduction mentioned immediately above).
2) Second, for life annuities under both versions of GMIB as well as guaranteed
payments under life annuities not involving GMIB, we make a further age
reduction according to the table in your contract entitled "Translation of
Adjusted Age." As indicated in the table, the further into the future the
first annuity payment is, the longer we expect the person receiving those
payments to live, and the more we reduce the annuitant's (or co-annuitant's)
age.
CURRENT ANNUITY PAYMENTS
When calculating current annuity purchase rates (i.e., non-guaranteed rates), we
use the actual age of the annuitant (or co-annuitant).
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4:
WHAT IS THE
DEATH BENEFIT?
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THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. A change of beneficiary will take effect on the date
you sign the change request form, provided we receive the form in good order.
Unless you name an irrevocable beneficiary, during the accumulation period, you
can change the beneficiary at any time before the owner dies. However, if
jointly owned, the owner must name the joint owner and the joint owner must name
the owner as the beneficiary.
CALCULATION OF THE DEATH BENEFIT
If the owner or joint owner dies during the accumulation phase, we will, upon
receiving the appropriate proof of death and any other needed documentation in
good order (proof of death), pay a death benefit to the beneficiary designated
by the deceased owner or joint owner. If there is a sole owner and there is only
one beneficiary who is the owner's spouse on the date of death, then the
surviving spouse may continue the contract under the Spousal Continuance
Benefit. If there are an owner and joint owner of the contract, and the owner's
spouse is both the joint owner and the beneficiary on the date of death, then at
the death of the first to die, the death benefit will be paid to the surviving
owner or the surviving owner may continue the contract under the Spousal
Continuance Benefit. See "Spousal Continuance Benefit" on page .
Upon death, the beneficiary will receive the greater of the following:
1) The current contract value (as of the time we receive proof of death). If you
have purchased the Contract With Credit, we will first deduct any credit
corresponding to a purchase payment made within one year of death. We impose
no market value adjustment on contract value held within the market value
adjustment option when a death benefit is paid.
2) Either the base death benefit, which equals the total invested purchase
payments you have made proportionally reduced by any withdrawals, or, if you
have chosen the Guaranteed Minimum Death Benefit, the GMDB protected value.
GUARANTEED MINIMUM DEATH BENEFIT
The Guaranteed Minimum Death Benefit (GMDB) provides for the option to receive
an enhanced death benefit upon the death of the sole owner or the first to die
of the owner or joint owner during the accumulation phase. If you elect the GMDB
feature, you must elect a GMDB protected value option.
The GMDB protected value option can be equal to the GMDB step-up. The GMDB
protected value is calculated daily.
GMDB STEP-UP
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS LESS THAN AGE 80
ON THE CONTRACT DATE, the GMDB step-up before the first contract anniversary is
the initial invested purchase payment increased by subsequent invested purchase
payments, and proportionally reduced by the effect of withdrawals. The GMDB
step-up on each contract anniversary will be the greater of the previous GMDB
step-up and the contract value as of such contract anniversary. Between contract
anniversaries, the GMDB step-up will increase by invested purchase payments and
reduce proportionally by withdrawals.
We stop increasing the GMDB step-up by any appreciation in the contract value
on the later of:
- - the contract anniversary coinciding with or next following the sole or older
owner's 80th birthday, or
- - the 5th contract anniversary.
However, we still increase the GMDB protected value by subsequent invested
purchase payments and proportionally reduce it by withdrawals.
Here is an example of a proportional reduction:
The current contract value is $100,000 and the protected value is $80,000.
The owner makes a withdrawal that reduces the contract value by 25% (including
the effect of any withdrawal charges). The
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new protected value is $60,000, or 75% of what it was before the withdrawal.
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS BETWEEN AGE 80
AND 85 ON THE CONTRACT DATE, the GMDB step-up before the third contract
anniversary is the sum of invested purchase payments, reduced by the effect of
withdrawals. On the third contract anniversary, we will adjust the GMDB step-up
to the greater of the then current GMDB step-up or the contract value as of that
contract anniversary. Thereafter, we will only increase the GMDB protected value
by subsequent invested purchase payments and proportionally reduce it by
withdrawals.
Special rules apply if the beneficiary is the spouse of the owner and the
contract does not have a joint owner. In that case, upon the death of the owner,
the spouse will have the choice of the following:
- - If the sole beneficiary under the contract is the owner's spouse, and the
other requirements of the Spousal Continuance Benefit are met (see page ),
then the contract can continue, and the spouse will become the new owner of
the contract; or
- - The spouse can receive the death benefit. A surviving spouse who is eligible
for the Spousal Continuance Benefit must choose between that benefit and
receiving the death benefit during the first 60 days following our receipt of
proof of death.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the contract
value on the date the change of ownership occurs, and for purposes of computing
the future death benefit, we will treat that contract value as a purchase
payment occurring on that date.
SPECIAL RULES IF JOINT OWNERS
If the contract has an owner and a joint owner and they are spouses at the time
that one dies the Spousal Continuance Benefit may apply. See "Spousal
Continuance Benefit" page 51. If the contract has an owner and a joint owner and
they are not spouses at the time one dies, we will pay the death benefit and the
contract will end.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
CHOICE 1. Lump sum payment of the death benefit. If the beneficiary does not
choose a payout option within sixty days, the beneficiary will receive this
payout option.
CHOICE 2. The payment of the entire death benefit within a period of 5 years
from the date of death of the first to die of the owner or joint owner.
The entire death benefit will include any increases or losses resulting
from the performance of the variable or fixed interest rate options during
this period. During this period the beneficiary may: reallocate the contract
value among the variable or fixed interest rate options; name a beneficiary
to receive any remaining death benefit in the event of the beneficiary's
death; and make withdrawals from the contract value, in which case, any such
withdrawals will not be subject to any withdrawal charges. However, the
beneficiary may not make any purchase payments to the contract.
During this 5 year period, we will continue to deduct from the death
benefit proceeds the charges and costs that were associated with the features
and benefits of the contract. Some of these features and benefits may not be
available to the beneficiary, such as the Guaranteed Minimum Income Benefit,
Income Appreciator Benefit and Spousal Continuance Benefit.
CHOICE 3. Payment of the death benefit under an annuity or annuity settlement
option over the lifetime of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary with distribution beginning
within one year of the date of death of the owner.
If the contract has an owner and a joint owner:
- If the owner and joint owner are spouses at the death of the first to die
of the two, any portion of the death benefit not applied under Choice 3
within one year of the survivor's date of death
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must be distributed within five years of the survivor's date of death.
- If the owner and joint owner are not spouses, any portion of the death
benefit not applied under Choice 3 within one year of the date of death of
the first to die must be distributed within five years of that date of
death.
The tax consequences to the beneficiary vary among the three death benefit
payout options. See "What Are The Tax Considerations Associated With The
Strategic Partners Annuity One Contract?" on page 62.
SPOUSAL CONTINUANCE BENEFIT
This benefit is available if, on the date we receive proof of the owner's death,
(1) there is only one owner of the contract and there is only one beneficiary
who is the owner's spouse; or (2) there are an owner and joint owner of the
contract, and the joint owner is the owner's spouse and the owner's beneficiary
under the contract. In no event, however, can the annuitant be older than the
maximum age for annuitization on the date of the owner's death, nor can the
surviving spouse be older than 95 on the date of the owner's death. Assuming the
above conditions are present, the surviving spouse can elect the Spousal
Continuance Benefit, but must do so no later than 60 days after furnishing proof
of the owner's death in good order.
Upon activation of the Spousal Continuance Benefit, the contract value is
adjusted to equal the amount of the death benefit to which the surviving spouse
would have been entitled. This contract value will serve as the basis for
calculating any death benefit payable upon the death of the surviving spouse. We
will allocate any increase in the adjusted contract value among the variable,
fixed interest rate or market value adjustment options in the same proportions
that existed immediately prior to the spousal continuance adjustment. We will
waive the $1,000 minimum requirement for the market value adjustment option.
Under the Spousal Continuance Benefit, we waive any potential withdrawal
charges applicable to purchase payments made prior to activation of the Spousal
Continuance Benefit. However, we will continue to impose withdrawal charges on
purchase payments made after activation of this benefit. In addition, contract
value allocated to the market value adjustment option will remain subject to a
potential market value adjustment.
IF YOU ELECTED THE BASE DEATH BENEFIT, then upon activation of the Spousal
Continuance Benefit, we will adjust the contract value to equal the greater of:
- - the contract value, or
- - the sum of all invested purchase payments (adjusted for withdrawals).
IF YOU HAVE ELECTED THE GMDB STEP-UP, we will adjust the contract value to
equal the greater of:
- - the contract value, or
- - the GMDB step-up.
After we have made the adjustment to contract value set out immediately
above, we will continue to compute the GMDB step-up under the surviving spousal
owner's contract, and will do so in accordance with the preceding discussion in
this section.
If the contract is being continued by the surviving spouse, the attained age
of the surviving spouse will be the basis used in determining the death benefit
payable under the Guaranteed Minimum Death Benefit provisions of the contract.
IF YOU ELECTED THE GUARANTEED MINIMUM INCOME BENEFIT, it will be continued
for the surviving spousal owner. All provisions of the Guaranteed Minimum Income
Benefit (i.e., waiting period, GMIB roll-up cap, etc.) will remain the same as
on the date of the owner's death. If the GMIB reset feature was never exercised,
the surviving spousal owner can exercise the GMIB reset feature twice. If the
original owner had previously exercised the GMIB reset feature once, the
surviving spousal owner can exercise the GMIB reset once. However the surviving
spouse (or new annuitant designated by the surviving spouse) must be under 76
years of age at the time of reset. If the original owner had previously
exercised the GMIB reset feature twice, the surviving spousal owner may not
exercise the GMIB reset at all. If the attained age of the surviving spouse at
activation of the Spousal Continuance Benefit, when added to the remainder of
the GMIB
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waiting period to be satisfied, would preclude the surviving spouse from
utilizing the Guaranteed Minimum Income Benefit, we will revoke the Guaranteed
Minimum Income Benefit under the contract at that time and we will no longer
charge for that benefit.
IF YOU ELECTED THE INCOME APPRECIATOR BENEFIT, on the owner's death, the
Income Appreciator Benefit will end unless the contract is continued by the
owner's surviving spouse under the Spousal Continuance Benefit. If the contract
is continued by the surviving spouse, we will continue to pay the balance of any
Income Appreciator Benefit payments until the earliest to occur of the
following: (a) the date on which 10 years' worth of IAB automatic withdrawal
payments or IAB credits, as applicable, have been paid, (b) the latest date on
which annuity payments would have had to have commenced had the owner not died
(i.e., the later of the contract anniversary next following the annuitant's 90th
birthday or the 10th contract anniversary), or (c) the later of the 10th
contract anniversary or the contract anniversary next following the surviving
spouse's 90th birthday (or the annuitant's 90th birthday if other than the
surviving spouse).
If the Income Appreciator Benefit has not been in force for 7 contract years,
the surviving spouse may not activate the benefit until it has been in force for
7 contract years. If the attained age of the surviving spouse at activation of
the Spousal Continuance Benefit, when added to the remainder of the Income
Appreciator Benefit waiting period to be satisfied, would preclude the surviving
spouse from utilizing the Income Appreciator Benefit, we will revoke the Income
Appreciator Benefit under the contract at that time and we will no longer charge
for that benefit. If the Income Appreciator Benefit has been in force for 7
contract years or more, but the benefit has not been activated, the surviving
spouse may activate the benefit at any time after the contract has been
continued. If the Income Appreciator Benefit is activated after the contract is
continued by the surviving spouse, the Income Appreciator Benefit calculation
will exclude any amount added to the contract at the time of spousal continuance
resulting from any death benefit value exceeding the contract value.
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5:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
ANNUITY ONE CONTRACT?
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PURCHASE PAYMENTS
The initial purchase payment is the amount of money you give us to purchase the
contract. The minimum initial purchase payment is $10,000, and may not be
greater than $1,000,000, absent prior approval. With some restrictions, you can
make additional purchase payments by means other than electronic fund transfer
of no less than $500 at any time during the accumulation phase. However, we
impose a minimum of $100 with respect to additional purchase payments made
through electronic fund transfers.
You may purchase this contract only if the oldest of the owner, joint owner
or annuitant is age 85 or younger on the contract date. Certain age limits apply
to certain features and benefits described herein. No subsequent purchase
payments may be made on or after the earliest of the 86th birthday of:
- - the owner,
- - the joint owner, or
- - the annuitant.
Currently, the maximum aggregate purchase payments you may make is $7
million. We limit the maximum total purchase payments in any contract year other
than the first to $2 million, absent our prior approval.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your invested purchase payment
among the variable or fixed interest rate investment options or the market value
adjustment option based on the percentages you choose. The percentage of your
allocation to a particular investment option can range in whole percentages from
0% to 100%.
When you make an additional purchase payment, it will be allocated in the
same way as your most recent purchase payment, unless you tell us otherwise.
Allocations to the DCA Fixed Rate Option must be no less than $2,000.
You may change your allocation of future invested purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive your payment in good order at
the Prudential Annuity Service Center. If, however, your first payment is made
without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information. We will
generally credit each subsequent purchase payment as of the business day we
receive it in good order at the Prudential Annuity Service Center. Our business
day generally closes at 4:00 p.m. Eastern time. Subsequent purchase payments
received in good order after 4:00 p.m. Eastern time will be credited on the
following business day.
CREDITS
If you purchase the Contract With Credit, we will add a credit amount to your
contract value with each purchase payment you make. The credit amount is
allocated to the variable or fixed interest rate investment options or the
market value adjustment option in the same percentages as the purchase payment.
The bonus credit that we pay with respect to any purchase payment depends on
(i) the age of the older of the owner or joint owner on the date on which the
purchase payment is made and (ii) the amount of the purchase payment.
Specifically,
- - if the elder owner is 80 or younger on the date that the purchase payment is
made, then we will add a bonus credit to the purchase payment equal to 4% if
the purchase payment is less than $250,000; 5% if the purchase payment is
equal to or greater than $250,000 but less than $1 million; or 6% if the
purchase payment is $1 million or greater; and
- - if the older owner is aged 81-85 on the date that the purchase payment is
made, then we will add a bonus credit equal to 3% of the amount of the
purchase payment.
Under the Contract With Credit, if the owner returns the contract during the
free look period, we will recapture the bonus credits. If we pay a death benefit
under the contract, we have a contractual right to take
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back any credit we applied within one year of the date of death.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment options you choose. To
determine the value of your contract allocated to the variable investment
options, we use a unit of measure called an accumulation unit. An accumulation
unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option,
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes, and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit
your contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. We determine the number of accumulation units
credited to your contract by dividing the amount of the purchase payment, plus
(if you have purchased the Contract With Credit) any applicable credit,
allocated to an investment option by the unit price of the accumulation unit for
that investment option. We calculate the unit price for each investment option
after the New York Stock Exchange closes each day and then credit your contract.
The value of the accumulation units can increase, decrease, or remain the same
from day to day.
We cannot guarantee that your contract value will increase or that it will
not fall below the amount of your total purchase payments. However, we do
guarantee a minimum interest rate of 1.5% a year on that portion of the contract
value allocated to the one-year fixed interest-rate option. For the DCA Fixed
Interest Rate Option, we guarantee a minimum interest rate of 3% annually.
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6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE CONTRACT?
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THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. WE DESCRIBE THESE CHARGES AND EXPENSES BELOW.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise, we will incur a loss. The
rates of certain of our charges have been set with reference to estimates of the
amount of specific types of expenses or risks that we will incur. In most cases,
this prospectus identifies such expenses or risks in the name of the charge;
however, the fact that any charge bears the name of, or is designed primarily to
defray a particular expense or risk does not mean that the amount we collect
from that charge will never be more than the amount of such expense or risk. Nor
does it mean that we may not also be compensated for such expense or risk out of
any other charges we are permitted to deduct by the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGE
Each day, we make a deduction for the insurance and administrative charge. This
charge covers our expenses for mortality and expense risk, administration,
marketing and distribution. If you choose the Guaranteed Minimum Death Benefit
Option, the insurance and administrative charge also includes a charge to cover
our assumption of the associated risk. The mortality risk portion of the charge
is for our assumption of the risk that the annuitant(s) will live longer than
expected based on our life expectancy tables. When this happens, we pay a
greater number of annuity payments. We also incur the risk that the death
benefit amount exceeds the contract value. The expense risk portion of the
charge is for assuming the risk that the current charges will be insufficient in
the future to cover the cost of administering the contract. The administrative
expense portion of the cost compensates us for the expenses associated with the
administration of the contract. This includes preparing and issuing the
contract; establishing and maintaining contract records; preparation of
confirmations and annual reports; personnel costs; legal and accounting fees;
filing fees; and systems costs. The Guaranteed Minimum Death Benefit risk
portion of the charge, if applicable, covers our assumption of the risk that the
protected value of the contract will be larger than the base death benefit if
the contract owner dies during the accumulation phase.
We calculate the insurance and administrative charge based on the average
daily value of all assets allocated to the variable investment options. These
charges are not assessed against amounts allocated to the fixed interest rate
options. The amount of the charge depends on the death benefit option that you
choose. The charge is equal to:
- 1.40% on an annual basis if you choose the base death benefit, and
- 1.65% on an annual basis if you choose the step-up Guaranteed Minimum
Death Benefit option.
We impose an additional insurance and administrative charge of 0.10% annually
(of account value attributable to the variable investment options) for the
Contract with Credit.
If the charges under the contract are not sufficient to cover our expenses,
then we will bear the loss. We do, however, expect to profit from this cost. The
insurance risk charge for your contract cannot be increased. Any profits made
from this charge may be used by us to pay for the costs of distributing the
contracts. If you choose the Contract With Credit, we will also use any profits
from this charge to recoup our costs of providing the credit.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period
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for a purchase payment. The amount and duration of the withdrawal charge depends
on whether you choose the Contract With Credit or the Contract Without Credit.
The withdrawal charge varies with the number of contract anniversaries that have
elapsed since each purchase payment being withdrawn was made. Specifically, we
maintain an "age" for each purchase payment you have made by keeping track of
how many contract anniversaries have passed since the purchase payment was made.
The withdrawal charge is the percentage, shown below, of the amount
withdrawn.
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the next following contract anniversary will
apply.
If you request a withdrawal, we will deduct an amount from the contract value
that is sufficient to pay the withdrawal charge, and provide you with the amount
requested.
If you request a full withdrawal, we will provide you with the full amount of
the contract value after making deductions for charges.
Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We determine the charge-free amount
available to you in a given contract year on the contract anniversary that
begins that year. In calculating the charge-free amount, we divide purchase
payments into two categories -- payments that are subject to a withdrawal charge
and those that are not. We determine the charge-free amount based only on
purchase payments that are subject to a withdrawal charge. The charge-free
amount in a given contract year is equal to 10% of the sum of all the purchase
payments subject to the withdrawal charge that you have made as of the
applicable contract anniversary. During the first contract year, the charge-free
amount is equal to 10% of the initial purchase payment.
When you make a withdrawal, we will deduct the amount of the withdrawal first
from the available charge-free amount. Any excess amount will then be deducted
from purchase payments in excess of the charge-free amount and subject to
applicable withdrawal charges. Once you have withdrawn all purchase payments,
additional withdrawals will come from any earnings. We do not impose withdrawal
charges on earnings.
If a withdrawal or transfer is taken from a market value adjustment guarantee
period prior to the expiration of the rate guarantee period we will make a
market value adjustment to the withdrawal amount. We will then apply a
withdrawal charge to the adjusted amount.
If you choose the Contract With Credit and make a withdrawal that is subject
to a withdrawal charge, we may use part of that withdrawal charge to recoup our
costs of providing the credit.
Withdrawal charges will never be greater than permitted by applicable law.
MINIMUM DISTRIBUTION REQUIREMENTS
If a withdrawal is taken from a tax qualified contract in order to satisfy an
IRS mandatory distribution requirement only with respect to that contract's
account balance, we will waive withdrawal charges. See "What Are The Tax
Considerations Associated With The Strategic Partners Annuity One Contract?" on
page 62.
CONTRACT MAINTENANCE CHARGE
We do not deduct a contract maintenance charge for administrative expenses while
your contract value is $75,000 or more. If your contract value is less than
$75,000 on a contract anniversary during the accumulation phase or when you make
a full withdrawal, we will deduct $30 (or a lower amount equal to 2% of your
contract value) for administrative expenses. We may raise the level of the
contract value at which we waive this fee. We will deduct this charge
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proportionately from each of your contract's investment options.
GUARANTEED MINIMUM INCOME BENEFIT CHARGE
We will impose an additional charge if you choose the Guaranteed Minimum Income
Benefit. FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2004, we will deduct a charge
equal to 0.50% per year of the average GMIB protected value for the period the
charge applies. FOR ALL OTHER CONTRACTS, this is an annual charge equal to 0.45%
of the average GMIB protected value. We deduct the charge from your contract
value on each of the following events:
- - each contract anniversary,
- - when you begin the income phase of the contract,
- - upon a full withdrawal, and
- - upon a partial withdrawal if the remaining contract value would not be enough
to cover the then applicable Guaranteed Minimum Income Benefit charge.
If we impose this fee other than on a contract anniversary, then we will
pro-rate it based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Because the charge is calculated based on the average GMIB protected value,
it does not increase or decrease based on changes to the annuity's account value
due to market performance. If the GMIB protected value increases, the dollar
amount of the annual charge will increase, while a decrease in the GMIB
protected value will decrease the dollar amount of the charge.
The charge is deducted annually in arrears each contract year on the contract
anniversary. We deduct the amount of the charge pro-rata from the contract value
allocated to the variable investment options. If you surrender your contract,
begin receiving annuity payments under the GMIB or any other annuity payout
option we make available during a contract year, or the GMIB terminates, we will
deduct the charge for the portion of the contract year since the prior contract
anniversary (or the contract date if in the first contract year). Upon a full
withdrawal or if the contract value remaining after a partial withdrawal is not
enough to cover the applicable Guaranteed Minimum Income Benefit charge, we will
deduct the charge from the amount we pay you.
THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL OR PARTIAL WITHDRAWAL DOES
NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE TIME OF YOUR CHOOSING.
We will not impose the Guaranteed Minimum Income Benefit charge after the
income phase begins.
INCOME APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Income Appreciator
Benefit. This is an annual charge equal to 0.25% of your contract value. The
Income Appreciator Benefit charge is calculated:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or the first to die of the owner or joint
owner prior to the annuity date,
- upon a full or partial withdrawal, and
- upon a subsequent purchase payment.
The fee is based on the contract value at the time of the calculation, and is
prorated based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Although the Income Appreciator Benefit charge may be calculated more often,
it is deducted only:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or first to die of the owner or joint
owner prior to the annuity date,
- upon a full withdrawal, and
- upon a partial withdrawal if the contract value remaining after such
partial withdrawal is not enough to cover the then-applicable Income
Appreciator Benefit charge.
We reserve the right to calculate and deduct the fee more frequently than
annually, such as quarterly.
The Income Appreciator Benefit charge is deducted from each investment option
in the same proportion that the amount allocated to the investment option
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bears to the total contract value. No market value adjustment will apply to the
portion of the charge deducted from the market value adjustment option. Upon a
full withdrawal, or if the contract value remaining after a partial withdrawal
is not enough to cover the then-applicable Income Appreciator Benefit charge,
the charge is deducted from the amount paid. The payment of the Income
Appreciator Benefit charge will be deemed to be made from earnings for purposes
of calculating other charges. THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL
OR PARTIAL WITHDRAWAL DOES NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE
TIME OF YOUR CHOOSING.
We do not assess this charge upon election of IAB Option 1, the completion of
IAB Option 2 or 3, and upon annuitization. However, we do assess the IAB charge
during the 10-year payment period contemplated by IAB Options 2 and 3. Moreover,
you should realize that amounts credited to your contract value under IAB Option
3 increase the contract value, and because the IAB fee is a percentage of your
contract value, the IAB fee may increase as a consequence of those additions.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal and premium based taxes applicable to your purchase
payment. We are responsible for the payment of these taxes and may make a charge
against the value of the contract to pay some or all of these taxes. New York
does not currently charge premium taxes on annuities. It is our current practice
not to deduct a charge for the federal tax associated with deferred acquisition
costs paid by us that are based on premium received. However, we reserve the
right to charge the contract owner in the future for any such tax associated
with deferred acquisition costs and any federal, state or local income, excise,
business or any other type of tax measured by the amount of premium received by
us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $25 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current plans to do so. We will deduct the transfer fee
pro-rata from the investment options from which the transfer is made.
COMPANY TAXES
We will pay the taxes on the earnings of the separate account. We do not
currently charge you for these taxes. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual fund.
Those funds charge fees that are in addition to the contract-related fees
described in this section. For 2003, the fees of these funds ranged on an annual
basis from % to % of fund assets (these fees reflect the effect of
expense reimbursements or waivers, which may terminate at any time). For
additional information about these fund fees, please consult the prospectuses
for the funds.
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7:
HOW CAN I
ACCESS MY MONEY?
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YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR FULL); OR
- - CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus any applicable charges and fees. We will calculate the value of your
contract and charges, if any, as of the date we receive your request in good
order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal and related withdrawal
charges will be made proportionately from all of the investment options you have
selected. The minimum contract value that must remain in order to keep your
contract in force after a withdrawal is $2,000. If you request a withdrawal
amount that would reduce the contract value below this minimum, we will withdraw
the maximum amount available that, with the withdrawal charge, would not reduce
the contract value below such minimum.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after we
receive a withdrawal request in good order. We will deduct applicable charges,
if any, from the assets in your contract.
With respect to the market value adjustment option, you may specify the
guarantee period from which you would like to make a withdrawal. If you indicate
that the withdrawal is to originate from the market value adjustment option, but
you do not specify which guarantee period is to be involved, then we will take
the withdrawal from the guarantee period that has the least time remaining until
its maturity date. If you indicate that you wish to make a withdrawal, but do
not specify the investment options to be involved, then we will take the
withdrawal from your contract value on a pro rata basis from each investment
option that you have. In that situation, we will aggregate the contract value in
each of the guarantee periods that you have within the market value adjustment
option for purposes of making that pro rata calculation. The portion of the
withdrawal associated with the market value adjustment option then will be taken
from the guarantee periods with the least amount of time remaining until the
maturity date, irrespective of the original length of the guarantee period. You
should be aware that a withdrawal may avoid a withdrawal charge based on the
charge-free amount that we allow, yet still be subject to a market value
adjustment.
INCOME TAXES, TAX PENALTIES, AND CERTAIN RESTRICTIONS ALSO MAY APPLY TO ANY
WITHDRAWAL YOU MAKE. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8 OF THIS
PROSPECTUS.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual, or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or proportionally
from all investment options (other than a guarantee period within the market
value adjustment option). The minimum automated withdrawal amount you can make
is $100.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND CERTAIN RESTRICTIONS MAY
APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8
OF THIS PROSPECTUS.
INCOME APPRECIATOR BENEFIT OPTIONS DURING THE ACCUMULATION PHASE
The Income Appreciator Benefit (IAB) is discussed on page 45. As mentioned
there, you may choose IAB Option 1 at annuitization, but you may instead choose
IAB Options 2 or 3 during the accumulation phase of your contract. Income
Appreciator Benefit payments under IAB Options 2 and 3 will begin on the same
day of the month as the contract date, beginning with the next month following
our receipt of your request in good
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order. Under IAB Options 2 and 3, you can choose to have the Income Appreciator
Benefit amounts paid or credited monthly, quarterly, semi-annually, or annually.
IAB OPTIONS 2 AND 3 INVOLVE A TEN-YEAR PAYMENT PERIOD. IF THE 10-YEAR PAYMENT
PERIOD WOULD END AFTER THE ANNUITY DATE AND YOU CHOOSE AN ANNUITY SETTLEMENT
OPTION OTHER THAN ANY LIFETIME PAYOUT OPTION OR PERIOD CERTAIN OPTION OF AT
LEAST 15 YEARS OR YOU MAKE A FULL WITHDRAWAL, YOU MAY LOSE ALL OR ANY REMAINING
PORTION OF THE INCOME APPRECIATOR BENEFIT. IN SUCH INSTANCES, WE WOULD NOT
REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
IAB OPTION 2 -- INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
Under this option, you elect to receive the Income Appreciator Benefit during
the accumulation phase. When you activate the benefit, a 10-year Income
Appreciator Benefit automatic withdrawal payment program begins. We will pay you
the Income Appreciator Benefit amount in equal installments over a 10 year
payment period. You may combine this Income Appreciator Benefit amount with an
automated withdrawal amount from your contract value, in which case each
combined payment must be at least $100.
The maximum automated withdrawal payment amount that you may receive from
your contract value under this Income Appreciator Benefit program in any
contract year during the 10-year period may not exceed 10% of the contract value
as of the date you activate the Income Appreciator Benefit.
Once we calculate the Income Appreciator Benefit, the amount will not be
affected by changes in contract value due to the investment performance of any
allocation option. Withdrawal charges may apply to automatic withdrawal payment
amounts, but not to amounts attributable to the Income Appreciator Benefit.
After the ten-year payment period has ended, if the remaining contract value
is $2,000 or more, the contract will continue. If the remaining contract value
is less than $2,000 after the end of the 10-year payment period, we will pay you
the remaining contract value and the contract will terminate. If the contract
value falls below the minimum amount required to keep the contract in force due
solely to investment results before the end of the 10-year payment period, we
will continue to pay the Income Appreciator Benefit amount for the remainder of
the 10-year payment period.
DISCONTINUING THE INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT
PROGRAM UNDER IAB OPTION 2
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 and activate IAB Option 3 at any time after payments have begun and
before the last payment is made. We will add the remaining Income Appreciator
Benefit amount to the contract value at the same frequency as your initial
election until the end of the 10-year payment period. We will treat any Income
Appreciator Benefit amount added to the contract value as additional earnings.
Unless you direct us otherwise, we will allocate these additions to the variable
or fixed interest rate options in the same proportions as your most recent
purchase payment allocation percentages.
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 before the last payment is made and elect an annuity or settlement
option. We will add the balance of the Income Appreciator Benefit amount for the
10-year payment period to the contract value in a lump sum before determining
the adjusted contract value. The adjusted contract value may be applied to any
annuity or settlement option that is paid over the lifetime of the annuitant,
joint annuitants, or a period certain of at least 15 years (but not to exceed
life expectancy).
IAB OPTION 3 -- INCOME APPRECIATOR BENEFIT CREDIT TO CONTRACT VALUE
Under this option, you can activate the Income Appreciator Benefit and receive
the benefit as credits to your contract value over a 10-year payment period. We
will allocate these Income Appreciator Benefit credits to the variable
investment options, the fixed interest rate option, or the market value
adjustment option in the same manner as your current allocation, unless you
direct us otherwise. We will waive the $1,000 minimum requirement for the market
value adjustment option. We
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will calculate the Income Appreciator Benefit amount on the date we receive your
written request in good order. Once we have calculated the Income Appreciator
Benefit, the Income Appreciator Benefit credit will not be affected by changes
in contract value due to the investment performance of any allocation option.
Before we add the last Income Appreciator Benefit credit to your contract
value, you may switch to IAB Option 2 and receive the remainder of the Income
Appreciator Benefit as payments to you (instead of credits to the contract
value) under the Income Appreciator Benefit program for the remainder of the
10-year payment period.
You can also request that any remaining payments in the 10-year payment
period be applied to an annuity or settlement option that is paid over the
lifetime of the annuitants, joint annuitants, or a period certain of at least 15
years (but not to exceed life expectancy).
EXCESS WITHDRAWALS
During the 10 year period under IAB options 2 or 3, an "excess withdrawal"
occurs when any amount is withdrawn from your contract value in a contract year
that exceeds the sum of (1) 10% of the contract value as of the date the Income
Appreciator Benefit was activated plus (2) earnings since the Income Appreciator
Benefit was activated that have not been previously withdrawn.
We will deduct the excess withdrawal on a proportional basis from the
remaining Income Appreciator Benefit amount. We will then calculate and apply a
new reduced Income Appreciator Benefit amount.
Withdrawals you make in a contract year that do not exceed the sum of (1) 10%
of the contract value as of the date the Income Appreciator Benefit was
activated plus (2) earnings since the Income Appreciator Benefit was activated
that have not been previously withdrawn do not reduce the remaining Income
Appreciator Benefit amount. Additionally, if the amount withdrawn in any year is
less than the excess withdrawal threshold, the difference between the amount
withdrawn and the threshold can be carried over to subsequent years on a
cumulative basis and withdrawn without causing a reduction to the Income
Appreciator Benefit amount.
EFFECT OF TOTAL WITHDRAWAL ON INCOME APPRECIATOR BENEFIT
We will not make Income Appreciator Benefit payments after the date you make a
total withdrawal of the contract surrender value.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
- - An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
- - The SEC, by order, permits suspension or postponement of payments for the
protection of owners.
We expect to pay the amount of any withdrawal or transfer made from the fixed
interest rate options promptly upon request.
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8:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE CONTRACT?
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The tax considerations associated with the Strategic Partners Annuity One
contract vary depending on whether the contract is (i) owned by an individual
and not associated with a tax-favored retirement plan, or (ii) held under a
tax-favored retirement plan. We discuss the tax considerations for these
categories of contracts below. The discussion is general in nature and describes
only federal income tax law (not state or other tax laws). It is based on
current law and interpretations, which may change. It is not intended as tax
advice. You should consult with a qualified tax advisor for complete information
and advice.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that some
or all of the charges for the optional benefits under the contract such as
Guaranteed Minimum Death Benefit, should be treated for federal income tax
purposes as a partial withdrawal from the contract. If this were the case, the
charge for this benefit could be deemed a withdrawal and treated as taxable to
the extent there are earnings in the contract. Additionally, for owners under
age 59 1/2, the taxable income attributable to the charge for the benefit could
be subject to a tax penalty.
If the IRS determines that the deductions for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned will be treated as a withdrawal. Also, if you elect any
interest payment option that we may offer, that election will be treated, for
tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on the gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of level annuity payments not less
frequently than annually under a lifetime annuity; and
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- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See "Federal Tax Status" in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035 exchanges
of entire contracts, therefore avoiding current taxation of gains in the
contract as well as the 10% tax penalty of pre-age 59 1/2 withdrawals. The IRS
has reserved the right to treat transactions it considers abusive as ineligible
for this favorable partial 1035 exchange treatment. We do not know what
transactions may be considered abusive. For example we do not know how the IRS
may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
All of the death benefit options are subject to income tax to the extent the
distribution exceeds the adjusted basis in the contract and the full value of
the death benefit is included in the owner's estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing an annuity payment option instead of a
lump sum death benefit may defer taxes. Certain minimum distribution
requirements apply upon your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with 3 exemptions unless you
designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY
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TAX FAVORED PLANS section for withholding rules for tax favored plans (for
example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the contract must be an annuity
contract for tax purposes. This means that the assets underlying the annuity
contract must be diversified, according to certain rules. It also means that we,
and not you as the contract owner, must have sufficient control over the
underlying assets to be treated as the owner of the underlying assets for tax
purposes. We believe these rules, which are further discussed in the Statement
of Additional Information, will be met.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if an annuity
payment option is selected by your designated beneficiary and if annuity
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect an annuity payment option based on life expectancy or a
period exceeding five years.
If any portion of the contract is payable to (or for the benefit of) your
surviving spouse, that portion of the contract may be continued with your spouse
as the owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You purchased more than one annuity contract from the same insurer within the
same calendar year (other than contracts held by tax favored plans).
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. This description assumes that you
have satisfied the requirements for eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
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TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement" on page 73 contains
information about eligibility, contribution limits, tax particulars, and other
IRA information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, calculated as of the date that we receive this cancellation
notice, if greater), less any applicable federal and state income tax
withholding.
CONTRIBUTIONS LIMITS/ROLLOVERS. Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA. You must
make a minimum initial payment of $10,000 to purchase a contract. This minimum
is greater than the maximum amount of any annual contribution allowed by law you
may make to an IRA. For 2004 the limit is $3,000; increasing in 2005 to 2007, to
$4,000; and for 2008, $5,000. After 2008 the contribution amount will be indexed
for inflation. The tax law also provides for a catch-up provision for
individuals who are age 50 and above. These taxpayers will be permitted to
contribute an additional $500 in years 2004 to 2005 and an additional $1,000 in
2006 and years thereafter. The "rollover" rules under the Code are fairly
technical; however, an individual (or his or her surviving spouse) may generally
"roll over" certain distributions from tax favored retirement plans (either
directly or within 60 days from the date of these distributions) if he or she
meets the requirements for distribution. Once you buy the contract, you can make
regular IRA contributions under the contract (to the extent permitted by law).
However, if you make such regular IRA contributions, you should note that you
will not be able to treat the contract as a "conduit IRA," which means that you
will not retain possible favorable tax treatment if you subsequently "roll over"
the contract funds originally derived from a qualified retirement plan into
another Section 401(a) plan.
Required Provisions. Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life of
New Jersey;
- - The annual premium you pay cannot be greater than the maximum amount allowed
by law, including catch-up contributions if applicable (which does not
include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April 1st
of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
(described on page 66).
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" (described on page 66);
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution (also generally described on page 66).
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" (generally, held for 5 tax years and payable on
account of death, disability,
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attainment of age 59 1/2, or first time-homebuyer) from Roth IRAs are
excludable from your gross income; and
- - If eligible, you may make contributions to a Roth IRA after attaining age
70 1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may purchase
a contract as a Roth IRA only in connection with a "rollover" or "conversion" of
the proceeds of another traditional IRA, conduit IRA, or Roth IRA. The Code
permits persons who meet certain income limitations (generally, adjusted gross
income under $100,000), and who receive certain qualifying distributions from
such non-Roth IRAs, to directly rollover or make, within 60 days, a "rollover"
of all or any part of the amount of such distribution to a Roth IRA which they
establish. This conversion triggers current taxation (but is not subject to a
10% early distribution penalty). Once the contract has been purchased, regular
Roth IRA contributions will be accepted to the extent permitted by law.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that payments must start
by April 1 of the year after the year you reach age 70 1/2 and must be made for
each year thereafter. The amount of the payment must at least equal the minimum
required under the IRS rules. Several choices are available for calculating the
minimum amount. More information on the mechanics of this calculation is
available on request. Please contact us at a reasonable time before the IRS
deadline so that a timely distribution is made. Please note that there is a 50%
tax penalty on the amount of any minimum distribution not made in a timely
manner.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will send you a check for this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA or Roth IRA before you attain age 59 1/2. There are only limited
exceptions to this tax, and you should consult your tax advisor for further
details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with 3 exemptions;
and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of the
contract.
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Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under "What Are The Expenses Associated With The
Strategic Partners Annuity One Contract" starting on page 55.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" on page 68.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement" on page 73.
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9:
OTHER
INFORMATION
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PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey) is a stock
life insurance company organized in 1982 under the laws of the State of New
Jersey. It is licensed to sell life insurance and annuities in New Jersey and
New York, and accordingly is subject to the laws of each of those states.
Pruco Life of New Jersey is a wholly-owned subsidiary of The Prudential
Insurance Company of America (Prudential), a New Jersey stock life insurance
company doing business since 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (Prudential Financial), a New Jersey
insurance holding company. As Pruco Life of New Jersey's ultimate parent,
Prudential Financial exercises significant influence over the operations and
capital structure of Pruco Life of New Jersey and Prudential. However, neither
Prudential Financial, Prudential, nor any other related company has any legal
responsibility to pay amounts that Pruco Life of New Jersey may owe under the
contract.
Pruco Life of New Jersey publishes annual and quarterly reports that are
filed with the SEC. These reports contain financial information about Pruco Life
of New Jersey that is annually audited by independent accountants. Pruco Life of
New Jersey's annual report for the year ended December 31, 2003, together with
subsequent periodic reports that Pruco Life of New Jersey files with the SEC,
are incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the Pruco Life of New Jersey
annual report that is not ordinarily mailed to contract owners, the more current
reports and any subsequently filed documents at no cost by contacting us at the
address or telephone number listed on the cover. The SEC file number for Pruco
Life of New Jersey is 33-18053. You may read and copy any filings made by Pruco
Life of New Jersey with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, Washington, D.C. 20549-0102. You can obtain information on the operation
of the Public Reference Room by calling (202) 942-8090. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account (separate account), to hold the assets that are
associated with the contracts. The separate account was established under New
Jersey law on May 20, 1996, and is registered with the U.S. Securities and
Exchange Commission under the Investment Company Act of 1940 as a unit
investment trust, which is a type of investment company. The assets of the
separate account are held in the name of Pruco Life of New Jersey and legally
belong to us. These assets are kept separate from all of our other assets and
may not be charged with liabilities arising out of any other business we may
conduct. More detailed information about Pruco Life of New Jersey, including its
audited financial statements, is provided in the SAI.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), 100 Mulberry Street,
Newark, New Jersey 07102-4077, acts as the distributor of the contracts under a
"best efforts" underwriting agreement with Pruco Life of New Jersey under which
PIMS is reimbursed for its costs and expenses. PIMS is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. and is a limited liability corporation
organized under Delaware law in 1996. It is a registered broker-dealer under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc.
Commissions are paid to broker-dealers that are registered under the Exchange
Act and/or entities that are exempt from such registration (firms) according to
one or more schedules. The individual representative will receive a portion of
the compensation, depending on the practice of the firm. Commissions are
generally based on a percentage of purchase payments made, up to a maximum of
7%. Alternative compensation schedules are available that provide a lower
initial
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commission plus ongoing annual compensation based on all or a portion of
contract value. We may also provide compensation for providing ongoing service
to you in relation to the contract. Commissions and other compensation paid in
relation to the contract do not result in any additional charge to you or to the
separate account.
In addition, in an effort to promote the sale of our products, we or PIMS may
enter into compensation arrangements with certain broker-dealer firms or
branches of such firms with respect to certain or all registered representatives
of such firms under which such firms may receive separate compensation or
reimbursement for, among other things, training of sales personnel, marketing or
other services they provide to us or our affiliates. To the extent permitted by
NASD rules and other applicable laws and regulations, PIMS may pay or allow
other promotional incentives or payments in the form of cash or non-cash
compensation. These arrangements may not be offered to all firms, and the terms
of such arrangements may differ between firms. You should note that firms and
individual registered representatives and branch managers within some firms
participating in one of these compensation arrangements might receive greater
compensation for selling the contract than for selling a different annuity that
is not eligible for these compensation arrangements. While compensation is
generally taken into account as an expense in considering the charges applicable
to an annuity product, any such compensation will be paid by us or PIMS, and
will not result in any additional charge to you. Overall compensation paid to
the distributing firm does not exceed, based on actuarial assumptions, 8.5% of
the purchase payments made. Your registered representative can provide you with
more information about the compensation arrangements that apply upon the sale of
the contract.
LITIGATION
We are subject to legal and regulatory actions in the ordinary course of our
business, including class actions. Pending legal and regulatory actions include
proceedings relating to aspects of the businesses and operations that are
specific to Pruco Life of New Jersey and that are typical of the businesses in
which Pruco Life of New Jersey operates. Class action and individual lawsuits
involve a variety of issues and/or allegations, which include sales practices,
underwriting practices, claims payment and procedures, premium charges, policy
servicing and breach of fiduciary duties to customers. We are also subject to
litigation arising out of our general business activities, such as our
investments and third party contracts. In certain of these matters, the
plaintiffs are seeking large and/or indeterminate amounts, including punitive or
exemplary damages.
Pruco Life of New Jersey's litigation is subject to many uncertainties, and
given the complexity and scope, the outcomes cannot be predicted. It is possible
that the results of operations or the cash flow of Pruco Life of New Jersey in a
particular quarterly or annual period could be materially affected by an
ultimate unfavorable resolution of pending litigation and regulatory matters.
Management believes, however, that the ultimate outcome of all pending
litigation and regulatory matters should not have a material adverse effect on
Pruco Life of New Jersey's financial position.
ASSIGNMENT
You can assign the contract at any time during your lifetime. If you do so, we
will reset the death benefit to equal the contract value on the date the
assignment occurs. For details, see "What Is The Death Benefit," on page 49. We
will not be bound by the assignment until we receive written notice. We will not
be liable for any payment or other action we take in accordance with the
contract if that action occurs before we receive notice of the assignment. An
assignment, like any other change in ownership, may trigger a taxable event.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
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FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life of New Jersey,
the co-issuer of the Strategic Partners Plus contract, are included in the
Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- - Company
- - Experts
- - Principal Underwriter
- - Allocation of Initial Purchase Payment
- - Determination of Accumulation Unit Values
- - Federal Tax Status
- - Directors and Officers
- - Financial Statements
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each contract
owner that resides in the household. If you are a member of such a household,
you should be aware that you can revoke your consent to householding at any
time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling 877-778-5008.
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MARKET-VALUE
ADJUSTMENT FORMULA
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MARKET-VALUE ADJUSTMENT FORMULA
The general formula under which Pruco Life of New Jersey calculates the market
value adjustment applicable to a full or partial surrender, annuitization, or
settlement under Strategic Partners Annuity One is set forth below. The market
value adjustment is expressed as a multiplier factor. That is, the Contract
Value after the market value adjustment ("MVA"), but before any withdrawal
charge, is as follows: Contract Value (after MVA) = Contract Value (before MVA)
X (1 + MVA). The MVA itself is calculated as follows:
1 + I
MVA = [(----------------)to the power of (N/12)] -1
1 + J + .0025
The MVA formula with respect to contracts issued in New York is what is depicted
above. The formula uses an interpolated rate "J" as the current credited
interest rate. Specifically, "J" is the interpolated current credited interest
rate offered on new money at the time of withdrawal, annuitization, or
settlement. The interpolated value is calculated using the following formula:
m/365 X (n + 1) year rate + (365 - m)/365 X n year rate,
where "n" equals the number of whole years remaining in the Contract's current
guarantee period, and "m" equals the number of days remaining in year "n" of the
current guarantee period.
MARKET VALUE ADJUSTMENT EXAMPLE
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2000 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2002. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2002 the interest rate declared by Pruco Life of New Jersey for a
guarantee period of 3 years (the number of whole years remaining) is 4%, and
for a guarantee period of 4 years (the number of whole years remaining plus
1) is 5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
The MVA factor calculation would be: [(1.06)/(1.0417 + 0.0025)] to the power
of (38/12) -1 = 0.04902
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X 0.04902 = $545.45
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $545.45 = $11,672.56
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2000 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2002. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2002 the interest rate declared by Pruco Life of New Jersey for a
guarantee period of 3 years
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(the number of whole years remaining) is 7%, and for a guarantee period of 4
years (the number of whole years remaining plus 1) is 8%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
The MVA factor calculation would be: [(1.06)/(1.0717 + 0.0025)] to the power
of (38/12) -1 = -0.04098
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.04098) = -$455.99
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$455.99) = $10,671.12
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IRA DISCLOSURE STATEMENT
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This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your Roth IRA,
or to one you purchase for your spouse. You can obtain more information
regarding your IRA either from your sales representative or from any district
office of the Internal Revenue Service. Those are federal tax law rules; state
tax laws may vary.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a refund (less any applicable federal and state income
tax withholding) within 10 days after it is delivered. The amount of the refund
is dictated by state law. This is a more liberal provision than is required in
connection with IRAs. To exercise this "free-look" provision, return the
contract to the representative who sold it you or to the Prudential Annuity
Service Center at the address shown on the first page of this prospectus.
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally, if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you are not an "active
participant" in an employer maintained qualified retirement plan or you have
"Adjusted Gross Income" (as defined under Federal tax laws) which does not
exceed the "applicable dollar limit." IRA contributions must be made by no later
than the due date for filing your income tax return for that year. For a single
taxpayer, the applicable dollar limitation is $45,000 in 2004, with the amount
of IRA contribution which may be reduced proportionately for Adjusted Gross
Income between $45,000-$55,000. For married couples filing jointly, the
applicable dollar limitation is $65,000, with the amount of IRA contribution
which may be reduced proportionately between $65,000-$75,000. There is no
deduction allowed for IRA contributions when Adjusted Gross Income reaches
$55,000 for individuals and $75,000 for married couples filing jointly. Income
limits are scheduled to increase until 2006 for single taxpayers and 2007 for
married taxpayers.
The maximum tax deductible annual contribution that a divorced spouse with no
other income may make to an IRA is the lesser of (1) the maximum amount allowed
by law, including catch-up contributions if applicable or (2) 100% of taxable
alimony.
If you should contribute more than the maximum contribution amount to your
IRA, the excess amount will be considered an "excess contribution." You are
permitted to withdraw an excess contribution from your IRA before your tax
filing date without adverse tax consequences. If, however, you fail to withdraw
any such excess contribution before your tax filing date, a 6% excise tax will
be imposed on the excess for the tax year of contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See "Premature Distributions" on page 74).
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you may also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and, if your
non-working spouse has compensation, his/her compensation must be less than your
compensation for the year. Contributions of up to the maximum amount allowed by
law, including catch-up contributions if applicable, may be made to your IRA and
the spousal IRA if the combined compensation of you and your spouse is at least
equal to the amount contributed. If requirements for deductibility (including
income levels) are met, you will be able to deduct an
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IRA DISCLOSURE STATEMENT CONTINUED
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-9
amount equal to the least of (i) the amount contributed to the IRAs; (ii) twice
the maximum amount allowed by law, including catch-up contributions if
applicable; or (iii) 100% of your combined gross income.
Contributions in excess of the contribution limits may be subject to penalty.
See "Contributions And Deductions" on page 73. If you contribute more than the
allowable amount, the excess portion will be considered an excess contribution.
The rules for correcting it are the same as discussed above for regular IRAs.
Other than the items mentioned in this section, all of the requirements
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA and reinvest it in another IRA. Withdrawals may also be made from other IRAs
and contributed to this contract. This transfer of funds from one IRA to another
is called a "rollover" IRA. To qualify as a rollover contribution, the entire
portion of the withdrawal must be reinvested in another IRA within 60 days after
the date it is received. You will not be allowed a tax-deduction for the amount
of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. You may later roll over such a
contribution to another qualified retirement plan. (You may roll less than all
of a qualified distribution into an IRA, but any part of it not rolled over will
be currently includable in your income without any capital gains treatment.)
Funds can also be rolled over from an IRA to another IRA or to another qualified
retirement plan or 457 government plan.
DISTRIBUTIONS
(a) PREMATURE DISTRIBUTIONS
At no time can your interest in your IRA be forfeited. To insure that your
contributions will be used for retirement, the federal tax law does not permit
you to use your IRA as security for a loan. Furthermore, as a general rule, you
may not sell or assign your interest in your IRA to anyone. Use of an IRA as
security or assignment of it to another will invalidate the entire annuity. It
then will be includable in your income in the year it is invalidated and will be
subject to a 10% tax penalty if you are not at least age 59 1/2 or totally
disabled. (You may, however, assign your IRA without penalty to your former
spouse in accordance with the terms of a divorce decree.)
You may surrender any portion of the value of your IRA. In the case of a
partial surrender which does not qualify as a rollover, the amount withdrawn
will be includable in your income and subject to the 10% penalty if you are not
at least age 59 1/2 or totally disabled unless you comply with special rules
requiring distributions to be made at least annually over your life expectancy.
The 10% tax penalty does not apply to the withdrawal of an excess
contribution as long as the excess is withdrawn before the due date of your tax
return. Withdrawals of excess contributions after the due date of your tax
return will generally be subject to the 10% penalty unless the excess
contribution results from erroneous information from a plan trustee making an
excess rollover contribution or unless you are over age 59 1/2 or are disabled.
(b) DISTRIBUTION AFTER AGE 59 1/2
Once you have attained age 59 1/2 (or have become totally disabled), you may
elect to receive a distribution of your IRA regardless of when you actually
retire. In addition, you must commence distributions from your IRA by April 1
following the year you attain age 70 1/2. You may elect to receive the
distribution under any one of the periodic payment options available under the
contract. The distributions from your IRA under any one of the periodic payment
options or in one sum will be treated as ordinary income as you receive them to
the degree that you have made deductible contributions. If you have made both
deductible and nondeductible contributions, the portion of the distribution
attributable to the nondeductible contribution will be tax-free.
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(c) INADEQUATE DISTRIBUTIONS--50% TAX
Your IRA is intended to provide retirement benefits over your lifetime. Thus,
federal tax law requires that you either (1) receive a lump-sum distribution of
your IRA by April 1 of the year following the year in which you attain age
70 1/2 or (2) start to receive periodic payments by that date. If you elect to
receive periodic payments, those payments must be sufficient to pay out the
entire value of your IRA during your life expectancy (or over the joint life
expectancies of you and your spouse/beneficiary). The calculation method is
defined under IRS regulations. If the payments are not sufficient to meet these
requirements, an excise tax of 50% will be imposed on the amount of any
underpayment.
(d) DEATH BENEFITS
If you (or your surviving spouse) die before receiving the entire value of your
IRA, the remaining interest must be distributed to your beneficiary (or your
surviving spouse's beneficiary) in one lump-sum by December 31st of the fifth
year after your (or your surviving spouse's) death, or applied to purchase an
immediate annuity for the beneficiary. This annuity must be payable over the
life expectancy of the beneficiary beginning by December 31st of the year
following the year after your or your spouse's death. If your spouse is the
designated beneficiary, he or she is treated as the owner of the IRA. If minimum
required distributions have begun, and no designated beneficiary is identified
by December 31st of the year following the year of death, the entire amount must
be distributed based on the life expectancy of the owner using the owner's age
prior to death. A distribution of the balance of your IRA upon your death will
not be considered a gift for federal tax purposes, but will be included in your
gross estate for purposes of federal estate taxes.
ROTH IRAS
Section 408A of the Code permits eligible individuals to contribute to a type of
IRA known as a "Roth IRA." Contributions may be made to a Roth IRA by taxpayers
with adjusted gross incomes of less than $160,000 for married individuals filing
jointly and less than $110,000 for single individuals. Married individuals
filing separately are not eligible to contribute to a Roth IRA. The maximum
amount of contributions allowable for any taxable year to all IRAs maintained by
an individual is generally the lesser of the maximum amount allowed by law and
100% of compensation for that year (the maximum amount allowed by law is phased
out for incomes between $150,000 and $160,000 for married and between $95,000
and $110,000 for singles). The contribution limit is reduced by the amount of
any contributions made to a traditional IRA. Contributions to a Roth IRA are not
deductible.
For taxpayers with adjusted gross income of $100,000 or less, all or part of
amounts in a traditional IRA may be converted, transferred or rolled over to a
Roth IRA. Some or all of the IRA value will typically be includable in the
taxpayer's gross income. Provided a rollover contribution meets the requirements
of IRAs under Section 408(d)(3) of the Code, a rollover may be made from a Roth
IRA to another Roth IRA.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLL OVER, TRANSFER OR
CONVERT ALL OR PART OF A TRADITIONAL IRA TO A ROTH IRA. PERSONS CONSIDERING A
ROLLOVER, TRANSFER OR CONVERSION SHOULD CONSULT THEIR OWN TAX ADVISOR.
"Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements: (1)
the distribution must be made (a) after the owner of the IRA attains age 59 1/2;
(b) after the owner's death; (c) due to the owner's disability; or (d) for a
qualified first time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that
is at least five tax years after the first year for which a contribution was
made to any Roth IRA established for the owner or five years after a rollover,
transfer, or conversion was made from a traditional IRA to a Roth IRA.
Distributions from a Roth IRA that are not qualified distributions will be
treated as made first from contributions and then from earnings, and taxed
generally in the same manner as distributions from a traditional IRA.
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IRA DISCLOSURE STATEMENT CONTINUED
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-9
Distributions from a Roth IRA need not commence at age 70 1/2. However, if
the owner dies before the entire interest in a Roth IRA is distributed, any
remaining interest in the contract must be distributed under the same rules
applied to traditional IRAs where death occurs before the required beginning
date.
The contract may not be available to Roth IRA's in New York.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions or 50% for underpayments),
you must file Form 5329 with the Internal Revenue Service. The form is to be
attached to your federal income tax return for the tax year in which the penalty
applies. Normal contributions and distributions must be shown on your income tax
return for the year to which they relate. If you were at least 70 1/2 at the end
of the prior year, we will indicate to you and to the IRS, on Form 5498, that
your account is subject to minimum required distributions.
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APPENDIX A
ACCUMULATION UNIT VALUES
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As we have indicated throughout this prospectus, the Strategic Partners Annuity
One Variable Annuity is a contract that allows you to select or decline any of
several features that carries with it a specific asset-based charge. We maintain
a unique unit value corresponding to each combination of such Contract features.
Here we depict the historical unit values corresponding to the contract features
bearing the highest and lowest combinations of asset-based charges during the
period November 10, 2003 to December 31, 2003. Under the version of the
contracts described in this prospectus, the highest combinations of asset-based
charges now amounts to 1.75%, while the lowest combination of asset-based
charges remains at 1.40%.
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ACCUMULATION UNIT VALUES
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* COMMENCEMENT OF BUSINESS
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80
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-9
* COMMENCEMENT OF BUSINESS
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-9
APPENDIX B
HYPOTHETICAL ILLUSTRATIONS
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The illustrations set out in the following tables depict hypothetical values
based on the following salient assumptions:
We assume that (i) the contract was issued to a male who was 60 years old
on the contract date, (ii) he made a single purchase payment of $100,000 on the
contract date, and (iii) he took no withdrawals during the time period
illustrated.
To calculate the contract values illustrated on the following pages, we
start with certain hypothetical rates of return (i.e., gross rates of return
equal to 0% and 10% annually). The hypothetical gross rates of return are first
reduced by the arithmetic average fees of the mutual funds underlying the
variable investment options. To compute the arithmetic average of the fees of
the underlying mutual funds, we added the investment management fees, other
expenses, and any 12b-1 fees of each underlying mutual fund and then divided
that sum by the number of mutual funds within the annuity product. In other
words, we assumed hypothetically that values are allocated equally among the
variable investment options. If you allocated the contract value unequally among
the variable investment options, that would affect the amount of mutual fund
fees that you bear indirectly, and thereby would influence the values under the
annuity contract. Based on the fees of the underlying mutual funds as of
December 31, 2003 (not giving effect to the expense reimbursements or expense
waivers that are described in the prospectus fee table), the arithmetic average
fund fees were equal to % annually. If we did take expense reimbursements and
waivers into account here, that would have lowered the arithmetic average, and
thereby increased the illustrated values. The hypothetical gross rates of return
are next reduced by the insurance and administrative charge associated with the
selected death benefit option. Finally, the contract value is reduced by the
annual charges for the optional benefits that are illustrated as well as by the
contract maintenance charge.
The hypothetical gross rates of return of 0% and 10% annually, when
reduced by the arithmetic average mutual fund fees and the insurance and
administrative charge, correspond to net annual rates of return of ( %) and
( %), respectively. These net rates of return do not reflect the contract
maintenance charge or the charges for optional benefits. If those charges were
reflected in the above-referenced net returns, then the net returns would be
lower.
An 'N/A' in these columns indicates that the benefit cannot be exercised
in that year.
A '0' in these columns indicates that the contract has terminated due to
insufficient account value and, consequently, the guaranteed benefit has no
value.
The values that you actually realize under a contract will be different
from what is depicted here if any of the assumptions we make here differ from
your circumstances. We will provide you with a personalized illustration upon
request.
Please see your prospectus for the meaning of the terms used here and for
a description of how the various illustrated features operate.
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STRATEGIC PARTNERS ANNUITY ONE
$100,000 SINGLE CONTRIBUTION AND NO WITHDRAWALS
MALE, ISSUE AGE 60
BENEFITS:
STEP-UP GUARANTEED MINIMUM DEATH BENEFIT
GUARANTEED MINIMUM INCOME BENEFIT
INCOME APPRECIATOR BENEFIT
10% ASSUMED GROSS RATE OF RETURN
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0% ASSUMED GROSS RATE OF RETURN
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The hypothetical investment results are illustrative only and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown and will depend on a number of
factors, including investment allocations made by the owner. The contract values
and guaranteed benefits for a contract would be different from the ones shown if
the actual gross rate of investment return averaged 0% or 10% over a period of
years, but also fluctuated above or below the average for individual contract
years. We can make no representation that these hypothetical investment results
can be achieved for any one year or continued over any period of time. In fact,
for any given period of time, the investment results could be negative.
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-9
EXPLANATION OF HEADINGS
CONTRACT VALUE -- The projected total value of the annuity at the beginning of
the period indicated, after all fees other than withdrawal charges have been
deducted.
SURRENDER VALUE -- The projected cash value of the annuity after any applicable
fees and withdrawal charges payable on surrender.
DEATH BENEFIT VALUE -- Value of base death benefit or GMDB, as indicated.
IAB VALUE -- Percentage of earnings in the contract upon IAB activation based on
the length of time the contract is in force: 7-9 years, 15%; 10-14 years, 20%;
15+ years, 25%. See prospectus for more complete information.
AMOUNT AVAILABLE TO ANNUITIZE -- The contract value plus the IAB value. See
prospectus for more complete information.
GMIB PROTECTED VALUE -- purchase payments (adjusted for withdrawals) compounded
at 5% annually up to the later of age 80 or 7 years from issue or last reset,
subject to a 200% cap. See prospectus for more complete information.
GMIB GUARANTEED ANNUAL PAYOUT FOR SINGLE LIFE WITH 10-YEAR PERIOD CERTAIN -- The
payout determined by applying the GMIB protected value (and IAB value if IAB is
elected) to the GMIB guaranteed annuity purchase rates contained in the
contract. The payout represents the minimum payout to be received when
annuitizing the contract based on the illustrated assumptions. See the
prospectus for more detail.
PROJECTED CONTRACT ANNUAL ANNUITY PAYOUT FOR SINGLE LIFE ANNUITY WITH 10-YEAR
PERIOD CERTAIN -- The hypothetical annuity payout based on the projected
contract value (and IAB value if IAB is elected) calculated using the minimum
payout rates guaranteed under the contract ("Guaranteed Minimum Payout Rates").
If the GMIB benefit is elected, the greater of the following would be paid at
annuitization:
(1) The GMIB Guaranteed Payout, or
(2) The annuity payout available under the contract that is calculated based
on the actual contract value at annuitization and the better of the
Guaranteed Minimum Annuity Payout Rates or the Current Annuity Payout
Rates in effect at the time of annuitization. To show how the GMIB rider
works relative to the annuity payout available under the contract we
included the Projected Contract Annuity Payout column which shows
hypothetical annuity payouts based on the projected contract values and
the Guaranteed Minimum Payout Rates. We did not illustrate any
hypothetical annuity payouts based on Current Annuity Payout Rates
because these rates are subject to change at any time; however,
historically the annuity payout provided under such Current Annuity
Payout Rates have been significantly higher than the annuity payout that
would be provided under Guaranteed Minimum Annuity Payout Rates.
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ORD01182NY
STRATEGIC PARTNERS(SM)
PLUS 3
VARIABLE ANNUITY
- --------------------------------------------------------------------------------
PROSPECTUS: MAY 1, 2004
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO LIFE OF NEW JERSEY). PRUCO
LIFE OF NEW JERSEY IS AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
THE FUNDS
- ------------------------------------------------------------
Strategic Partners Plus offers a wide variety of investment choices, including
variable investment options that invest in underlying mutual funds managed by
these leading asset managers:
PRUDENTIAL INVESTMENTS LLC
JENNISON ASSOCIATES LLC
A I M CAPITAL MANAGEMENT, INC.
ALLIANCE CAPITAL MANAGEMENT, L.P.
CALAMOS ASSET MANAGEMENT, INC.
DAVIS ADVISORS
DEUTSCHE ASSET MANAGEMENT INVESTMENT SERVICES LIMITED
THE DREYFUS CORPORATION
EVERGREEN INVESTMENT MANAGEMENT COMPANY
GE ASSET MANAGEMENT, INCORPORATED
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
HOTCHKIS AND WILEY CAPITAL MANAGEMENT LLC
INVESCO FUNDS GROUP, INC.
JANUS CAPITAL MANAGEMENT LLC
J.P. MORGAN INVESTMENT MANAGEMENT INC.
MASSACHUSETTS FINANCIAL SERVICES COMPANY (MFS)
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC (PIMCO)
SALOMON BROTHERS ASSET MANAGEMENT INC.
You may choose between two basic versions of Strategic Partners Plus. One
version, the Contract With Credit, provides for a bonus credit that we add to
each purchase payment you make. If you choose this version of Strategic Partners
Plus, some charges and expenses may be higher than if you choose the version
without the credit. Those higher charges could exceed the amount of the credit
under some circumstances, particularly if you withdraw purchase payments within
a few years of making those purchase payments.
PLEASE READ THIS PROSPECTUS
- ------------------------------------------------------------
Please read this prospectus before purchasing a Strategic Partners Plus variable
annuity contract, and keep it for future reference. The current prospectuses for
the underlying mutual funds contain important information about the mutual
funds. When you invest in a variable investment option that is funded by a
mutual fund, you should read the mutual fund prospectus and keep it for future
reference. The Risk Factors section relating to the market value adjustment
option appears on page 13 of this prospectus.
TO LEARN MORE ABOUT STRATEGIC PARTNERS PLUS
- ------------------------------------------------------------
To learn more about the Strategic Partners Plus variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2004. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life of New Jersey also files
other reports with the SEC. All of these filings can be reviewed and copied at
the SEC's offices, and can also be obtained from the SEC's Public Reference
Section, 450 5th Street N.W., Washington, D.C. 20549-0102. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
(202) 942-8090. The SEC maintains a Web site (http://www.sec.gov) that contains
the Strategic Partners Plus SAI, material incorporated by reference, and other
information regarding registrants that file electronically with the SEC. The
Table of Contents of the SAI is on page 72 of this prospectus.
FOR A FREE COPY OF THE SAI CALL US AT:
- ------------------------------------------------------------
- - (888) PRU-2888 or write to us at:
- - Prudential Annuity Service Center
P.O. Box 7960
Philadelphia, PA 19101
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS PLUS IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
STRATEGIC PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA. P2401NY
CONTENTS
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3
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4
PART I SUMMARY
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STRATEGIC PARTNERS PLUS PROSPECTUS
5
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
GLOSSARY
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WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract adjusted
for any market value adjustment minus any charge we impose for premium taxes and
withdrawal charges.
ANNUITANT
The person whose life determines the amount of income payments that we will pay.
If the annuitant dies before the annuity date, the co-annuitant (if any) becomes
the annuitant if the contract's requirements for changing the annuity date are
met. If, upon the death of the annuitant, there is no surviving eligible
co-annuitant, and the owner is not the annuitant, then the owner becomes the
annuitant.
ANNUITY DATE
The date when income payments are scheduled to begin.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirements for
changing the annuity date are met. No co-annuitant may be designated if the
owner is a non-natural person.
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
CONTRACT OWNER, OWNER, OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
CONTRACT WITH CREDIT
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make. This version has higher withdrawal charges and
insurance and administrative costs, and may provide lower interest rates for
fixed rate options than the Contract Without Credit.
CONTRACT WITHOUT CREDIT
A version of the annuity contract that does not provide a credit and has lower
withdrawal charges and insurance and administrative costs than the Contract With
Credit.
CREDIT
If you choose the Contract With Credit, this is the bonus amount that we
allocate to your account each time you make a purchase payment. The amount of
the credit is a percentage of the purchase payment. Bonus credits generally are
not recaptured once the free look period expires. Our reference in the preceding
sentence to "generally are not recaptured" refers to the fact that we have the
contractual right to deduct, from the death benefit we pay, the amount of any
credit corresponding to a purchase payment made within one year of death.
6
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PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive, at a
minimum, the total invested purchase payments, reduced by withdrawals, or a
potentially greater amount related to market appreciation. The Guaranteed
Minimum Death Benefit is available for an additional charge. See "What Is The
Death Benefit?" on page 51.
DOLLAR COST AVERAGING FIXED RATE OPTION (DCA FIXED RATE OPTION)
An investment option that offers a fixed rate of interest for a selected period
during which periodic transfers are automatically made to selected variable
investment options or to the one-year fixed interest rate option.
FIXED INTEREST RATE OPTIONS
Investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic transfers
are made to selected variable investment options or to the one-year fixed rate
option.
GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
GUARANTEE PERIOD
A period of time during which your invested purchase payment in the market value
adjustment option earns interest at the declared rate. We may offer one or more
guarantee periods.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain GMDB
protected value.
GMDB PROTECTED VALUE
The amount guaranteed under the Guaranteed Minimum Death Benefit, which equals
the GMDB step-up value. The GMDB protected value will be subject to certain age
restrictions and time durations, however, it will still increase by subsequent
invested purchase payments and reduce by the effect of withdrawals.
GMDB STEP-UP
We use the GMDB step-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. Generally speaking, the GMDB step-up
establishes a "high water mark" of protected value that we would pay upon death,
even if the contract value has declined. For example, if the GMDB step-up were
set at $100,000 on a contract anniversary, and the contract value subsequently
declined to $80,000 on the date of death, the GMDB step-up value would
nonetheless remain $100,000 (assuming no additional purchase payments or
withdrawals).
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
An optional feature available for an additional charge that guarantees that the
income payments you receive during the income phase will be no less than a
certain GMIB protected value applied to the GMIB guaranteed annuity purchase
rates.
GMIB PROTECTED VALUE
We use the GMIB protected value to calculate annuity payments should you
annuitize under the Guaranteed Minimum Income Benefit.
The value is calculated daily and is equal to the GMIB roll-up, until the
GMIB roll-up either reaches its cap or if we stop applying the annual interest
rate based on the age of the annuitant, number of contract anniversaries or
number of years since last GMIB reset. At such point, the GMIB protected value
will be increased by any subsequent invested purchase payments. Any withdrawals
in subsequent contract years will proportionally reduce the GMIB protected
value. The GMIB protected value is not available as a cash surrender benefit or
a death benefit, nor is it used to calculate the cash surrender value or death
benefit.
GMIB RESET
You may elect to "step-up" or "reset" your GMIB protected value if your contract
value is greater than the current
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GLOSSARY CONTINUED
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GMIB protected value. Upon exercise of the reset provision, your GMIB protected
value will be reset to equal your current contract value.
GMIB ROLL-UP
We will use the GMIB roll-up value to compute the GMIB protected value of the
Guaranteed Minimum Income Benefit. The GMIB roll-up is equal to the invested
purchase payments (after a reset, the contract value at the time of the reset)
compounded daily at an effective annual interest rate starting on the date each
invested purchase payment is made, subject to a cap, and reduced by the effect
of withdrawals.
INCOME APPRECIATOR BENEFIT (IAB)
An optional feature that may be available for an additional charge that may
provide a supplemental income benefit based on earnings under the contract.
IAB AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
A series of payments consisting of a portion of your contract value and Income
Appreciator Benefit paid to you in equal installments over a 10 year period,
which you may choose, if you elect to receive the Income Appreciator Benefit
during the accumulation phase.
IAB CREDIT
An amount we add to your contract value that is credited in equal installments
over a 10 year period, which you may choose, if you elect to receive the Income
Appreciator Benefit during the accumulation phase.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INCOME PHASE
The period during which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract. The joint owner may be the owner's spouse, but need
not be.
MARKET VALUE ADJUSTMENT
An adjustment to your contract value or withdrawal proceeds that is based on the
relationship between interest you are currently earning within the market value
adjustment option and prevailing interest rates. This adjustment may be positive
or negative.
MARKET VALUE ADJUSTMENT OPTION
Under the Contract Without Credit, this investment option may offer various
guarantee periods and pays a fixed rate of interest with respect to each
guarantee period. We impose a market value adjustment on withdrawals or
transfers that you make from this option prior to the end of its guarantee
period.
NET PURCHASE PAYMENTS
Your total purchase payments less any withdrawals you have made.
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19101. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
888-PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life of New Jersey Flexible Premium Variable
Annuity Account. The separate account is set apart from all of the general
assets of Pruco Life of New Jersey.
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STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners Plus variable annuity. We have filed the Statement of Additional
Information with the Securities and Exchange Commission and it is legally a part
of this prospectus. To learn how to obtain a copy of the Statement of Additional
Information, see the front cover of this prospectus.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
"What Are The Tax Considerations Associated With The Strategic Partners Plus
Contract," on page 64.
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life of New Jersey that invests in a particular mutual fund is referred to
in your contract as a subaccount.
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PART I
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SUMMARY FOR SECTIONS 1-9
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FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS PLUS VARIABLE ANNUITY?
The Strategic Partners Plus variable annuity is a contract between you, the
owner, and us, the insurance company, Pruco Life Insurance Company of New Jersey
(Pruco Life of New Jersey, we or us). The contract allows you to invest on a
tax-deferred basis in variable investment options, fixed interest rate options,
and the market value adjustment option. The contract is intended for retirement
savings or other long-term investment purposes and provides for a death benefit.
There are two basic versions of the Strategic Partners Plus variable annuity.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges and insurance and administrative costs than the
Contract Without Credit,
- - may provide lower interest rates for fixed interest rate options than the
Contract Without Credit, and
- - does not offer the market value adjustment option.
Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges and insurance and administrative costs than the
Contract With Credit.
- - may provide higher interest rates for fixed interest rate options than the
Contract With Credit, and
- - offers the market value adjustment option.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value
including an investment in the Prudential Series Fund Money Market Portfolio
variable investment option.
The fixed interest rate options offer a guaranteed interest rate. While your
money is allocated to one of these options, your principal amount will not
decrease and we guarantee that your money will earn at least a minimum interest
rate annually.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed and
the interest amount that your money will earn is guaranteed by us to be at least
3%.
You may make up to 12 free transfers each contract year among the investment
options. Certain restrictions apply to transfers involving the fixed interest
rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
- - During the accumulation phase, any earnings grow on a tax-deferred basis and
are generally only taxed as income when you make a withdrawal.
- - The income phase starts when you begin receiving regular payments from your
contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you will receive during the
income phase. Other factors will affect the amount of your payments, such as
age, gender, and the payout option you select.
The contract offers a choice of income and death benefit options, which may
also be available to you.
We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
If you change your mind about owning Strategic Partners Plus, you may cancel
your contract within 10 days after receiving it (or whatever period is required
by applicable law). This time period is referred to as the "Free Look" period.
Pruco Life of New Jersey offers several different annuities which your
representative may be authorized to offer to you. Each annuity has different
features and
10
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PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
benefits that may be appropriate for you based on your financial situation, your
age and how you intend to use the annuity. The different features and benefits
include variations in death benefit protection and the ability to access your
annuity's contract value. The fees and charges under the annuity contract and
compensation paid to your representative may also be different between each
annuity. If you are purchasing the contract as a replacement for existing
variable annuity or variable life coverage, you should consider, among other
things, any surrender or penalty charges you may incur when replacing your
existing coverage.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in any or all of the following variable investment
options:
The Prudential Series Fund, Inc.
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP Aggressive Growth Asset Allocation Portfolio
SP AIM Aggressive Growth Portfolio
SP AIM Core Equity Portfolio
SP Alliance Large Cap Growth Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Davis Value Portfolio
SP Deutsche International Equity Portfolio
SP Goldman Sachs Small Cap Value Portfolio (formerly SP Small/Mid Cap Value
Portfolio)
SP Growth Asset Allocation Portfolio
SP INVESCO Small Company Growth Portfolio
SP Jennison International Growth Portfolio
SP Large Cap Value Portfolio
SP MFS Capital Opportunities Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Strategic Partners Focused Growth Portfolio
SP Technology Portfolio
(formerly SP Alliance Technology Portfolio)
Evergreen Variable Annuity Trust
- - Evergreen VA Foundation Fund
- - Evergreen VA Fund*
- - Evergreen VA Growth Fund
- - Evergreen VA Growth and Income Fund**
- - Evergreen VA International Equity Fund***
- - Evergreen VA Omega Fund
- - Evergreen VA Small Cap Value Fund
* Effective December 5, 2003, the Evergreen Blue Chip Fund and the Evergreen
VA Masters Fund were each merged into the Evergreen VA Fund.
** Effective December 5, 2003, the Evergreen Capital Growth Fund was merged
into the Evergreen Growth and Income Fund.
*** Effective December 5, 2003, the Evergreen VA Global Leaders Fund was
merged into the Evergreen VA International Equity Fund.
Evergreen Investment Management Company, LLC serves as investment adviser to
the above-listed Evergreen Variable Annuity Trust Funds.
Janus Aspen Series
Growth Portfolio -- Service Shares
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
You may also invest your money in fixed interest rate options or in a market
value adjustment option.
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
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SUMMARY FOR SECTIONS 1-9 CONTINUED
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Generally, once you begin receiving regular payments, you cannot change your
payment plan.
For an additional fee, you may also choose, if it is available under your
contract, the Guaranteed Minimum Income Benefit (GMIB) and the Income
Appreciator Benefit. The Guaranteed Minimum Income Benefit provides that once
the income period begins, your income payments will be no less than a value that
is based on a certain "GMIB protected value " applied to the GMIB guaranteed
annuity purchase rates. The Income Appreciator Benefit may provide an additional
income amount during the accumulation phase or upon annuitization. See "What
Kind Of Payments Will I Receive During The Income Phase" on page 43.
SECTION 4
WHAT IS THE DEATH BENEFIT?
In general, if the sole owner or first to die of the owner or joint owner dies
before the income phase of the contract begins, the person(s) or entity that you
have chosen as your beneficiary will receive, at a minimum, the greater of (i)
the contract value, (ii) either the base death benefit or, for a higher
insurance and administrative cost, a potentially larger Guaranteed Minimum Death
Benefit (GMDB). The base death benefit equals the total invested purchase
payments proportionally reduced by withdrawals. The Guaranteed Minimum Death
Benefit is equal to the "GMDB protected value." On the date we receive proof of
death, in lieu of paying a death benefit, we will allow the surviving spouse to
continue the contract by exercising the Spousal Continuance Benefit, if in
addition to certain other conditions:
(1) there is only one owner of the contract and there is only one beneficiary
who is the owner's spouse; or
(2) there are an owner and joint owner of the contract, and the owner's spouse
is both the joint owner and the beneficiary under the contract.
The benefit is described on page 51.
SECTION 5
HOW CAN I PURCHASE A STRATEGIC PARTNERS PLUS CONTRACT?
You can purchase this contract under most circumstances with a minimum initial
purchase payment of $10,000, but not greater than $1,000,000 absent our prior
approval. Generally, you can make additional purchase payments of $500 ($100 if
made through electronic funds transfer) or more at any time during the
accumulation phase of the contract. Your representative can help you fill out
the proper forms. The Contract With Credit provides for the allocation of a
credit with each purchase payment.
You may purchase this contract only if the oldest of the owner, joint owner
or annuitant are age 85 or younger on the contract date. In addition, certain
age limits apply to certain features and benefits described herein.
SECTION 6
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS CONTRACT?
The contract has insurance features and investment features, both of which have
related costs and charges.
- - Each year (or upon full surrender) we deduct a contract maintenance charge if
your contract value is less than $75,000. This charge is currently equal to
the lesser of $30 or 2% of your contract value. We do not impose the contract
maintenance charge if your contract value is $75,000 or more.
- - For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable investment
options, depending on the death benefit option that you choose. The daily
cost is equivalent to an annual charge, as follows:
-- 1.4% if you choose the base death benefit,
-- 1.65% if you choose the step-up Guaranteed Minimum Death Benefit option.
We impose an additional insurance and administrative charge of 0.10% annually
for the Contract With Credit.
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- - We will deduct an additional charge if you choose the Guaranteed Minimum
Income Benefit. We deduct this annual charge from your contract value on the
contract anniversary and upon certain other events. The charge for this
benefit is equal to 0.50% for contracts sold on or after May 1, 2004 (0.45%
for all other contracts) of the average GMIB protected value.
- - We will deduct an additional charge if you choose the Income Appreciator
Benefit. We deduct this charge from your contract value on the contract
anniversary and upon certain other events. The charge for this benefit is
based on an annual rate of 0.25% of your contract value.
- - There are also expenses associated with the mutual funds. For 2003, the fees
of these funds ranged on an annual basis from % to % of fund assets,
which are reduced by expense reimbursements or waivers to % to %. These
reimbursements or waivers may be terminated at any time.
- - If you withdraw money less than seven contract anniversaries after making a
purchase payment, then you may have to pay a withdrawal charge on all or part
of the withdrawal. This charge ranges from 1-7% for the Contract Without
Credit and 5-8% for the Contract With Credit.
For more information, including details about other possible charges under
the contract, see "Summary of Contract Expenses" on page 15 and "What Are The
Expenses Associated With The Strategic Partners Plus Contract?" on page 57.
SECTION 7
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. For the Contract Without Credit, if
you withdraw money less than seven contract anniversaries after making a
purchase payment, we may impose a withdrawal charge ranging from 1-7%. For the
Contract With Credit, we may impose a withdrawal charge ranging from 5-8%.
Under the market value adjustment option, you will be subject to a market
value adjustment if you make a withdrawal or transfer from the option prior to
the end of a guarantee period.
SECTION 8
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS
CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, the tax laws treat the withdrawal as a withdrawal
of earnings, which are taxed as ordinary income. If you are younger than age
59 1/2 when you take money out, you may be charged a 10% federal tax penalty on
the earnings in addition to ordinary taxation. A portion of the payments you
receive during the income phase is considered a partial return of your original
investment and therefore will not be taxable as income. Generally, all amounts
withdrawn from an Individual Retirement Annuity (IRA) contract (excluding Roth
IRAs) are taxable and subject to the 10% penalty if withdrawn prior to age
59 1/2.
SECTION 9
OTHER INFORMATION
This contract is issued by Pruco Life Insurance Company of New Jersey (Pruco
Life of New Jersey), an indirect subsidiary of The Prudential Insurance Company
of America, and sold by registered representatives of affiliated and
unaffiliated broker/dealers.
RISK FACTORS
There are various risks associated with an investment in the market value
adjustment option that we summarize below.
Issuer Risk. The market value adjustment option, fixed interest rate options,
and the contract's other insurance features are available under a contract
issued by Pruco Life of New Jersey, and thus backed by the financial strength of
that company. If Pruco Life of New Jersey were to experience significant
financial adversity, it is possible that Pruco Life of New Jersey's ability to
pay interest and principal under the market value adjustment option and fixed
interest rate options and to fulfill its insurance guarantees could be impaired.
13
SUMMARY FOR SECTIONS 1-9 CONTINUED
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PART I
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Risks Related to Changing Interest Rates. You do not participate directly in
the investment experience of the bonds and other instruments that Pruco Life of
New Jersey holds to support the market value adjustment option. Nonetheless, the
market value adjustment formula (which is detailed in the appendix to this
prospectus) reflects the effect that prevailing interest rates have on those
bonds and other instruments. If you need to withdraw your money prior to the end
of a guarantee period and during a period in which prevailing interest rates
have risen above their level when you made your purchase, you will experience a
"negative" market value adjustment. When we impose this market value adjustment,
it could result in the loss of both the interest you have earned and a portion
of your purchase payments. Thus, before you commit to a particular guarantee
period, you should consider carefully whether you have the ability to remain
invested throughout the guarantee period. In addition, we cannot, of course,
assure you that the market value adjustment option will perform better than
another investment that you might have made.
Risks Related to the Withdrawal Charge. We may impose withdrawal charges on
amounts withdrawn from the market value adjustment option. If you anticipate
needing to withdraw your money prior to the end of a guarantee period, you
should be prepared to pay the withdrawal charge that we will impose.
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SUMMARY OF CONTRACT EXPENSES
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THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS AND EXPENSES
YOU WILL PAY FOR STRATEGIC PARTNERS PLUS. THE FOLLOWING TABLES DESCRIBE THE
MAXIMUM FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING, AND
SURRENDERING THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT
YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT, SURRENDER THE CONTRACT, OR
TRANSFER CASH VALUE BETWEEN INVESTMENT OPTIONS.
For more detailed information, including additional information about current
and maximum charges, see "What Are The Expenses Associated With The Strategic
Partners Plus Contract?" on page 57. The individual fund prospectuses contain
detailed expense information about the underlying mutual funds.
CONTRACTOWNER TRANSACTION EXPENSES
1: Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We will waive the withdrawal charge
if we pay a death benefit or under certain other circumstances. See "Withdrawal
Charge" on page 58.
2: Currently, we charge $25 for each transfer after the twelfth in a contract
year. As shown in the table, we can raise that charge up to a maximum of $30,
but have no current intention to do so. We will not charge you for transfers
made in connection with Dollar Cost Averaging and Auto-Rebalancing and do not
count them toward the limit of 12 free transfers per year.
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SUMMARY OF CONTRACT EXPENSES CONTINUED
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PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
The next table describes the fees and expenses that you will pay periodically
during the time that you own the contract, not including underlying mutual fund
fees and expenses.
ANNUAL ACCOUNT EXPENSES
3: We currently assess a fee of $30 against contracts valued less than $75,000
(or 2% of contract value, if less).
4: We impose this additional charge of 0.10% annually on the Contract With
Credit, irrespective of which death benefit option you choose.
5: We impose this charge only if you choose the Guaranteed Minimum Income
Benefit. This charge is equal to 0.50% for contracts sold on or after May 1,
2004 (0.45% for all other contracts), of the average GMIB protected value, which
is calculated daily and generally is equal to the GMIB roll-up value. The fee is
withdrawn from each variable investment option in the same proportion as the
contract value allocated to that variable investment option represents to the
total contract value in all variable investment options. Subject to certain age
or duration restrictions, the roll-up value is the total of all invested
purchase payments (after a reset, the contract value at the time of the reset)
compounded daily at an effective annual rate of 5%, subject to a 200% cap of all
invested purchase payments. Withdrawals reduce both the roll-up value and the
200% cap. When the GMIB roll-up is increasing at an effective annual interest
rate of 5%, the reduction is equal to the amount of the withdrawal for the first
5% of the roll-up value, calculated as of the latest contract anniversary (or
contract date). The amount of the withdrawal in excess of 5% of the roll-up
value further reduces the roll-up value and 200% cap proportionally to the
additional reduction in contract value after the first 5% withdrawal occurs. See
"Effect of Withdrawals" on page 44. We assess this fee each contract anniversary
and when you begin the income phase of your contract. We also assess this fee if
you make a full withdrawal, but prorate the fee based on the portion of the
contract year that has elapsed since the full annual fee was most recently
deducted. If you make a partial withdrawal, we will assess the prorated fee if
the remaining contract value after the withdrawal would be less than the amount
of the prorated fee; otherwise we will not assess the fee at that time.
6: We impose this charge only if you choose the Income Appreciator Benefit. The
charge for this benefit is based on an annual rate of 0.25% of your contract
value. The Income Appreciator Benefit charge is calculated: on each contract
anniversary, on the annuity date, upon the death of the sole owner or first to
die of the owner or joint owner prior to the annuity date, upon a full or
partial withdrawal, and upon a subsequent purchase payment. The fee is based on
the contract value at the time of the calculation, and is prorated based on the
portion of the contract year since the date that the charge was last deducted.
Although it may be calculated more often, it is deducted only: on each contract
anniversary, on the annuity date, upon the death of the sole owner or first to
die of the owner or joint owner prior to the annuity date, upon a full
withdrawal, and upon a partial withdrawal if the contract value remaining after
such partial withdrawal is not enough to cover the then-applicable charge. With
respect to full and partial withdrawals, we prorate the fee based on the portion
of the contract year that has elapsed since the full annual fee was most
recently deducted. We reserve the right to calculate and deduct the fee more
frequently than annually, such as quarterly.
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PART I
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TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) charged by the
underlying mutual funds that you may pay periodically during the time that you
own the contract. More detail concerning each underlying mutual fund's fees and
expenses is contained below and in the prospectus for each underlying mutual
fund. The minimum and maximum total operating expenses depicted below are based
on historical fund expenses for the year ended December 31, 2003. Fund expenses
are not fixed or guaranteed by the Strategic Partners Plus contract, and may
vary from year to year.
* Actual expenses for the mutual funds are lower due to certain expense
reimbursements or waivers. Expense reimbursements or waivers are voluntary and
may be terminated at any time. The minimum and maximum expenses, with expense
reimbursements are 0.37% and 1.30%, respectively.
17
SUMMARY OF CONTRACT EXPENSES CONTINUED
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PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
1. Each "SP" Portfolio of The Prudential Series Fund, Inc., has expense
reimbursements in effect. These expense reimbursements are voluntary and may be
terminated at any time. The expenses of each Series Fund Portfolio, including
the effect of any expense reimbursements, are as follows:
[to be added]
2. Each asset allocation portfolio invests in a combination of underlying
portfolios of The Prudential Series Fund, Inc. The Total Expenses for each asset
allocation portfolio are calculated as a blend of the fees of the underlying
portfolios, plus a 0.05% advisory fee payable to the investment adviser,
Prudential Investments LLC.
3.
4.
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PART I
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EXPENSE EXAMPLES
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THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND EXPENSES.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS
INDICATED. THE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH
YEAR AND ASSUME THE MAXIMUM FEES AND EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH
DO NOT REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXAMPLE 1a: Contract With Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Withdraw
All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit,
- - You choose the Step-Up Guaranteed Minimum Death Benefit,
- - You choose the Guaranteed Minimum Income Benefit (for contracts sold on or
after May 1, 2004),
- - You choose the Income Appreciator Benefit,
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses,
- - The investment has a 5% return each year,
- - The mutual fund's total operating expenses remain the same each year, and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 1b: Contract With Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
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EXPENSE EXAMPLES CONTINUED
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EXAMPLE 2a: Contract With Credit: Base Death Benefit, and You Withdraw All Your
Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit,
- - You do not choose a Guaranteed Minimum Death Benefit, Guaranteed Minimum
Income Benefit or Income Appreciator Benefit,
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses,
- - The investment has a 5% return each year,
- - The mutual fund's total operating expenses remain the same each year, and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 2b: Contract With Credit: Base Death Benefit, and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 3a: Contract Without Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Withdraw
All Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 3b: Contract Without Credit: Step-Up Guaranteed Minimum Death Benefit,
Guaranteed Minimum Income Benefit, Income Appreciator Benefit, and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 1b except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 4a: Contract Without Credit: Base Death Benefit; and You Withdraw All
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 4b: Contract Without Credit: Base Death Benefit; and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 2b except that it
assumes that you invest in the Contract Without Credit.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Note that withdrawal charges (which are reflected in Examples 1a, 2a, 3a and 4a)
are assessed in connection with some annuity options, but not others.
The values shown in the 10 year column are the same for Example 1a and 1b, 2a
and 2b, 3a and 3b, and 4a and 4b. This is because if 10 years have elapsed since
your last purchase payment, we would no longer deduct withdrawal charges when
you make a withdrawal.
The examples use an average contract maintenance charge, which we calculated
based on our estimate of the total contract fees we expect to collect in 2004.
Based on these estimates, the contract maintenance charge is included as an
annual charge of 0.035% of contract value.
Your actual fees will vary based on the amount of your contract and your
specific allocation among the investment options.
A table of accumulation unit values appears in the Appendix to this prospectus.
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1:
WHAT IS THE STRATEGIC PARTNERS PLUS
VARIABLE ANNUITY?
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THE STRATEGIC PARTNERS PLUS VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU, THE
OWNER, AND US, PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO LIFE OF NEW
JERSEY, WE OR US).
Under our contract, in exchange for your payment to us, we promise to pay you a
guaranteed income stream that can begin any time on or after the first contract
anniversary. Your annuity is in the accumulation phase until you decide to begin
receiving annuity payments. The date you begin receiving annuity payments is the
annuity date. On the annuity date, your contract switches to the income phase.
This annuity contract benefits from tax deferral. Tax deferral means that you
are not taxed on earnings or appreciation on the assets in your contract until
you withdraw money from your contract. (If you purchase the annuity contract in
a tax-favored plan such as an IRA, that plan generally provides tax deferral
even without investing in an annuity contract. Therefore, before purchasing an
annuity in a tax-favored plan, you should consider whether its features and
benefits beyond tax deferral meet your needs and goals. You may also want to
consider the relative features, benefits and costs of these annuities compared
with any other investment that you may use in connection with your retirement
plan or arrangement.)
There are two basic versions of Strategic Partners Plus variable annuity.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges and insurance and administrative costs than the
Contract Without Credit,
- - may provide a lower interest rate for the fixed interest rate options than
the Contract Without Credit, and
- - does not offer the market value adjustment option.
Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges and insurance and administrative costs than the
Contract With Credit,
- - may provide a higher interest rate for the fixed interest rate options than
the Contract With Credit, and
- - offers the market value adjustment option.
Unless we state otherwise, when we use the word contract, it applies to both
versions.
Because of the higher withdrawal charges, if you choose the Contract With
Credit and you withdraw a purchase payment, depending upon the performance of
the investment options you choose, you may be worse off than if you had chosen
the Contract Without Credit. We do not recommend purchase of either version of
Strategic Partners Plus if you anticipate having to withdraw a significant
amount of your purchase payments within a few years of making those purchase
payments.
Strategic Partners Plus is a variable annuity contract. During the
accumulation phase, you can allocate your assets among the variable investment
options, guaranteed fixed interest rate options and a market value adjustment
option. The market value adjustment option is only available in the Contract
Without Credit. If you select variable investment options, the amount of money
you are able to accumulate in your contract during the accumulation phase
depends upon the investment performance of the underlying mutual fund(s)
associated with that variable investment option.
Because the mutual funds' portfolios fluctuate in value depending upon market
conditions, your contract value can either increase or decrease. This is
important, since the amount of the annuity payments you receive during the
income phase depends upon the value of your contract at the time you begin
receiving payments.
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As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person whose life is used to determine how much and
how long (if applicable) the annuity payments will continue once the annuity
phase begins. On or after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners Plus, you may cancel
your contract within 10 days after receiving it (or whatever period is required
by applicable law). You can request a refund by returning the contract either to
the representative who sold it to you, or to the Prudential Annuity Service
Center at the address shown on the first page of this prospectus. You will
receive:
- - the amount equal to the portion of the purchase payments including any fees
or other charges, allocated to any of the fixed interest rate options, and
- - the sum of (i) the difference between purchase payments received, including
any fees or other charges, and the amounts allocated to the variable
investment options, and (ii) the contract value as of the date the contract
is mailed or delivered to us or to the representative who sold it to you.
This amount will be reduced by any applicable federal and state income tax
withholding and may be more or less than your original payment.
If you have purchased the Contract With Credit, we will deduct any credit we
had added to your contract value.
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2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
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THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY
ONE OR MORE OF THE VARIABLE INVESTMENT OPTIONS, FIXED INTEREST RATE OPTIONS, AND
A MARKET VALUE ADJUSTMENT OPTION.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their shares
to both variable annuity and variable life separate accounts of different
insurance companies, which could create the kinds of risk that are described in
more detail in the current prospectus for the underlying mutual fund. The
current prospectuses for the underlying mutual funds also contain other
important information about the mutual funds. When you invest in a variable
investment option that is funded by a mutual fund, you should read the mutual
fund prospectus and keep it for future reference.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment of
their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective (in italics) and
a short, summary description of their key policies to assist you in determining
which portfolios may be of interest to you. There is no guarantee that any
portfolio will meet its investment objective. The name of the adviser/subadviser
for each portfolio appears next to the description.
All the portfolios on the following chart, except for the Janus Aspen
Series -- Growth Portfolio, and the seven Evergreen Funds, are Prudential Series
Fund portfolios. The Jennison Portfolio, Prudential Equity Portfolio, Prudential
Global Portfolio, Prudential Money Market Portfolio, Prudential Stock Index
Portfolio and Prudential Value Portfolio, and each "SP" Portfolio of the
Prudential Series Fund, are managed by an indirect wholly-owned subsidiary of
Prudential Financial, Inc. called Prudential Investments LLC (PI) under a
"manager-of-managers" approach. The SP Aggressive Growth Asset Allocation
Portfolio, SP Balanced Asset Allocation Portfolio, SP Conservative Asset
Allocation Portfolio, and SP Growth Asset Allocation Portfolio invest in other
Prudential Series Fund Portfolios, and are managed by PI.
Under the manager-of-managers approach, PI has the ability to assign subadvisers
to manage specific portions of a portfolio, and the portion managed by a
subadviser may vary from 0% to 100% of the portfolio's assets. The subadvisers
that manage some or all of a Prudential Series Fund portfolio are listed on the
following chart.
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual fund.
An affiliate of each of the funds may compensate Pruco Life of New Jersey based
upon an annual percentage of the average assets held in the fund by Pruco Life
of New Jersey under the contracts. These percentages may vary by fund and/or
portfolio, and reflect administrative and other services we provide. With regard
to its variable annuity contracts generally, Pruco Life of New Jersey receives
fees that range from 0.05% to 0.40% annually for providing such services.
As detailed in the Prudential Series Fund prospectus, although the Series Fund
Money Market Portfolio is designed to be a stable investment option, it is
possible to lose money in that portfolio. For example, when prevailing
short-term interest rates are very low, the yield on the Money Market Portfolio
may be so low that, when separate account and contract charges are deducted, you
experience a negative return.
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PART II
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FIXED INTEREST RATE OPTIONS
We offer two fixed interest rate options:
- - a one-year fixed interest rate option, and
- - a dollar cost averaging fixed rate option (DCA Fixed Rate Option).
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, they
will not be less than 1.5% for the one-year fixed interest rate option, or 3%
for the dollar cost averaging fixed rate option. We may offer lower interest
rates for Contracts With Credit than for Contracts Without Credit.
Payments allocated to the fixed interest rate options become part of Pruco
Life of New Jersey's general assets.
ONE-YEAR FIXED INTEREST RATE OPTION
We set a one-year base guaranteed annual interest rate for the one-year fixed
interest rate option. Additionally, we may provide a higher interest rate on
each purchase payment allocated to this option for the first year after the
payment. This higher interest rate will not apply to amounts transferred from
other investment options within the contract or amounts remaining in this option
for more than one year.
DOLLAR COST AVERAGING FIXED RATE OPTION
You may allocate all or part of any purchase payment to the DCA Fixed Rate
Option. Under this option, you automatically transfer amounts over a stated
period (currently, six or twelve months) from the DCA Fixed Rate Option to the
variable investment options and/or to the one-year fixed interest rate option,
as you select. We will invest the assets you allocate to the DCA Fixed Rate
Option in our general account until they are transferred. You may not transfer
from other investment options to the DCA Fixed Rate Option.
If you choose to allocate all or part of a purchase payment to the DCA Fixed
Rate Option, the minimum amount of the purchase payment you may allocate is
$2,000. The first periodic transfer will occur on the date you allocate your
purchase payment to the DCA Fixed Rate Option. Subsequent transfers will occur
on the monthly anniversary of the first transfer. Currently, you may choose to
have the purchase payments allocated to the DCA Fixed Rate Option transferred to
the other options in either six or twelve monthly installments, and you may not
change that number of monthly installments after you have chosen the DCA Fixed
Rate Option. You may allocate to both the six-month and twelve-month options.
(In the future, we may make available other numbers of transfers and other
transfer schedules--for example, quarterly as well as monthly.)
If you choose a six-payment transfer schedule, each transfer generally will
equal 1/6th of the amount you allocated to the DCA Fixed Rate Option, and if you
choose a twelve-payment transfer schedule, each transfer generally will equal
1/12th of the amount you allocated to the DCA Fixed Rate Option. In either case,
the final transfer amount generally will also include the credited interest. You
may change at any time the options into which the DCA Fixed Rate Option assets
are transferred. You may make a one time transfer of the remaining value out of
your DCA Fixed Rate Option, if you so choose. Transfers from the DCA Fixed Rate
Option do not count toward the maximum number of free transfers allowed under
the contract.
If you make a withdrawal or have a fee assessed from your contract, and all
or part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we
will recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
By investing amounts on a regular basis instead of investing the total amount
at one time, the DCA Fixed
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Rate Option may decrease the effect of market fluctuation on the investment of
your purchase payment. Of course, dollar cost averaging cannot ensure a profit
or protect against loss in a declining market.
MARKET VALUE ADJUSTMENT OPTION
Under the market value adjustment option, we may offer one or more of several
guarantee periods provided that the interest rate we are able to declare will be
no less than 3% interest annually with respect to any guarantee period. This
option is only available in the Contract Without Credit.
IF AMOUNTS ARE WITHDRAWN FROM A GUARANTEE PERIOD, OTHER THAN DURING THE
30-DAY PERIOD IMMEDIATELY FOLLOWING THE END OF THE GUARANTEE PERIOD, THEY WILL
BE SUBJECT TO A MARKET VALUE ADJUSTMENT EVEN IF THEY ARE NOT SUBJECT TO A
WITHDRAWAL CHARGE.
You will earn interest on your invested purchase payment at the rate that we
have declared for the guarantee period you have chosen. You must invest at least
$1,000 if you choose this option.
We refer to interest rates as annual rates, although we credit interest
within each guarantee period on a daily basis. The daily interest that we credit
is equal to the pro rated portion of the interest that would be earned on an
annual basis. We credit interest from the business day on which your purchase
payment is received in good order at the Prudential Annuity Service Center until
the earliest to occur of any of the following events: (a) full surrender of the
contract, (b) commencement of annuity payments or settlement, (c) end of the
guarantee period, (d) transfer of the value in the guarantee period, (e) payment
of a death benefit, or (f) the date the amount is withdrawn.
During the 30-day period immediately following the end of a guarantee period,
we allow you to do any of the following, without the imposition of the market
value adjustment:
(a) withdraw or transfer the value of the guarantee period,
(b) allocate the value to another available guarantee period or other investment
option (provided that the new guarantee period ends prior to the annuity
date). You will receive the interest rate applicable on the date we receive
your instruction, or
(c) apply the value in the guarantee period to the annuity or settlement option
of your choice.
If we do not receive instructions from you concerning the disposition of the
contract value in your maturing guarantee period, we will reinvest the amount in
the Prudential Series Fund Money Market Portfolio investment option.
During the 30-day period immediately following the end of the guarantee
period, or until you elect to do (a), (b) or (c) listed immediately above, you
will receive the current interest rate applicable to the guarantee period having
the same duration as the guarantee period that just matured, which is offered on
the day immediately following the end of the matured guarantee period. However,
if at that time we do not offer a guarantee period with the same duration as
that which matured, you will then receive the current interest rate applicable
to the shortest guarantee period then offered.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed and
the interest amount that your money will earn is guaranteed by us to be at least
3%.
Payments allocated to the market value adjustment option are held as a
separate pool of assets. Any gains or losses experienced by these assets will
not directly affect the contracts. The strength of our guarantees under these
options is based on the overall financial strength of Pruco Life of New Jersey.
MARKET VALUE ADJUSTMENT
When you allocate a purchase payment or transfer contract value to a guarantee
period, we use that money to buy and sell securities and other instruments to
support our obligation to pay interest. Generally, we buy bonds for this
purpose. The duration of the bonds and other instruments that we buy with
respect to a particular guarantee period is influenced significantly by the
length of the guarantee period. For example, we typically would acquire
longer-duration bonds with respect to the 10 year guarantee period than we do
for the 3 year guarantee period. The value of these bonds is affected
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by changes in interest rates, among other factors. The market value adjustment
that we assess against your contract value if you withdraw or transfer outside
the 30-day period discussed above involves our attributing to you a portion of
our investment experience on these bonds and other instruments.
For example, if you make a full withdrawal when interest rates have risen
since the time of your investment, the bonds and other investments in the
guarantee period likely would have decreased in value, meaning that we would
impose a "negative" market value adjustment on you (i.e., one that results in a
reduction of the withdrawal proceeds that you receive). For a partial
withdrawal, we would deduct a negative market value adjustment from your
remaining contract value. Conversely, if interest rates have decreased, the
market value adjustment would be positive.
Other things you should know about the market value adjustment include the
following:
- - We determine the market value adjustment according to a mathematical formula,
which is set forth at the end of this prospectus under the heading
"Market-Value Adjustment Formula." In that section of the prospectus, we also
provide hypothetical examples of how the formula works.
- - A negative market value adjustment could cause you to lose not only the
interest you have earned but also a portion of your principal.
- - In addition to imposing a market value adjustment on withdrawals, we also
will impose a market value adjustment on the contract value you apply to an
annuity or settlement option, unless you annuitize within the 30-day period
discussed above.
YOU SHOULD REALIZE, HOWEVER, THAT APART FROM THE MARKET VALUE ADJUSTMENT, THE
VALUE OF THE BENEFIT IN YOUR GUARANTEE PERIOD UNDER YOUR CONTRACT DOES NOT
DEPEND ON THE INVESTMENT PERFORMANCE OF THE BONDS AND OTHER INSTRUMENTS THAT WE
HOLD WITH RESPECT TO YOUR GUARANTEE PERIOD. APART FROM THE EFFECT OF ANY MARKET
VALUE ADJUSTMENT, WE DO NOT PASS THROUGH TO YOU THE GAINS OR LOSSES ON THE BONDS
AND OTHER INSTRUMENTS THAT WE HOLD IN CONNECTION WITH A GUARANTEE PERIOD.
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and the one-year fixed interest rate option. In addition, you
can transfer your contract value out of a market value adjustment guarantee
period into another market value adjustment guarantee period, into a variable
investment option, or into a one-year fixed interest rate option, although a
market value adjustment will apply to any transfer you make outside the 30-day
period discussed above. You may transfer contract value into the market value
adjustment option at any time, provided it is at least $1,000.
In general, you may make your transfer request by telephone, electronically,
or otherwise in paper form to the Prudential Annuity Service Center. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following unauthorized
telephone or electronic instructions that we reasonably believed to be genuine.
Your transfer request will take effect at the end of the business day on which
it was received. Our business day generally closes at 4:00 p.m. Eastern time.
Transfer requests received after 4:00 p.m. Eastern time will take effect at the
end of the next business day.
With regard to the market value adjustment option, you can specify the
guarantee period from which you wish to transfer. If you request a transfer from
the market value adjustment option, but you do not specify the guarantee period
from which funds are to be taken, then we will transfer funds from the guarantee
period that has the least time remaining until its maturity date.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST RATE OPTION, OTHER THAN THE
DCA OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE ONE YEAR
INTEREST RATE PERIOD. TRANSFERS FROM THE DCA OPTION ARE MADE ON A PERIODIC BASIS
FOR THE PERIOD THAT YOU SELECT.
During the contract accumulation phase, you can make up to 12 transfers each
contract year, among the investment options, without charge. Currently we charge
$25 for each transfer after the twelfth in a
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contract year, and we have the right to increase this charge up to $30. (Dollar
Cost Averaging and Auto-Rebalancing transfers whether or not part of the DCA
fixed rate option are always free, and do not count toward the 12 free transfers
per year.)
ADDITIONAL TRANSFER RESTRICTIONS
Frequent transfers among investment options in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction costs,
or affect performance. For those reasons, the contract was not designed for
persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in any
contract year for all existing or new contract owners, and to take the other
actions discussed below. We also reserve the right to limit the number of
transfers in any contract year or to refuse any transfer request for an owner or
certain owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on accumulation unit values or the share prices of the
underlying mutual funds; or (b) we are informed by a fund (e.g., by the fund's
portfolio manager) that the purchase or redemption of fund shares must be
restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate amount
of a trade or trades represented a relatively large proportion of the total
assets of a particular underlying mutual fund. In furtherance of our general
authority to restrict transfers as described above, and without limiting other
actions we may take in the future, we have adopted the following specific
restrictions:
- - Once you have made 20 transfers during a contract year, we will accept any
additional transfer request during that year only if the request is submitted
to us in writing with an original signature and otherwise is in good order.
For purposes of this 20 transfer limit, we (i) do not view a facsimile
transmission as a "writing", (ii) will treat multiple transfer requests
submitted on the same business day as a single transfer, and (iii) do not
count transfers that involve one of our systematic programs, such as asset
allocation and automated withdrawals.
- - With respect to each variable investment option (other than the Prudential
Series Fund Money Market Portfolio), we track amounts exceeding a certain
dollar threshold that were transferred into the option. If you transfer such
amount into a particular variable investment option, and within 30 calendar
days thereafter transfer (the "Transfer Out") all or a portion of that amount
into another variable investment option, then upon the Transfer Out, the
former variable investment option becomes restricted (the "Restricted
Option"). Specifically, we will not permit subsequent transfers into the
Restricted Option for 90 calendar days after the Transfer Out if the
Restricted Option invests in a non-international fund, or 180 calendar days
after the Transfer Out if the Restricted Option invests in an international
fund. For purposes of this rule, we do not count transfers made in connection
with one of our systematic programs, such as asset allocation and automated
withdrawals. Even if an amount becomes restricted under the foregoing rules,
you are still free to redeem the amount from your contract at any time.
- - We reserve the right to effect exchanges on a delayed basis for all contracts.
That is, we may price an exchange involving a variable investment option on
the business day subsequent to the business day on which the exchange request
was received. Before implementing such a practice, we would issue a separate
written notice to contract owners that explains the practice in detail.
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- - If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
- - We will not implement these rules in jurisdictions that have not authorized us
to do so, or may implement different rules on certain jurisdictions if
required by such jurisdictions.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option into any other variable
investment option or the one-year fixed interest rate option. You can have these
automatic transfers occur monthly, quarterly, semiannually or annually. By
investing amounts on a regular basis instead of investing the total amount at
one time, dollar cost averaging may decrease the effect of market fluctuation on
the investment of your purchase payment. Of course, dollar cost averaging cannot
ensure a profit or protect against loss in a declining market.
Each dollar cost averaging transfer must be at least $100. Transfers will be
made automatically on the schedule you choose until the entire amount you chose
to have transferred has been transferred or until you tell us to discontinue the
transfers. If the remaining amount to be transferred drops below $100, the
entire remaining balance will be transferred on the next transfer date. You can
allocate subsequent purchase payments to be transferred under this option at any
time.
Your transfers will occur on the last calendar day of each transfer period
you have selected, provided that the New York Stock Exchange is open on that
date. If the New York Stock Exchange is not open on a particular transfer date,
the transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging feature
is available only during the contract accumulation phase.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you a
questionnaire to complete that will help determine a program that is appropriate
for you. Your asset allocation will be prepared based on your answers to the
questionnaire. You will not be charged for this service, and you are not
obligated to participate or to invest according to program recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns over
the long term. However, asset allocation does not guarantee a profit or protect
against a loss. You are not obligated to participate or to invest according to
the program recommendations. We do not intend to provide any personalized
investment advice in connection with these programs and you should not rely on
these programs as providing individualized investment recommendations to you.
The asset allocation programs do not guarantee better investment results. We
reserve the right to terminate or change the asset allocation programs at any
time. You should consult your representative before electing any asset
allocation program.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation percentage or to a subsequent allocation percentage you
select. We will rebalance only the variable investment options that you have
designated. If you also participate in the DCA
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feature, then the variable investment option from which you make the DCA
transfers will not be rebalanced.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually, or annually. The rebalancing will occur on the last calendar day
of the period you have chosen, provided that the New York Stock Exchange is open
on that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of Auto-Rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by the
variable investment options. However, we vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote is
required, we will mail you a proxy which is a form that you need to complete and
return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own in our own right, in the same
proportion as shares for which we receive instructions from contract owners. We
may change the way your voting instructions are calculated if it is required or
permitted by federal or state regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in existing
funds. We would not do this without the approval of the Securities and Exchange
Commission (SEC) and any necessary state insurance departments. You will be
given specific notice in advance of any substitution we intend to make. We may
also stop allowing investments in existing variable investment options and their
underlying mutual funds.
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PAYMENT PROVISIONS
We can begin making annuity payments any time on or after the first contract
anniversary. Annuity payments must begin no later than the later of the contract
anniversary coinciding with or next following the annuitant's 90th birthday or
the tenth contract anniversary.
Upon annuitization, any value in a guarantee period of the market value
adjustment option may be subject to a market value adjustment.
The Strategic Partners Plus variable annuity contract offers an optional
Guaranteed Minimum Income Benefit, which we describe below. Your annuity options
vary depending upon whether you choose this benefit.
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT
We make the income plans described below available at any time before the
annuity date. These plans are called annuity options or settlement options.
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that your participation in the variable
investment options ends on the annuity date. If an annuity option is not
selected by the annuity date, the Life Income Annuity Option (Option 2,
described below) will automatically be selected unless prohibited by applicable
law. GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CANNOT BE
CHANGED AND YOU CANNOT MAKE WITHDRAWALS.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but not to exceed life expectancy). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the annuitant dies during the income phase, payments will continue to
the beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump-sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate will be at least 3% a year.
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
the present value of the remaining annuity payments in one lump sum, unless we
were specifically instructed that the remaining annuity payments continue to be
paid to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate will be at least 3% a year.
If an annuity option is not selected by the annuity date, you will
automatically select this option.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options that are offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, as discussed on page 66, you
should consider the minimum distribution requirements mentioned on page 68 when
selecting your annuity option.
If contracts are held in connection with "qualified" retirement plans (such
as a Section 401(k) plan), please note that if you are married at the time your
payments commence, you may be required by federal law to choose an income option
that provides at least a 50 percent joint and survivor annuity to your spouse,
unless your spouse waives that right. Similarly, if you are married at the time
of your death, federal law may require all or a portion of the death benefit to
be paid to your spouse, even if you designated someone else as your beneficiary.
For more information, consult the terms of your retirement arrangement.
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GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit (GMIB), is an optional feature that
guarantees that once the income period begins, your income payments will be no
less than the GMIB protected value applied to the GMIB guaranteed annuity
purchase rates. If you want the Guaranteed Minimum Income Benefit, you must
elect it when you make your initial purchase payment. Once elected, the
Guaranteed Minimum Income Benefit cannot be revoked.
The GMIB protected value is calculated daily and is equal to the GMIB roll-up
until the GMIB roll-up either reaches its cap or if we stop applying the annual
interest rate based on the age of the annuitant, number of contract
anniversaries, or number of years since the last GMIB reset, as described below.
At this point, the GMIB protected value will be increased by any subsequent
invested purchase payments and reduced proportionally by withdrawals.
The Guaranteed Minimum Income Benefit is subject to certain restrictions
described below.
- - The annuitant must be 75 or younger in order for you to elect the Guaranteed
Minimum Income Benefit.
- - If you choose the Guaranteed Minimum Income Benefit, we will impose an annual
charge equal to 0.50% for contracts sold on or after May 1, 2004 (0.45% for
all other contracts) of the average GMIB protected value described below.
- - Under the contract terms governing the GMIB, we can require GMIB participants
to invest only in designated underlying mutual funds or can require GMIB
participants to invest according to an asset allocation model.
- - TO TAKE ADVANTAGE OF THE GUARANTEED MINIMUM INCOME BENEFIT, YOU MUST WAIT A
CERTAIN AMOUNT OF TIME BEFORE YOU BEGIN THE INCOME PHASE. THE WAITING PERIOD
IS THE PERIOD EXTENDING FROM THE CONTRACT DATE TO THE 7TH CONTRACT
ANNIVERSARY BUT, IF THE GUARANTEED MINIMUM INCOME BENEFIT HAS BEEN RESET (AS
DESCRIBED BELOW), THE WAITING PERIOD IS THE 7 YEAR PERIOD BEGINNING WITH THE
DATE OF THE MOST RECENT RESET.
Once the waiting period has elapsed, you will have a 30-day period each year,
beginning on the contract anniversary (or in the case of a reset, the
anniversary of the most recent reset), during which you may begin the income
phase with the Guaranteed Minimum Income Benefit by submitting the necessary
forms in good order to the Prudential Annuity Service Center.
GMIB ROLL-UP
The GMIB roll-up is equal to the invested purchase payments (after a reset, the
contract value at the time of the reset), increased daily at an effective annual
interest rate of 5% starting on the date each invested purchase payment is made,
until the cap is reached (GMIB roll-up cap). We will reduce this amount by the
effect of withdrawals. The GMIB roll-up cap is equal to two times each invested
purchase payment (for a reset, two times the sum of (1) the contract value at
the time of the reset, and (2) any invested purchase payments made subsequent to
the reset).
Even if the GMIB roll-up cap has not been reached, we will nevertheless stop
increasing the GMIB roll-up value by the effective annual interest rate on the
latest of:
- - the contract anniversary coinciding with or next following the annuitant's
80th birthday,
- - the 7th contract anniversary, or
- - 7 years from the most recent GMIB reset (as described below).
However, even if we stop increasing the GMIB roll-up value by the effective
annual interest rate, we will still increase the GMIB protected value by
subsequent invested purchase payments, reduced proportionally by withdrawals.
EFFECT OF WITHDRAWALS.
In any contract year when the GMIB protected value is increasing at the rate of
5%, withdrawals will first reduce the GMIB protected value on a
dollar-for-dollar basis, by the same dollar amount of the withdrawal up to the
first 5% of GMIB protected value calculated on the contract anniversary (or,
during the first contract year, on the contract date). The GMIB roll-up cap is
also reduced by withdrawals in the same manner. Any withdrawals made after the
dollar-for-dollar limit has been reached will
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proportionally reduce the GMIB protected value. We calculate the proportional
reduction (after any dollar-for-dollar withdrawal) by dividing the contract
value after the withdrawal by the contract value immediately following the
withdrawal of any available dollar-for-dollar amount. The resulting percentage
is multiplied by both the GMIB protected value and GMIB roll-up cap after
subtracting from each the amount of the withdrawal that does not exceed 5%. In
each contract year during which the GMIB protected value has stopped increasing
at the 5% rate, withdrawals will reduce the GMIB protected value proportionally.
The following examples of dollar-for-dollar and proportional reductions
assume: 1.) the contract date and the effective date of the GMIB are May 1,
2004; 2.) an initial purchase payment of $250,000; 3.) an initial GMIB protected
value of $250,000; 4.) an initial 200% cap of $500,000; and 5.) an initial
dollar-for-dollar limit of $12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on June 1, 2004 (in the first contract year). No
prior withdrawals have been taken. Immediately prior to the withdrawal, the GMIB
protected value is $251,038.10 (the initial value accumulated for 31 days at an
annual effective rate of 5%). As the amount withdrawn is less than the dollar-
for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., by $10,000,
from $251,038.10 to $241,038.10).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$500,000 to $490,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of
the first contract year is also reduced by the amount withdrawn (from $12,500
to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on July 1, 2004 (still within the first
contract year). Immediately before the withdrawal, the contract value is
$220,000 and the GMIB protected value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - The GMIB protected value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64).
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or
$7,500).
- B is the contract value less the Remaining Limit ($220,000 - $2,500, or
$217,500). The resulting GMIB protected value is: $239,506.64 X (1 -
($7,500/$217,500)), or $231,247.79.
- The GMIB 200% cap is first reduced by the Remaining Limit, (from $490,000 to
$487,500).
- The GMIB 200% cap is then further reduced by the ratio of A to B above
($487,500 x (1-($7,500/$217,500)), or $470,689.66.
- - The Remaining Limit is set to zero (0) for the balance of the first contract
year.
EXAMPLE 3. DOLLAR-FOR-DOLLAR LIMIT IN SECOND CONTRACT YEAR
A $10,000 withdrawal is made on the first anniversary of the contract date, May
1, 2005 (second contract year). Prior to the withdrawal, the GMIB protected
value is $240,838.37. The dollar-for-dollar limit is equal to 5% of this amount,
or $12,041.92. As the amount withdrawn is less than the dollar-for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $240,838.37 to $230,838.37).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$470,689.66 to $460,689.66).
- - The Remaining Limit for the balance of the second contract year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
GMIB RESET FEATURE
You may elect to "reset" your GMIB protected value to equal your current
contract value twice over the life of
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the contract. You may only exercise this reset option if the annuitant has not
yet reached his or her 76th birthday. If you reset, you must wait a new 7-year
period from the most recent reset to exercise the Guaranteed Minimum Income
Benefit. Further, we will reset the GMIB roll-up cap to equal two times the GMIB
protected value as of such date. Additionally, if you reset, we will determine
the GMIB payout amount by using the GMIB guaranteed annuity purchase rates
(specified in your contract) based on the number of years since the most recent
reset. These purchase rates may be less advantageous than the rates that would
have applied absent a reset.
PAYOUT AMOUNT
The Guaranteed Minimum Income Benefit payout amount is based on the age and sex
of the annuitant (and, if there is one, the co-annuitant). After we first deduct
a charge for any applicable premium taxes that we are required to pay, the
payout amount will equal the greater of:
1) the GMIB protected value as of the date you exercise the GMIB payout option,
applied to the GMIB guaranteed annuity purchase rates (which are generally
less favorable than the annuity purchase rates for annuity payments not
involving GMIB) and based on the annuity payout option as described below, or
2) the adjusted contract value--that is, the value of the contract adjusted for
any market value adjustment minus any charge we impose for premium taxes and
withdrawal charges--as of the date you exercise the GMIB payout option
applied to the current annuity purchase rates then in use.
GMIB ANNUITY PAYOUT OPTIONS
We currently offer two Guaranteed Minimum Income Benefit annuity payout options.
Each option involves payment for at least a period certain of ten years. In
calculating the amount of the payments under the original version of GMIB we
apply certain assumed interest rates, equal to 2% annually for a waiting period
of 7-9 years, and 2.5% annually for waiting periods of 10 years or longer for
contracts sold on or after May 1, 2004 (and 2.5% annually for a waiting period
of 7-9 years, 3% annually for a waiting period of 10-14 years, and 3.5% annually
for waiting periods of 15 years or longer for all other contracts).
GMIB OPTION 1
SINGLE LIFE PAYOUT OPTION
We will make monthly payments for as long as the annuitant lives, with payments
for a period certain. We will stop making payments after the later of the death
of the annuitant or the end of the period certain.
GMIB OPTION 2
JOINT LIFE PAYOUT OPTION
In the case of an annuitant and co-annuitant, we will make monthly payments for
the joint lifetime of the annuitant and co-annuitant, with payments for a period
certain. If the co-annuitant dies first, we will continue to make payments until
the later of the death of the annuitant and the end of the period certain. If
the annuitant dies first, we will continue to make payments until the later of
the death of the co-annuitant and the end of the period certain, but if the
period certain ends first, we will reduce the amount of each payment to 50% of
the original amount.
You have no right to withdraw amounts early under either GMIB payout option.
We may make other payout frequencies available, such as quarterly, semi-annually
or annually.
Because we do not impose a new waiting period for each subsequent purchase
payment, if you choose the Guaranteed Minimum Income Benefit, we reserve the
right to limit subsequent purchase payments if we discover that by the timing of
your purchase payments, your GMIB protected value is increasing in ways we did
not intend. In determining whether to limit purchase payments, we will look at
purchase payments which are disproportionately larger than your initial purchase
payment and other actions that may artificially increase the GMIB protected
value. Certain state laws may prevent us from limiting your subsequent purchase
payments. You must exercise one of the GMIB payout options described above no
later than 30 days after the later of the contract anniversary coinciding with
or next
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following the annuitant's attainment of age 90 or the 10th contract anniversary.
You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event that your contract value declines
significantly due to negative investment performance. If your contract value is
not significantly affected by negative investment performance, it is unlikely
that the purchase of GMIB will result in your receiving larger annuity payments
than if you had not purchased GMIB. This is because the assumptions that we use
in computing the GMIB benefit, such as the annuity purchase rates, (which
include assumptions as to age-setbacks and assumed interest rates), are more
conservative than the assumptions that we use in computing annuity payout
options outside of GMIB. For example, assuming that a life income annuity option
were elected, if your adjusted contract value equaled the GMIB protected value,
the amount of each annuity payment that you would receive under the GMIB would
be less than the amount of each annuity payment that you would receive under our
standard annuity payout option. Therefore, in those situations where the GMIB's
insurance is not needed, because the annuity payments outside of the GMIB would
be greater than those offered under the GMIB, you would have paid a fee for the
GMIB without ever taking advantage of the benefit that it is designed to
provide. The GMIB, however, is an effective means of ensuring a minimum annuity
payout, regardless of the investment performance of the variable investment
options.
TERMINATING THE GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit cannot be terminated by the owner once
elected. The GMIB automatically terminates as of the date the contract is fully
surrendered, on the date the death benefit is payable to your beneficiary
(unless your surviving spouse elects to continue the contract), or on the date
that your contract value is transferred to begin making annuity payments. The
GMIB may also be terminated if you designate a new annuitant who would not be
eligible to elect the GMIB based on his or her age at the time of the change.
Upon termination of the GMIB, we will deduct the charge from your contract
value for the portion of the contract year since the prior contract anniversary
(or the contract date if in the first contract year).
INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit (IAB) is an optional, supplemental income benefit
that provides an additional income amount during the accumulation period or upon
annuitization. The Income Appreciator Benefit is designed to provide you with
additional funds in order to defray the impact taxes may have on distributions
from your contract. Because individual circumstances vary, you should consult
with a qualified tax advisor to determine whether it would be appropriate for
you to elect the Income Appreciator Benefit.
If you want the Income Appreciator Benefit, you generally must elect it when
you make your initial purchase payment. Once you elect the Income Appreciator
Benefit, you may not later revoke it.
- - The annuitant must be 75 or younger in order for you to elect the Income
Appreciator Benefit.
- - If you choose the Income Appreciator Benefit, we will impose an annual charge
equal to 0.25% of your contract value. See "What Are The Expenses Associated
With The Strategic Partners Plus Contract?" on page 57.
ACTIVATION OF THE INCOME APPRECIATOR BENEFIT
YOU CAN ACTIVATE THE INCOME APPRECIATOR BENEFIT AT ANY TIME AFTER IT HAS BEEN IN
FORCE FOR SEVEN YEARS. To activate the Income Appreciator Benefit, you must send
us a written request in good order.
Once activated, you can receive the Income Appreciator Benefit:
- - (IAB OPTION 1) at annuitization when determining an annuity payment;
- - (IAB OPTION 2) during the accumulation phase through the IAB automatic
withdrawal payment program; or
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- - (IAB OPTION 3) during the accumulation phase as an Income Appreciator Benefit
credit to your contract over a 10-year period.
More information about IAB Option 1 appears below. For information about IAB
Options 2 and 3, See "How Can I Access My Money?" on page .
Income Appreciator Benefit payments are treated as earnings and may be
subject to tax upon withdrawal. See "What Are The Tax Considerations Associated
With The Strategic Partners Plus Contract?" on page .
IF YOU DO NOT ACTIVATE THE BENEFIT PRIOR TO THE MAXIMUM ANNUITIZATION AGE YOU
MAY LOSE ALL OR PART OF THE IAB.
CALCULATION OF INCOME APPRECIATOR BENEFIT AMOUNT
We will calculate the Income Appreciator Benefit amount as of the date we
receive your written request in good order (or, for IAB Option 1, on the annuity
date). We do this by multiplying the current earnings in the contract by the
applicable Income Appreciator Benefit percentage based on the number of years
the Income Appreciator Benefit has been in force. For purposes of calculating
the Income Appreciator Benefit:
- - earnings are calculated as the difference between the contract value and the
sum of all purchase payments;
- - earnings do not include (1) any amount added to the contract value as a
result of the Spousal Continuance Benefit (explained on page 53), or (2) if
we were to permit you to elect the Income Appreciator Benefit after the
contract date, any earnings accrued under the contract prior to that
election;
- - withdrawals reduce earnings first, then purchase payments, on a
dollar-for-dollar basis;
- - the table below shows the Income Appreciator Benefit percentages
corresponding to the number of years the Income Appreciator Benefit has been
in force.
IAB OPTION 1 -- INCOME APPRECIATOR BENEFIT AT ANNUITIZATION
Under this option, if you choose to activate the Income Appreciator Benefit at
annuitization, we will calculate the Income Appreciator Benefit amount on the
annuity date and add it to the adjusted contract value for purposes of
determining the amount available for annuitization. You may apply this amount to
any annuity or settlement option over the lifetime of the annuitant, joint
annuitants, or a period certain of at least 15 years (but not to exceed life
expectancy).
UPON ANNUITIZATION, YOU MAY LOSE ALL OR A PORTION OF THE INCOME APPRECIATOR
BENEFIT IF YOU CHOOSE AN ANNUITY SETTLEMENT OPTION OTHER THAN ANY LIFETIME
PAYOUT OPTION OR PERIOD CERTAIN OPTION FOR AT LEAST 15 YEARS. IN SUCH INSTANCES,
WE WOULD NOT REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
EFFECT OF INCOME APPRECIATOR BENEFIT ON GUARANTEED MINIMUM INCOME BENEFIT
If you exercise the Guaranteed Minimum Income Benefit feature and an Income
Appreciator Benefit amount remains payable under your contract, the value we use
to calculate the annuity payout amount will be the greater of:
1. the adjusted contract value plus the remaining Income Appreciator Benefit
amount, calculated at current IAB annuitization rates; or
2. the GMIB protected value plus the remaining Income Appreciator Benefit
amount, calculated using the GMIB guaranteed annuity purchase rates shown in
the contract.
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If you exercise the Guaranteed Minimum Income Benefit feature and activate
the Income Appreciator Benefit at the same time, you must choose among the
Guaranteed Minimum Income Benefit annuity payout options available at the time.
TERMINATING THE INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit will terminate on the earliest of:
- - the date you make a total withdrawal from the contract;
- - the date a death benefit is payable if the contract is not continued by the
surviving spouse under the Spousal Continuance Benefit;
- - the date the Income Appreciator Benefit amount is reduced to zero (generally
ten years after activation) under IAB Options 2 and 3;
- - the date of annuitization; or
- - the date the contract terminates.
HOW WE DETERMINE ANNUITY PAYMENTS
Generally speaking, the annuity phase of the contract involves our distributing
to you in increments the value that you have accumulated. We make these
incremental payments either over a specified time period (e.g., 15 years)
("fixed period annuities") or for the duration of the life of the annuitant (and
possibly co-annuitant) ("life annuities"). There are certain assumptions that
are common to both fixed period annuities and life annuities. In each type of
annuity, we assume that the value you apply at the outset toward your annuity
payments earns interest throughout the payout period. For annuity options within
the GMIB, this interest rate ranges from 2% to 2.5% for contracts sold on or
after May 1, 2004 (and 2.5% to 3.5% for all other contracts). For non-GMIB
annuity options, the guaranteed minimum rate is 1.5% annually for contracts sold
on or after May 1, 2004 (and 3% for all other contracts). The GMIB guaranteed
annuity purchase rates in your contract depict the minimum amounts we will pay
(per $1000 of adjusted contract value). If our current annuity purchase rates on
the annuity date are more favorable to you than the guaranteed rates, we will
make payments based on those more favorable rates.
Other assumptions that we use for life annuities and fixed period annuities
differ, as detailed in the following overview:
FIXED PERIOD ANNUITIES
Currently, we offer fixed period annuities only under the Income Appreciator
Benefit and non-GMIB annuity options. Generally speaking, in determining the
amount of each annuity payment under a fixed period annuity, we start with the
adjusted contract value, add interest assumed to be earned over the fixed
period, and divide the sum by the number of payments you have requested. The
life expectancy of the annuitant and co-annuitant are relevant to this
calculation only in that we will not allow you to select a fixed period that
exceeds life expectancy.
LIFE ANNUITIES
There are more variables that affect our calculation of life annuity payments.
Most importantly, we make several assumptions about the annuitant's or co-
annuitant's life expectancy, including the following:
- - The Annuity 2000 Mortality Table is the starting point for our life expectancy
assumptions. This table anticipates longevity of an insured population based
on historical experience and reflecting anticipated experience for the year
2000.
GUARANTEED AND GMIB ANNUITY PAYMENTS
- - Because life expectancy has lengthened over the past few decades, and likely
will increase in the future, our life annuity calculations anticipate these
future improvements. We do this largely by making a hypothetical reduction in
the age of the annuitant (or co-annuitant), in lieu of using the annuitant's
(or co-annuitant's) actual age, in calculating the payment amounts. By using
such a reduced age, we base our calculations on a younger person, who
generally would live longer and therefore draw life annuity payments over a
longer time period. Given the longer pay-out period, the payments made to the
younger person would be less than those made to an older person. We make two
such age adjustments:
1) First, for all life annuities, we start with the age of the annuitant (or
co-annuitant) on his/her most
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recent birthday and reduce that age by either (a) two years, with respect to
guaranteed payments under life annuities not involving GMIB, as well as GMIB,
payments for contracts not described in (b) below, or (b) four years, for
life annuities under the GMIB sold in contracts on or after May 1, 2004 (the
age reduction reduces annuity payments correspondingly. The four-year age
reduction mentioned here causes a greater reduction in annuity payments than
the two-year age reduction mentioned immediately above).
2) Second, for life annuities under both versions of GMIB as well as guaranteed
payments under life annuities not involving GMIB, we make a further age
reduction according to the table in your contract entitled "Translation of
Adjusted Age." As indicated in the table, the further into the future the
first annuity payment is, the longer we expect the person receiving those
payments to live, and the more we reduce the annuitant's (or co-annuitant's)
age.
CURRENT ANNUITY PAYMENTS
When calculating current annuity purchase rates (i.e., non-guaranteed rates), we
use the actual age of the annuitant (or co-annuitant).
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4:
WHAT IS THE
DEATH BENEFIT?
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THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. A change of beneficiary will take effect on the date
you sign the change request form, provided we receive the form in good order.
Unless you name an irrevocable beneficiary, during the accumulation period, you
can change the beneficiary at any time before the owner dies. However, if
jointly owned, the owner must name the joint owner and the joint owner must name
the owner as the beneficiary.
CALCULATION OF THE DEATH BENEFIT
If the owner or joint owner dies during the accumulation phase, we will, upon
receiving the appropriate proof of death and any other needed documentation in
good order (proof of death), pay a death benefit to the beneficiary designated
by the deceased owner or joint owner. If there is a sole owner and there is only
one beneficiary who is the owner's spouse on the date of death, then the
surviving spouse may continue the contract under the Spousal Continuance
Benefit. If there are an owner and joint owner of the contract, and the owner's
spouse is both the joint owner and the beneficiary on the date of death, then at
the death of the first to die, the death benefit will be paid to the surviving
owner or the surviving owner may continue the contract under the Spousal
Continuance Benefit. See "Spousal Continuance Benefit" on page .
Upon death, the beneficiary will receive the greater of the following:
1) The current contract value (as of the time we receive proof of death). If you
have purchased the Contract With Credit, we will first deduct any credit
corresponding to a purchase payment made within one year of death. We impose
no market value adjustment on contract value held within the market value
adjustment option when a death benefit is paid.
2) Either the base death benefit, which equals the total invested purchase
payments you have made proportionally reduced by any withdrawals, or, if you
have chosen the Guaranteed Minimum Death Benefit, the GMDB protected value.
GUARANTEED MINIMUM DEATH BENEFIT
The Guaranteed Minimum Death Benefit (GMDB) provides for the option to receive
an enhanced death benefit upon the death of the sole owner or the first to die
of the owner or joint owner during the accumulation phase. If you elect the GMDB
feature, you must elect a GMDB protected value option.
The GMDB protected value option can be equal to the GMDB step-up. The GMDB
protected value is calculated daily.
GMDB STEP-UP
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS LESS THAN AGE 80
ON THE CONTRACT DATE, the GMDB step-up before the first contract anniversary is
the initial invested purchase payment increased by subsequent invested purchase
payments, and proportionally reduced by the effect of withdrawals. The GMDB
step-up on each contract anniversary will be the greater of the previous GMDB
step-up and the contract value as of such contract anniversary. Between contract
anniversaries, the GMDB step-up will increase by invested purchase payments and
reduce proportionally by withdrawals.
We stop increasing the GMDB step-up by any appreciation in the contract value
on the later of:
- - the contract anniversary coinciding with or next following the sole or older
owner's 80th birthday, or
- - the 5th contract anniversary.
However, we still increase the GMDB protected value by subsequent invested
purchase payments and proportionally reduce it by withdrawals.
Here is an example of a proportional reduction:
The current contract value is $100,000 and the protected value is $80,000.
The owner makes a withdrawal that reduces the contract value by 25% (including
the effect of any withdrawal charges). The
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PART II
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new protected value is $60,000, or 75% of what it was before the withdrawal.
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS BETWEEN AGE 80
AND 85 ON THE CONTRACT DATE, the GMDB step-up before the third contract
anniversary is the sum of invested purchase payments, reduced by the effect of
withdrawals. On the third contract anniversary, we will adjust the GMDB step-up
to the greater of the then current GMDB step-up or the contract value as of that
contract anniversary. Thereafter, we will only increase the GMDB protected value
by subsequent invested purchase payments and proportionally reduce it by
withdrawals.
Special rules apply if the beneficiary is the spouse of the owner and the
contract does not have a joint owner. In that case, upon the death of the owner,
the spouse will have the choice of the following:
- - If the sole beneficiary under the contract is the owner's spouse, and the
other requirements of the Spousal Continuance Benefit are met (see page ),
then the contract can continue, and the spouse will become the new owner of
the contract; or
- - The spouse can receive the death benefit. A surviving spouse who is eligible
for the Spousal Continuance Benefit must choose between that benefit and
receiving the death benefit during the first 60 days following our receipt of
proof of death.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the contract
value on the date the change of ownership occurs, and for purposes of computing
the future death benefit, we will treat that contract value as a purchase
payment occurring on that date.
SPECIAL RULES IF JOINT OWNERS
If the contract has an owner and a joint owner and they are spouses at the time
that one dies the Spousal Continuance Benefit may apply. See "Spousal
Continuance Benefit" page 53. If the contract has an owner and a joint owner and
they are not spouses at the time one dies, we will pay the death benefit and the
contract will end.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
CHOICE 1. Lump sum payment of the death benefit. If the beneficiary does not
choose a payout option within sixty days, the beneficiary will receive this
payout option.
CHOICE 2. The payment of the entire death benefit within a period of 5 years
from the date of death of the first to die of the owner or joint owner.
The entire death benefit will include any increases or losses resulting
from the performance of the variable or fixed interest rate options during
this period. During this period the beneficiary may: reallocate the contract
value among the variable or fixed interest rate options; name a beneficiary
to receive any remaining death benefit in the event of the beneficiary's
death; and make withdrawals from the contract value, in which case, any such
withdrawals will not be subject to any withdrawal charges. However, the
beneficiary may not make any purchase payments to the contract.
During this 5 year period, we will continue to deduct from the death
benefit proceeds the charges and costs that were associated with the features
and benefits of the contract. Some of these features and benefits may not be
available to the beneficiary, such as the Guaranteed Minimum Income Benefit,
Income Appreciator Benefit and Spousal Continuance Benefit.
CHOICE 3. Payment of the death benefit under an annuity or annuity settlement
option over the lifetime of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary with distribution beginning
within one year of the date of death of the owner.
If the contract has an owner and a joint owner:
- If the owner and joint owner are spouses at the death of the first to die
of the two, any portion of the death benefit not applied under Choice 3
within one year of the survivor's date of death
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PART II
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must be distributed within five years of the survivor's date of death.
- If the owner and joint owner are not spouses, any portion of the death
benefit not applied under Choice 3 within one year of the date of death of
the first to die must be distributed within five years of that date of
death.
The tax consequences to the beneficiary vary among the three death benefit
payout options. See "What Are The Tax Considerations Associated With The
Strategic Partners Plus Contract?" on page 64.
SPOUSAL CONTINUANCE BENEFIT
This benefit is available if, on the date we receive proof of the owner's death,
(1) there is only one owner of the contract and there is only one beneficiary
who is the owner's spouse; or (2) there are an owner and joint owner of the
contract, and the joint owner is the owner's spouse and the owner's beneficiary
under the contract. In no event, however, can the annuitant be older than the
maximum age for annuitization on the date of the owner's death, nor can the
surviving spouse be older than 95 on the date of the owner's death. Assuming the
above conditions are present, the surviving spouse can elect the Spousal
Continuance Benefit, but must do so no later than 60 days after furnishing proof
of the owner's death in good order.
Upon activation of the Spousal Continuance Benefit, the contract value is
adjusted to equal the amount of the death benefit to which the surviving spouse
would have been entitled. This contract value will serve as the basis for
calculating any death benefit payable upon the death of the surviving spouse. We
will allocate any increase in the adjusted contract value among the variable,
fixed interest rate or market value adjustment options in the same proportions
that existed immediately prior to the spousal continuance adjustment. We will
waive the $1,000 minimum requirement for the market value adjustment option.
Under the Spousal Continuance Benefit, we waive any potential withdrawal
charges applicable to purchase payments made prior to activation of the Spousal
Continuance Benefit. However, we will continue to impose withdrawal charges on
purchase payments made after activation of this benefit. In addition, contract
value allocated to the market value adjustment option will remain subject to a
potential market value adjustment.
IF YOU ELECTED THE BASE DEATH BENEFIT, then upon activation of the Spousal
Continuance Benefit, we will adjust the contract value to equal the greater of:
- - the contract value, or
- - the sum of all invested purchase payments (adjusted for withdrawals).
IF YOU HAVE ELECTED THE GMDB STEP-UP, we will adjust the contract value to
equal the greater of:
- - the contract value, or
- - the GMDB step-up.
After we have made the adjustment to contract value set out immediately
above, we will continue to compute the GMDB step-up under the surviving spousal
owner's contract, and will do so in accordance with the preceding discussion in
this section.
If the contract is being continued by the surviving spouse, the attained age
of the surviving spouse will be the basis used in determining the death benefit
payable under the Guaranteed Minimum Death Benefit provisions of the contract.
IF YOU ELECTED THE GUARANTEED MINIMUM INCOME BENEFIT, it will be continued
for the surviving spousal owner. All provisions of the Guaranteed Minimum Income
Benefit (i.e., waiting period, GMIB roll-up cap, etc.) will remain the same as
on the date of the owner's death. If the GMIB reset feature was never exercised,
the surviving spousal owner can exercise the GMIB reset feature twice. If the
original owner had previously exercised the GMIB reset feature once, the
surviving spousal owner can exercise the GMIB reset once. However the surviving
spouse (or new annuitant designated by the surviving spouse) must be under 76
years of age at the time of reset. If the original owner had previously
exercised the GMIB reset feature twice, the surviving spousal owner may not
exercise the GMIB reset at all. If the attained age of the surviving spouse at
activation of the Spousal Continuance Benefit, when added to the remainder of
the GMIB
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
waiting period to be satisfied, would preclude the surviving spouse from
utilizing the Guaranteed Minimum Income Benefit, we will revoke the Guaranteed
Minimum Income Benefit under the contract at that time and we will no longer
charge for that benefit.
IF YOU ELECTED THE INCOME APPRECIATOR BENEFIT, on the owner's death, the
Income Appreciator Benefit will end unless the contract is continued by the
owner's surviving spouse under the Spousal Continuance Benefit. If the contract
is continued by the surviving spouse, we will continue to pay the balance of any
Income Appreciator Benefit payments until the earliest to occur of the
following: (a) the date on which 10 years' worth of IAB automatic withdrawal
payments or IAB credits, as applicable, have been paid, (b) the latest date on
which annuity payments would have had to have commenced had the owner not died
(i.e., the later of the contract anniversary next following the annuitant's 90th
birthday or the 10th contract anniversary), or (c) the later of the 10th
contract anniversary or the contract anniversary next following the surviving
spouse's 90th birthday (or the annuitant's 90th birthday if other than the
surviving spouse).
If the Income Appreciator Benefit has not been in force for 7 contract years,
the surviving spouse may not activate the benefit until it has been in force for
7 contract years. If the attained age of the surviving spouse at activation of
the Spousal Continuance Benefit, when added to the remainder of the Income
Appreciator Benefit waiting period to be satisfied, would preclude the surviving
spouse from utilizing the Income Appreciator Benefit, we will revoke the Income
Appreciator Benefit under the contract at that time and we will no longer charge
for that benefit. If the Income Appreciator Benefit has been in force for 7
contract years or more, but the benefit has not been activated, the surviving
spouse may activate the benefit at any time after the contract has been
continued. If the Income Appreciator Benefit is activated after the contract is
continued by the surviving spouse, the Income Appreciator Benefit calculation
will exclude any amount added to the contract at the time of spousal continuance
resulting from any death benefit value exceeding the contract value.
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
5:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
PLUS CONTRACT?
- --------------------------------------------------------------------------------
PURCHASE PAYMENTS
The initial purchase payment is the amount of money you give us to purchase the
contract. The minimum initial purchase payment is $10,000, and may not be
greater than $1,000,000, absent prior approval. With some restrictions, you can
make additional purchase payments by means other than electronic fund transfer
of no less than $500 at any time during the accumulation phase. However, we
impose a minimum of $100 with respect to additional purchase payments made
through electronic fund transfers.
You may purchase this contract only if the oldest of the owner, joint owner
or annuitant is age 85 or younger on the contract date. Certain age limits apply
to certain features and benefits described herein. No subsequent purchase
payments may be made on or after the earliest of the 86th birthday of:
- - the owner,
- - the joint owner, or
- - the annuitant.
Currently, the maximum aggregate purchase payments you may make is $7
million. We limit the maximum total purchase payments in any contract year other
than the first to $2 million, absent our prior approval.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your invested purchase payment
among the variable or fixed interest rate investment options or the market value
adjustment option based on the percentages you choose. The percentage of your
allocation to a particular investment option can range in whole percentages from
0% to 100%.
When you make an additional purchase payment, it will be allocated in the
same way as your most recent purchase payment, unless you tell us otherwise.
Allocations to the DCA Fixed Rate Option must be no less than $2,000.
You may change your allocation of future invested purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive your payment in good order at
the Prudential Annuity Service Center. If, however, your first payment is made
without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information. We will
generally credit each subsequent purchase payment as of the business day we
receive it in good order at the Prudential Annuity Service Center. Our business
day generally closes at 4:00 p.m. Eastern time. Subsequent purchase payments
received in good order after 4:00 p.m. Eastern time will be credited on the
following business day.
CREDITS
If you purchase the Contract With Credit, we will add a credit amount to your
contract value with each purchase payment you make. The credit amount is
allocated to the variable or fixed interest rate investment options or the
market value adjustment option in the same percentages as the purchase payment.
The bonus credit that we pay with respect to any purchase payment depends on
(i) the age of the older of the owner or joint owner on the date on which the
purchase payment is made and (ii) the amount of the purchase payment.
Specifically,
- - if the elder owner is 80 or younger on the date that the purchase payment is
made, then we will add a bonus credit to the purchase payment equal to 4% if
the purchase payment is less than $250,000; 5% if the purchase payment is
equal to or greater than $250,000 but less than $1 million; or 6% if the
purchase payment is $1 million or greater; and
- - if the older owner is aged 81-85 on the date that the purchase payment is
made, then we will add a bonus credit equal to 3% of the amount of the
purchase payment.
Under the Contract With Credit, if the owner returns the contract during the
free look period, we will recapture the bonus credits. If we pay a death benefit
under the contract, we have a contractual right to take
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
back any credit we applied within one year of the date of death.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment options you choose. To
determine the value of your contract allocated to the variable investment
options, we use a unit of measure called an accumulation unit. An accumulation
unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option,
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes, and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit
your contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. We determine the number of accumulation units
credited to your contract by dividing the amount of the purchase payment, plus
(if you have purchased the Contract With Credit) any applicable credit,
allocated to an investment option by the unit price of the accumulation unit for
that investment option. We calculate the unit price for each investment option
after the New York Stock Exchange closes each day and then credit your contract.
The value of the accumulation units can increase, decrease, or remain the same
from day to day.
We cannot guarantee that your contract value will increase or that it will
not fall below the amount of your total purchase payments. However, we do
guarantee a minimum interest rate of 1.5% a year on that portion of the contract
value allocated to the one-year fixed interest-rate option. For the DCA Fixed
Interest Rate Option, we guarantee a minimum interest rate of 3% annually.
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PART II
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6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS CONTRACT?
- --------------------------------------------------------------------------------
THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. WE DESCRIBE THESE CHARGES AND EXPENSES BELOW.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise, we will incur a loss. The
rates of certain of our charges have been set with reference to estimates of the
amount of specific types of expenses or risks that we will incur. In most cases,
this prospectus identifies such expenses or risks in the name of the charge;
however, the fact that any charge bears the name of, or is designed primarily to
defray a particular expense or risk does not mean that the amount we collect
from that charge will never be more than the amount of such expense or risk. Nor
does it mean that we may not also be compensated for such expense or risk out of
any other charges we are permitted to deduct by the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGE
Each day, we make a deduction for the insurance and administrative charge. This
charge covers our expenses for mortality and expense risk, administration,
marketing and distribution. If you choose the Guaranteed Minimum Death Benefit
Option, the insurance and administrative charge also includes a charge to cover
our assumption of the associated risk. The mortality risk portion of the charge
is for our assumption of the risk that the annuitant(s) will live longer than
expected based on our life expectancy tables. When this happens, we pay a
greater number of annuity payments. We also incur the risk that the death
benefit amount exceeds the contract value. The expense risk portion of the
charge is for assuming the risk that the current charges will be insufficient in
the future to cover the cost of administering the contract. The administrative
expense portion of the cost compensates us for the expenses associated with the
administration of the contract. This includes preparing and issuing the
contract; establishing and maintaining contract records; preparation of
confirmations and annual reports; personnel costs; legal and accounting fees;
filing fees; and systems costs. The Guaranteed Minimum Death Benefit risk
portion of the charge, if applicable, covers our assumption of the risk that the
protected value of the contract will be larger than the base death benefit if
the contract owner dies during the accumulation phase.
We calculate the insurance and administrative charge based on the average
daily value of all assets allocated to the variable investment options. These
charges are not assessed against amounts allocated to the fixed interest rate
options. The amount of the charge depends on the death benefit option that you
choose. The charge is equal to:
- 1.40% on an annual basis if you choose the base death benefit, and
- 1.65% on an annual basis if you choose the step-up Guaranteed Minimum
Death Benefit option.
We impose an additional insurance and administrative charge of 0.10% annually
(of account value attributable to the variable investment options) for the
Contract with Credit.
If the charges under the contract are not sufficient to cover our expenses,
then we will bear the loss. We do, however, expect to profit from this cost. The
insurance risk charge for your contract cannot be increased. Any profits made
from this charge may be used by us to pay for the costs of distributing the
contracts. If you choose the Contract With Credit, we will also use any profits
from this charge to recoup our costs of providing the credit.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period
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for a purchase payment. The amount and duration of the withdrawal charge depends
on whether you choose the Contract With Credit or the Contract Without Credit.
The withdrawal charge varies with the number of contract anniversaries that have
elapsed since each purchase payment being withdrawn was made. Specifically, we
maintain an "age" for each purchase payment you have made by keeping track of
how many contract anniversaries have passed since the purchase payment was made.
The withdrawal charge is the percentage, shown below, of the amount
withdrawn.
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the next following contract anniversary will
apply.
If you request a withdrawal, we will deduct an amount from the contract value
that is sufficient to pay the withdrawal charge, and provide you with the amount
requested.
If you request a full withdrawal, we will provide you with the full amount of
the contract value after making deductions for charges.
Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We determine the charge-free amount
available to you in a given contract year on the contract anniversary that
begins that year. In calculating the charge-free amount, we divide purchase
payments into two categories -- payments that are subject to a withdrawal charge
and those that are not. We determine the charge-free amount based only on
purchase payments that are subject to a withdrawal charge. The charge-free
amount in a given contract year is equal to 10% of the sum of all the purchase
payments subject to the withdrawal charge that you have made as of the
applicable contract anniversary. During the first contract year, the charge-free
amount is equal to 10% of the initial purchase payment.
When you make a withdrawal, we will deduct the amount of the withdrawal first
from the available charge-free amount. Any excess amount will then be deducted
from purchase payments in excess of the charge-free amount and subject to
applicable withdrawal charges. Once you have withdrawn all purchase payments,
additional withdrawals will come from any earnings. We do not impose withdrawal
charges on earnings.
If a withdrawal or transfer is taken from a market value adjustment guarantee
period prior to the expiration of the rate guarantee period we will make a
market value adjustment to the withdrawal amount. We will then apply a
withdrawal charge to the adjusted amount.
If you choose the Contract With Credit and make a withdrawal that is subject
to a withdrawal charge, we may use part of that withdrawal charge to recoup our
costs of providing the credit.
Withdrawal charges will never be greater than permitted by applicable law.
MINIMUM DISTRIBUTION REQUIREMENTS
If a withdrawal is taken from a tax qualified contract in order to satisfy an
IRS mandatory distribution requirement only with respect to that contract's
account balance, we will waive withdrawal charges. See "What Are The Tax
Considerations Associated With The Strategic Partners Plus Contract?" on page
64.
CONTRACT MAINTENANCE CHARGE
We do not deduct a contract maintenance charge for administrative expenses while
your contract value is $75,000 or more. If your contract value is less than
$75,000 on a contract anniversary during the accumulation phase or when you make
a full withdrawal, we will deduct $30 (or a lower amount equal to 2% of your
contract value) for administrative expenses. We may raise the level of the
contract value at which we waive this fee. We will deduct this charge
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STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
proportionately from each of your contract's investment options.
GUARANTEED MINIMUM INCOME BENEFIT CHARGE
We will impose an additional charge if you choose the Guaranteed Minimum Income
Benefit. FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2004, we will deduct a charge
equal to 0.50% per year of the average GMIB protected value for the period the
charge applies. FOR ALL OTHER CONTRACTS, this is an annual charge equal to 0.45%
of the average GMIB protected value. We deduct the charge from your contract
value on each of the following events:
- - each contract anniversary,
- - when you begin the income phase of the contract,
- - upon a full withdrawal, and
- - upon a partial withdrawal if the remaining contract value would not be enough
to cover the then applicable Guaranteed Minimum Income Benefit charge.
If we impose this fee other than on a contract anniversary, then we will
pro-rate it based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Because the charge is calculated based on the average GMIB protected value,
it does not increase or decrease based on changes to the annuity's account value
due to market performance. If the GMIB protected value increases, the dollar
amount of the annual charge will increase, while a decrease in the GMIB
protected value will decrease the dollar amount of the charge.
The charge is deducted annually in arrears each contract year on the contract
anniversary. We deduct the amount of the charge pro-rata from the contract value
allocated to the variable investment options. If you surrender your contract,
begin receiving annuity payments under the GMIB or any other annuity payout
option we make available during a contract year, or the GMIB terminates, we will
deduct the charge for the portion of the contract year since the prior contract
anniversary (or the contract date if in the first contract year). Upon a full
withdrawal or if the contract value remaining after a partial withdrawal is not
enough to cover the applicable Guaranteed Minimum Income Benefit charge, we will
deduct the charge from the amount we pay you.
THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL OR PARTIAL WITHDRAWAL DOES
NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE TIME OF YOUR CHOOSING.
We will not impose the Guaranteed Minimum Income Benefit charge after the
income phase begins.
INCOME APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Income Appreciator
Benefit. This is an annual charge equal to 0.25% of your contract value. The
Income Appreciator Benefit charge is calculated:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or the first to die of the owner or joint
owner prior to the annuity date,
- upon a full or partial withdrawal, and
- upon a subsequent purchase payment.
The fee is based on the contract value at the time of the calculation, and is
prorated based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Although the Income Appreciator Benefit charge may be calculated more often,
it is deducted only:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or first to die of the owner or joint
owner prior to the annuity date,
- upon a full withdrawal, and
- upon a partial withdrawal if the contract value remaining after such
partial withdrawal is not enough to cover the then-applicable Income
Appreciator Benefit charge.
We reserve the right to calculate and deduct the fee more frequently than
annually, such as quarterly.
The Income Appreciator Benefit charge is deducted from each investment option
in the same proportion that the amount allocated to the investment option
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bears to the total contract value. No market value adjustment will apply to the
portion of the charge deducted from the market value adjustment option. Upon a
full withdrawal, or if the contract value remaining after a partial withdrawal
is not enough to cover the then-applicable Income Appreciator Benefit charge,
the charge is deducted from the amount paid. The payment of the Income
Appreciator Benefit charge will be deemed to be made from earnings for purposes
of calculating other charges. THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL
OR PARTIAL WITHDRAWAL DOES NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE
TIME OF YOUR CHOOSING.
We do not assess this charge upon election of IAB Option 1, the completion of
IAB Option 2 or 3, and upon annuitization. However, we do assess the IAB charge
during the 10-year payment period contemplated by IAB Options 2 and 3. Moreover,
you should realize that amounts credited to your contract value under IAB Option
3 increase the contract value, and because the IAB fee is a percentage of your
contract value, the IAB fee may increase as a consequence of those additions.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal and premium based taxes applicable to your purchase
payment. We are responsible for the payment of these taxes and may make a charge
against the value of the contract to pay some or all of these taxes. New York
does not currently charge premium taxes on annuities. It is our current practice
not to deduct a charge for the federal tax associated with deferred acquisition
costs paid by us that are based on premium received. However, we reserve the
right to charge the contract owner in the future for any such tax associated
with deferred acquisition costs and any federal, state or local income, excise,
business or any other type of tax measured by the amount of premium received by
us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $25 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current plans to do so. We will deduct the transfer fee
pro-rata from the investment options from which the transfer is made.
COMPANY TAXES
We will pay the taxes on the earnings of the separate account. We do not
currently charge you for these taxes. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual fund.
Those funds charge fees that are in addition to the contract-related fees
described in this section. For 2003, the fees of these funds ranged on an annual
basis from % to % of fund assets (these fees reflect the effect of
expense reimbursements or waivers, which may terminate at any time). For
additional information about these fund fees, please consult the prospectuses
for the funds.
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7:
HOW CAN I
ACCESS MY MONEY?
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YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR FULL); OR
- - CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus any applicable charges and fees. We will calculate the value of your
contract and charges, if any, as of the date we receive your request in good
order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal and related withdrawal
charges will be made proportionately from all of the investment options you have
selected. The minimum contract value that must remain in order to keep your
contract in force after a withdrawal is $2,000. If you request a withdrawal
amount that would reduce the contract value below this minimum, we will withdraw
the maximum amount available that, with the withdrawal charge, would not reduce
the contract value below such minimum.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after we
receive a withdrawal request in good order. We will deduct applicable charges,
if any, from the assets in your contract.
With respect to the market value adjustment option, you may specify the
guarantee period from which you would like to make a withdrawal. If you indicate
that the withdrawal is to originate from the market value adjustment option, but
you do not specify which guarantee period is to be involved, then we will take
the withdrawal from the guarantee period that has the least time remaining until
its maturity date. If you indicate that you wish to make a withdrawal, but do
not specify the investment options to be involved, then we will take the
withdrawal from your contract value on a pro rata basis from each investment
option that you have. In that situation, we will aggregate the contract value in
each of the guarantee periods that you have within the market value adjustment
option for purposes of making that pro rata calculation. The portion of the
withdrawal associated with the market value adjustment option then will be taken
from the guarantee periods with the least amount of time remaining until the
maturity date, irrespective of the original length of the guarantee period. You
should be aware that a withdrawal may avoid a withdrawal charge based on the
charge-free amount that we allow, yet still be subject to a market value
adjustment.
INCOME TAXES, TAX PENALTIES, AND CERTAIN RESTRICTIONS ALSO MAY APPLY TO ANY
WITHDRAWAL YOU MAKE. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8 OF THIS
PROSPECTUS.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual, or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or proportionally
from all investment options (other than a guarantee period within the market
value adjustment option). The minimum automated withdrawal amount you can make
is $100.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND CERTAIN RESTRICTIONS MAY
APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8
OF THIS PROSPECTUS.
INCOME APPRECIATOR BENEFIT OPTIONS DURING THE ACCUMULATION PHASE
The Income Appreciator Benefit (IAB) is discussed on page 47. As mentioned
there, you may choose IAB Option 1 at annuitization, but you may instead choose
IAB Options 2 or 3 during the accumulation phase of your contract. Income
Appreciator Benefit payments under IAB Options 2 and 3 will begin on the same
day of the month as the contract date, beginning with the next month following
our receipt of your request in good
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order. Under IAB Options 2 and 3, you can choose to have the Income Appreciator
Benefit amounts paid or credited monthly, quarterly, semi-annually, or annually.
IAB OPTIONS 2 AND 3 INVOLVE A TEN-YEAR PAYMENT PERIOD. IF THE 10-YEAR PAYMENT
PERIOD WOULD END AFTER THE ANNUITY DATE AND YOU CHOOSE AN ANNUITY SETTLEMENT
OPTION OTHER THAN ANY LIFETIME PAYOUT OPTION OR PERIOD CERTAIN OPTION OF AT
LEAST 15 YEARS OR YOU MAKE A FULL WITHDRAWAL, YOU MAY LOSE ALL OR ANY REMAINING
PORTION OF THE INCOME APPRECIATOR BENEFIT. IN SUCH INSTANCES, WE WOULD NOT
REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
IAB OPTION 2 -- INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
Under this option, you elect to receive the Income Appreciator Benefit during
the accumulation phase. When you activate the benefit, a 10-year Income
Appreciator Benefit automatic withdrawal payment program begins. We will pay you
the Income Appreciator Benefit amount in equal installments over a 10 year
payment period. You may combine this Income Appreciator Benefit amount with an
automated withdrawal amount from your contract value, in which case each
combined payment must be at least $100.
The maximum automated withdrawal payment amount that you may receive from
your contract value under this Income Appreciator Benefit program in any
contract year during the 10-year period may not exceed 10% of the contract value
as of the date you activate the Income Appreciator Benefit.
Once we calculate the Income Appreciator Benefit, the amount will not be
affected by changes in contract value due to the investment performance of any
allocation option. Withdrawal charges may apply to automatic withdrawal payment
amounts, but not to amounts attributable to the Income Appreciator Benefit.
After the ten-year payment period has ended, if the remaining contract value
is $2,000 or more, the contract will continue. If the remaining contract value
is less than $2,000 after the end of the 10-year payment period, we will pay you
the remaining contract value and the contract will terminate. If the contract
value falls below the minimum amount required to keep the contract in force due
solely to investment results before the end of the 10-year payment period, we
will continue to pay the Income Appreciator Benefit amount for the remainder of
the 10-year payment period.
DISCONTINUING THE INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT
PROGRAM UNDER IAB OPTION 2
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 and activate IAB Option 3 at any time after payments have begun and
before the last payment is made. We will add the remaining Income Appreciator
Benefit amount to the contract value at the same frequency as your initial
election until the end of the 10-year payment period. We will treat any Income
Appreciator Benefit amount added to the contract value as additional earnings.
Unless you direct us otherwise, we will allocate these additions to the variable
or fixed interest rate options in the same proportions as your most recent
purchase payment allocation percentages.
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 before the last payment is made and elect an annuity or settlement
option. We will add the balance of the Income Appreciator Benefit amount for the
10-year payment period to the contract value in a lump sum before determining
the adjusted contract value. The adjusted contract value may be applied to any
annuity or settlement option that is paid over the lifetime of the annuitant,
joint annuitants, or a period certain of at least 15 years (but not to exceed
life expectancy).
IAB OPTION 3 -- INCOME APPRECIATOR BENEFIT CREDIT TO CONTRACT VALUE
Under this option, you can activate the Income Appreciator Benefit and receive
the benefit as credits to your contract value over a 10-year payment period. We
will allocate these Income Appreciator Benefit credits to the variable
investment options, the fixed interest rate option, or the market value
adjustment option in the same manner as your current allocation, unless you
direct us otherwise. We will waive the $1,000 minimum
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requirement for the market value adjustment option. We will calculate the Income
Appreciator Benefit amount on the date we receive your written request in good
order. Once we have calculated the Income Appreciator Benefit, the Income
Appreciator Benefit credit will not be affected by changes in contract value due
to the investment performance of any allocation option.
Before we add the last Income Appreciator Benefit credit to your contract
value, you may switch to IAB Option 2 and receive the remainder of the Income
Appreciator Benefit as payments to you (instead of credits to the contract
value) under the Income Appreciator Benefit program for the remainder of the
10-year payment period.
You can also request that any remaining payments in the 10-year payment
period be applied to an annuity or settlement option that is paid over the
lifetime of the annuitants, joint annuitants, or a period certain of at least 15
years (but not to exceed life expectancy).
EXCESS WITHDRAWALS
During the 10 year period under IAB options 2 or 3, an "excess withdrawal"
occurs when any amount is withdrawn from your contract value in a contract year
that exceeds the sum of (1) 10% of the contract value as of the date the Income
Appreciator Benefit was activated plus (2) earnings since the Income Appreciator
Benefit was activated that have not been previously withdrawn.
We will deduct the excess withdrawal on a proportional basis from the
remaining Income Appreciator Benefit amount. We will then calculate and apply a
new reduced Income Appreciator Benefit amount.
Withdrawals you make in a contract year that do not exceed the sum of (1) 10%
of the contract value as of the date the Income Appreciator Benefit was
activated plus (2) earnings since the Income Appreciator Benefit was activated
that have not been previously withdrawn do not reduce the remaining Income
Appreciator Benefit amount. Additionally, if the amount withdrawn in any year is
less than the excess withdrawal threshold, the difference between the amount
withdrawn and the threshold can be carried over to subsequent years on a
cumulative basis and withdrawn without causing a reduction to the Income
Appreciator Benefit amount.
EFFECT OF TOTAL WITHDRAWAL ON INCOME APPRECIATOR BENEFIT
We will not make Income Appreciator Benefit payments after the date you make a
total withdrawal of the contract surrender value.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
- - An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
- - The SEC, by order, permits suspension or postponement of payments for the
protection of owners.
We expect to pay the amount of any withdrawal or transfer made from the fixed
interest rate options promptly upon request.
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8:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS CONTRACT?
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The tax considerations associated with the Strategic Partners Plus contract vary
depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan, or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. It is not intended as tax advice. You should
consult with a qualified tax advisor for complete information and advice.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that some
or all of the charges for the optional benefits under the contract such as
Guaranteed Minimum Death Benefit, should be treated for federal income tax
purposes as a partial withdrawal from the contract. If this were the case, the
charge for this benefit could be deemed a withdrawal and treated as taxable to
the extent there are earnings in the contract. Additionally, for owners under
age 59 1/2, the taxable income attributable to the charge for the benefit could
be subject to a tax penalty.
If the IRS determines that the deductions for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned will be treated as a withdrawal. Also, if you elect any
interest payment option that we may offer, that election will be treated, for
tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on the gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of level annuity payments not less
frequently than annually under a lifetime annuity; and
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- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See "Federal Tax Status" in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035 exchanges
of entire contracts, therefore avoiding current taxation of gains in the
contract as well as the 10% tax penalty of pre-age 59 1/2 withdrawals. The IRS
has reserved the right to treat transactions it considers abusive as ineligible
for this favorable partial 1035 exchange treatment. We do not know what
transactions may be considered abusive. For example we do not know how the IRS
may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
All of the death benefit options are subject to income tax to the extent the
distribution exceeds the adjusted basis in the contract and the full value of
the death benefit is included in the owner's estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing an annuity payment option instead of a
lump sum death benefit may defer taxes. Certain minimum distribution
requirements apply upon your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with 3 exemptions unless you
designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY
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TAX FAVORED PLANS section for withholding rules for tax favored plans (for
example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the contract must be an annuity
contract for tax purposes. This means that the assets underlying the annuity
contract must be diversified, according to certain rules. It also means that we,
and not you as the contract owner, must have sufficient control over the
underlying assets to be treated as the owner of the underlying assets for tax
purposes. We believe these rules, which are further discussed in the Statement
of Additional Information, will be met.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if an annuity
payment option is selected by your designated beneficiary and if annuity
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect an annuity payment option based on life expectancy or a
period exceeding five years.
If any portion of the contract is payable to (or for the benefit of) your
surviving spouse, that portion of the contract may be continued with your spouse
as the owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You purchased more than one annuity contract from the same insurer within the
same calendar year (other than contracts held by tax favored plans).
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. This description assumes that you
have satisfied the requirements for eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
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TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement" on page 75 contains
information about eligibility, contribution limits, tax particulars, and other
IRA information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, calculated as of the date that we receive this cancellation
notice, if greater), less any applicable federal and state income tax
withholding.
CONTRIBUTIONS LIMITS/ROLLOVERS. Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA. You must
make a minimum initial payment of $10,000 to purchase a contract. This minimum
is greater than the maximum amount of any annual contribution allowed by law you
may make to an IRA. For 2004 the limit is $3,000; increasing in 2005 to 2007, to
$4,000; and for 2008, $5,000. After 2008 the contribution amount will be indexed
for inflation. The tax law also provides for a catch-up provision for
individuals who are age 50 and above. These taxpayers will be permitted to
contribute an additional $500 in years 2004 to 2005 and an additional $1,000 in
2006 and years thereafter. The "rollover" rules under the Code are fairly
technical; however, an individual (or his or her surviving spouse) may generally
"roll over" certain distributions from tax favored retirement plans (either
directly or within 60 days from the date of these distributions) if he or she
meets the requirements for distribution. Once you buy the contract, you can make
regular IRA contributions under the contract (to the extent permitted by law).
However, if you make such regular IRA contributions, you should note that you
will not be able to treat the contract as a "conduit IRA," which means that you
will not retain possible favorable tax treatment if you subsequently "roll over"
the contract funds originally derived from a qualified retirement plan into
another Section 401(a) plan.
Required Provisions. Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life of
New Jersey;
- - The annual premium you pay cannot be greater than the maximum amount allowed
by law, including catch-up contributions if applicable (which does not
include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April 1st
of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
(described on page 68).
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" (described on page 68);
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution (also generally described on page 68).
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" (generally, held for 5 tax years and payable on
account of death, disability,
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attainment of age 59 1/2, or first time-homebuyer) from Roth IRAs are
excludable from your gross income; and
- - If eligible, you may make contributions to a Roth IRA after attaining age
70 1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may purchase
a contract as a Roth IRA only in connection with a "rollover" or "conversion" of
the proceeds of another traditional IRA, conduit IRA, or Roth IRA. The Code
permits persons who meet certain income limitations (generally, adjusted gross
income under $100,000), and who receive certain qualifying distributions from
such non-Roth IRAs, to directly rollover or make, within 60 days, a "rollover"
of all or any part of the amount of such distribution to a Roth IRA which they
establish. This conversion triggers current taxation (but is not subject to a
10% early distribution penalty). Once the contract has been purchased, regular
Roth IRA contributions will be accepted to the extent permitted by law.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that payments must start
by April 1 of the year after the year you reach age 70 1/2 and must be made for
each year thereafter. The amount of the payment must at least equal the minimum
required under the IRS rules. Several choices are available for calculating the
minimum amount. More information on the mechanics of this calculation is
available on request. Please contact us at a reasonable time before the IRS
deadline so that a timely distribution is made. Please note that there is a 50%
tax penalty on the amount of any minimum distribution not made in a timely
manner.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will send you a check for this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA or Roth IRA before you attain age 59 1/2. There are only limited
exceptions to this tax, and you should consult your tax advisor for further
details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with 3 exemptions;
and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of the
contract.
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Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under "What Are The Expenses Associated With The
Strategic Partners Plus Contract" starting on page 57.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" on page 70.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement" on page 75.
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STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
9:
OTHER
INFORMATION
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PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey) is a stock
life insurance company organized in 1982 under the laws of the State of New
Jersey. It is licensed to sell life insurance and annuities in New Jersey and
New York, and accordingly is subject to the laws of each of those states.
Pruco Life of New Jersey is a wholly-owned subsidiary of The Prudential
Insurance Company of America (Prudential), a New Jersey stock life insurance
company doing business since 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (Prudential Financial), a New Jersey
insurance holding company. As Pruco Life of New Jersey's ultimate parent,
Prudential Financial exercises significant influence over the operations and
capital structure of Pruco Life of New Jersey and Prudential. However, neither
Prudential Financial, Prudential, nor any other related company has any legal
responsibility to pay amounts that Pruco Life of New Jersey may owe under the
contract.
Pruco Life of New Jersey publishes annual and quarterly reports that are
filed with the SEC. These reports contain financial information about Pruco Life
of New Jersey that is annually audited by independent accountants. Pruco Life of
New Jersey's annual report for the year ended December 31, 2003, together with
subsequent periodic reports that Pruco Life of New Jersey files with the SEC,
are incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the Pruco Life of New Jersey
annual report that is not ordinarily mailed to contract owners, the more current
reports and any subsequently filed documents at no cost by contacting us at the
address or telephone number listed on the cover. The SEC file number for Pruco
Life of New Jersey is 33-18053. You may read and copy any filings made by Pruco
Life of New Jersey with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, Washington, D.C. 20549-0102. You can obtain information on the operation
of the Public Reference Room by calling (202) 942-8090. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account (separate account), to hold the assets that are
associated with the contracts. The separate account was established under New
Jersey law on May 20, 1996, and is registered with the U.S. Securities and
Exchange Commission under the Investment Company Act of 1940 as a unit
investment trust, which is a type of investment company. The assets of the
separate account are held in the name of Pruco Life of New Jersey and legally
belong to us. These assets are kept separate from all of our other assets and
may not be charged with liabilities arising out of any other business we may
conduct. More detailed information about Pruco Life of New Jersey, including its
audited financial statements, is provided in the SAI.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), 100 Mulberry Street,
Newark, New Jersey 07102-4077, acts as the distributor of the contracts under a
"best efforts" underwriting agreement with Pruco Life of New Jersey under which
PIMS is reimbursed for its costs and expenses. PIMS is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. and is a limited liability corporation
organized under Delaware law in 1996. It is a registered broker-dealer under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc.
Commissions are paid to broker-dealers that are registered under the Exchange
Act and/or entities that are exempt from such registration (firms) according to
one or more schedules. The individual representative will receive a portion of
the compensation, depending on the practice of the firm. Commissions are
generally based on a percentage of purchase payments made, up to a maximum of
7%. Alternative compensation schedules are available that provide a lower
initial
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STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
commission plus ongoing annual compensation based on all or a portion of
contract value. We may also provide compensation for providing ongoing service
to you in relation to the contract. Commissions and other compensation paid in
relation to the contract do not result in any additional charge to you or to the
separate account.
In addition, in an effort to promote the sale of our products, we or PIMS may
enter into compensation arrangements with certain broker-dealer firms or
branches of such firms with respect to certain or all registered representatives
of such firms under which such firms may receive separate compensation or
reimbursement for, among other things, training of sales personnel, marketing or
other services they provide to us or our affiliates. To the extent permitted by
NASD rules and other applicable laws and regulations, PIMS may pay or allow
other promotional incentives or payments in the form of cash or non-cash
compensation. These arrangements may not be offered to all firms, and the terms
of such arrangements may differ between firms. You should note that firms and
individual registered representatives and branch managers within some firms
participating in one of these compensation arrangements might receive greater
compensation for selling the contract than for selling a different annuity that
is not eligible for these compensation arrangements. While compensation is
generally taken into account as an expense in considering the charges applicable
to an annuity product, any such compensation will be paid by us or PIMS, and
will not result in any additional charge to you. Overall compensation paid to
the distributing firm does not exceed, based on actuarial assumptions, 8.5% of
the purchase payments made. Your registered representative can provide you with
more information about the compensation arrangements that apply upon the sale of
the contract.
LITIGATION
We are subject to legal and regulatory actions in the ordinary course of our
business, including class actions. Pending legal and regulatory actions include
proceedings relating to aspects of the businesses and operations that are
specific to Pruco Life of New Jersey and that are typical of the businesses in
which Pruco Life of New Jersey operates. Class action and individual lawsuits
involve a variety of issues and/or allegations, which include sales practices,
underwriting practices, claims payment and procedures, premium charges, policy
servicing and breach of fiduciary duties to customers. We are also subject to
litigation arising out of our general business activities, such as our
investments and third party contracts. In certain of these matters, the
plaintiffs are seeking large and/or indeterminate amounts, including punitive or
exemplary damages.
Pruco Life of New Jersey's litigation is subject to many uncertainties, and
given the complexity and scope, the outcomes cannot be predicted. It is possible
that the results of operations or the cash flow of Pruco Life of New Jersey in a
particular quarterly or annual period could be materially affected by an
ultimate unfavorable resolution of pending litigation and regulatory matters.
Management believes, however, that the ultimate outcome of all pending
litigation and regulatory matters should not have a material adverse effect on
Pruco Life of New Jersey's financial position.
ASSIGNMENT
You can assign the contract at any time during your lifetime. If you do so, we
will reset the death benefit to equal the contract value on the date the
assignment occurs. For details, see "What Is The Death Benefit," on page 51. We
will not be bound by the assignment until we receive written notice. We will not
be liable for any payment or other action we take in accordance with the
contract if that action occurs before we receive notice of the assignment. An
assignment, like any other change in ownership, may trigger a taxable event.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life of New Jersey,
the co-issuer of the Strategic
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OTHER INFORMATION CONTINUED
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
Partners Plus contract, are included in the Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- - Company
- - Experts
- - Principal Underwriter
- - Allocation of Initial Purchase Payment
- - Determination of Accumulation Unit Values
- - Federal Tax Status
- - Directors and Officers
- - Financial Statements
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each contract
owner that resides in the household. If you are a member of such a household,
you should be aware that you can revoke your consent to householding at any
time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling 877-778-5008.
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MARKET-VALUE
ADJUSTMENT FORMULA
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MARKET-VALUE ADJUSTMENT FORMULA
The general formula under which Pruco Life of New Jersey calculates the market
value adjustment applicable to a full or partial surrender, annuitization, or
settlement under Strategic Partners Plus is set forth below. The market value
adjustment is expressed as a multiplier factor. That is, the Contract Value
after the market value adjustment ("MVA"), but before any withdrawal charge, is
as follows: Contract Value (after MVA) = Contract Value (before MVA) X (1 +
MVA). The MVA itself is calculated as follows:
1 + I
MVA = [(----------------)to the power of (N/12)] -1
1 + J + .0025
The MVA formula with respect to contracts issued in New York is what is depicted
above. The formula uses an interpolated rate "J" as the current credited
interest rate. Specifically, "J" is the interpolated current credited interest
rate offered on new money at the time of withdrawal, annuitization, or
settlement. The interpolated value is calculated using the following formula:
m/365 X (n + 1) year rate + (365 - m)/365 X n year rate,
where "n" equals the number of whole years remaining in the Contract's current
guarantee period, and "m" equals the number of days remaining in year "n" of the
current guarantee period.
MARKET VALUE ADJUSTMENT EXAMPLE
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2000 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2002. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2002 the interest rate declared by Pruco Life of New Jersey for a
guarantee period of 3 years (the number of whole years remaining) is 4%, and
for a guarantee period of 4 years (the number of whole years remaining plus
1) is 5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
The MVA factor calculation would be: [(1.06)/(1.0417 + 0.0025)] to the power
of (38/12) -1 = 0.04902
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X 0.04902 = $545.45
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $545.45 = $11,672.56
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2000 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2002. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2002 the interest rate declared by Pruco Life of New Jersey for a
guarantee period of 3 years
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MARKET-VALUE ADJUSTMENT FORMULA CONTINUED
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
(the number of whole years remaining) is 7%, and for a guarantee period of 4
years (the number of whole years remaining plus 1) is 8%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
The MVA factor calculation would be: [(1.06)/(1.0717 + 0.0025)] to the power
of (38/12) -1 = -0.04098
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.04098) = -$455.99
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$455.99) = $10,671.12
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IRA DISCLOSURE STATEMENT
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This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your Roth IRA,
or to one you purchase for your spouse. You can obtain more information
regarding your IRA either from your sales representative or from any district
office of the Internal Revenue Service. Those are federal tax law rules; state
tax laws may vary.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a refund (less any applicable federal and state income
tax withholding) within 10 days after it is delivered. The amount of the refund
is dictated by state law. This is a more liberal provision than is required in
connection with IRAs. To exercise this "free-look" provision, return the
contract to the representative who sold it you or to the Prudential Annuity
Service Center at the address shown on the first page of this prospectus.
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally, if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you are not an "active
participant" in an employer maintained qualified retirement plan or you have
"Adjusted Gross Income" (as defined under Federal tax laws) which does not
exceed the "applicable dollar limit." IRA contributions must be made by no later
than the due date for filing your income tax return for that year. For a single
taxpayer, the applicable dollar limitation is $45,000 in 2004, with the amount
of IRA contribution which may be reduced proportionately for Adjusted Gross
Income between $45,000-$55,000. For married couples filing jointly, the
applicable dollar limitation is $65,000, with the amount of IRA contribution
which may be reduced proportionately between $65,000-$75,000. There is no
deduction allowed for IRA contributions when Adjusted Gross Income reaches
$55,000 for individuals and $75,000 for married couples filing jointly. Income
limits are scheduled to increase until 2006 for single taxpayers and 2007 for
married taxpayers.
The maximum tax deductible annual contribution that a divorced spouse with no
other income may make to an IRA is the lesser of (1) the maximum amount allowed
by law, including catch-up contributions if applicable or (2) 100% of taxable
alimony.
If you should contribute more than the maximum contribution amount to your
IRA, the excess amount will be considered an "excess contribution." You are
permitted to withdraw an excess contribution from your IRA before your tax
filing date without adverse tax consequences. If, however, you fail to withdraw
any such excess contribution before your tax filing date, a 6% excise tax will
be imposed on the excess for the tax year of contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See "Premature Distributions" on page 76).
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you may also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and, if your
non-working spouse has compensation, his/her compensation must be less than your
compensation for the year. Contributions of up to the maximum amount allowed by
law, including catch-up contributions if applicable, may be made to your IRA and
the spousal IRA if the combined compensation of you and your spouse is at least
equal to the amount contributed. If requirements for deductibility (including
income levels) are met, you will be able to deduct an
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IRA DISCLOSURE STATEMENT CONTINUED
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
amount equal to the least of (i) the amount contributed to the IRAs; (ii) twice
the maximum amount allowed by law, including catch-up contributions if
applicable; or (iii) 100% of your combined gross income.
Contributions in excess of the contribution limits may be subject to penalty.
See "Contributions And Deductions" on page 75. If you contribute more than the
allowable amount, the excess portion will be considered an excess contribution.
The rules for correcting it are the same as discussed above for regular IRAs.
Other than the items mentioned in this section, all of the requirements
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA and reinvest it in another IRA. Withdrawals may also be made from other IRAs
and contributed to this contract. This transfer of funds from one IRA to another
is called a "rollover" IRA. To qualify as a rollover contribution, the entire
portion of the withdrawal must be reinvested in another IRA within 60 days after
the date it is received. You will not be allowed a tax-deduction for the amount
of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. You may later roll over such a
contribution to another qualified retirement plan. (You may roll less than all
of a qualified distribution into an IRA, but any part of it not rolled over will
be currently includable in your income without any capital gains treatment.)
Funds can also be rolled over from an IRA to another IRA or to another qualified
retirement plan or 457 government plan.
DISTRIBUTIONS
(a) PREMATURE DISTRIBUTIONS
At no time can your interest in your IRA be forfeited. To insure that your
contributions will be used for retirement, the federal tax law does not permit
you to use your IRA as security for a loan. Furthermore, as a general rule, you
may not sell or assign your interest in your IRA to anyone. Use of an IRA as
security or assignment of it to another will invalidate the entire annuity. It
then will be includable in your income in the year it is invalidated and will be
subject to a 10% tax penalty if you are not at least age 59 1/2 or totally
disabled. (You may, however, assign your IRA without penalty to your former
spouse in accordance with the terms of a divorce decree.)
You may surrender any portion of the value of your IRA. In the case of a
partial surrender which does not qualify as a rollover, the amount withdrawn
will be includable in your income and subject to the 10% penalty if you are not
at least age 59 1/2 or totally disabled unless you comply with special rules
requiring distributions to be made at least annually over your life expectancy.
The 10% tax penalty does not apply to the withdrawal of an excess
contribution as long as the excess is withdrawn before the due date of your tax
return. Withdrawals of excess contributions after the due date of your tax
return will generally be subject to the 10% penalty unless the excess
contribution results from erroneous information from a plan trustee making an
excess rollover contribution or unless you are over age 59 1/2 or are disabled.
(b) DISTRIBUTION AFTER AGE 59 1/2
Once you have attained age 59 1/2 (or have become totally disabled), you may
elect to receive a distribution of your IRA regardless of when you actually
retire. In addition, you must commence distributions from your IRA by April 1
following the year you attain age 70 1/2. You may elect to receive the
distribution under any one of the periodic payment options available under the
contract. The distributions from your IRA under any one of the periodic payment
options or in one sum will be treated as ordinary income as you receive them to
the degree that you have made deductible contributions. If you have made both
deductible and nondeductible contributions, the portion of the distribution
attributable to the nondeductible contribution will be tax-free.
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(c) INADEQUATE DISTRIBUTIONS--50% TAX
Your IRA is intended to provide retirement benefits over your lifetime. Thus,
federal tax law requires that you either (1) receive a lump-sum distribution of
your IRA by April 1 of the year following the year in which you attain age
70 1/2 or (2) start to receive periodic payments by that date. If you elect to
receive periodic payments, those payments must be sufficient to pay out the
entire value of your IRA during your life expectancy (or over the joint life
expectancies of you and your spouse/beneficiary). The calculation method is
defined under IRS regulations. If the payments are not sufficient to meet these
requirements, an excise tax of 50% will be imposed on the amount of any
underpayment.
(d) DEATH BENEFITS
If you (or your surviving spouse) die before receiving the entire value of your
IRA, the remaining interest must be distributed to your beneficiary (or your
surviving spouse's beneficiary) in one lump-sum by December 31st of the fifth
year after your (or your surviving spouse's) death, or applied to purchase an
immediate annuity for the beneficiary. This annuity must be payable over the
life expectancy of the beneficiary beginning by December 31st of the year
following the year after your or your spouse's death. If your spouse is the
designated beneficiary, he or she is treated as the owner of the IRA. If minimum
required distributions have begun, and no designated beneficiary is identified
by December 31st of the year following the year of death, the entire amount must
be distributed based on the life expectancy of the owner using the owner's age
prior to death. A distribution of the balance of your IRA upon your death will
not be considered a gift for federal tax purposes, but will be included in your
gross estate for purposes of federal estate taxes.
ROTH IRAS
Section 408A of the Code permits eligible individuals to contribute to a type of
IRA known as a "Roth IRA." Contributions may be made to a Roth IRA by taxpayers
with adjusted gross incomes of less than $160,000 for married individuals filing
jointly and less than $110,000 for single individuals. Married individuals
filing separately are not eligible to contribute to a Roth IRA. The maximum
amount of contributions allowable for any taxable year to all IRAs maintained by
an individual is generally the lesser of the maximum amount allowed by law and
100% of compensation for that year (the maximum amount allowed by law is phased
out for incomes between $150,000 and $160,000 for married and between $95,000
and $110,000 for singles). The contribution limit is reduced by the amount of
any contributions made to a traditional IRA. Contributions to a Roth IRA are not
deductible.
For taxpayers with adjusted gross income of $100,000 or less, all or part of
amounts in a traditional IRA may be converted, transferred or rolled over to a
Roth IRA. Some or all of the IRA value will typically be includable in the
taxpayer's gross income. Provided a rollover contribution meets the requirements
of IRAs under Section 408(d)(3) of the Code, a rollover may be made from a Roth
IRA to another Roth IRA.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLL OVER, TRANSFER OR
CONVERT ALL OR PART OF A TRADITIONAL IRA TO A ROTH IRA. PERSONS CONSIDERING A
ROLLOVER, TRANSFER OR CONVERSION SHOULD CONSULT THEIR OWN TAX ADVISOR.
"Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements: (1)
the distribution must be made (a) after the owner of the IRA attains age 59 1/2;
(b) after the owner's death; (c) due to the owner's disability; or (d) for a
qualified first time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that
is at least five tax years after the first year for which a contribution was
made to any Roth IRA established for the owner or five years after a rollover,
transfer, or conversion was made from a traditional IRA to a Roth IRA.
Distributions from a Roth IRA that are not qualified distributions will be
treated as made first from contributions and then from earnings, and taxed
generally in the same manner as distributions from a traditional IRA.
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IRA DISCLOSURE STATEMENT CONTINUED
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Distributions from a Roth IRA need not commence at age 70 1/2. However, if
the owner dies before the entire interest in a Roth IRA is distributed, any
remaining interest in the contract must be distributed under the same rules
applied to traditional IRAs where death occurs before the required beginning
date.
The contract may not be available to Roth IRA's in New York.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions or 50% for underpayments),
you must file Form 5329 with the Internal Revenue Service. The form is to be
attached to your federal income tax return for the tax year in which the penalty
applies. Normal contributions and distributions must be shown on your income tax
return for the year to which they relate. If you were at least 70 1/2 at the end
of the prior year, we will indicate to you and to the IRS, on Form 5498, that
your account is subject to minimum required distributions.
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APPENDIX A
ACCUMULATION UNIT VALUES
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As we have indicated throughout this prospectus, the Strategic Partners Plus
Variable Annuity is a contract that allows you to select or decline any of
several features that carries with it a specific asset-based charge. We maintain
a unique unit value corresponding to each combination of such Contract features.
Here we depict the historical unit values corresponding to the contract features
bearing the highest and lowest combinations of asset-based charges during the
period November 10, 2003 to December 31, 2003. Under the version of the
contracts described in this prospectus, the highest combinations of asset-based
charges now amounts to 1.75%, while the lowest combination of asset-based
charges remains at 1.40%.
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ACCUMULATION UNIT VALUES
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
* COMMENCEMENT OF BUSINESS
** EFFECTIVE DECEMBER 5, 2003, THE EVERGREEN CAPITAL GROWTH FUND WAS MERGED
INTO THE EVERGREEN GROWTH AND INCOME FUND.
*** EFFECTIVE DECEMBER 5, 2003, THE EVERGREEN VA GLOBAL LEADERS FUND WAS MERGED
INTO THE EVERGREEN VA INTERNATIONAL EQUITY FUND.
**** EFFECTIVE DECEMBER 5, 2003, THE EVERGREEN BLUE CHIP FUND AND THE EVERGREEN
VA MASTERS FUND WERE EACH MERGED INTO THE EVERGREEN VA FUND.
81
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
82
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
* COMMENCEMENT OF BUSINESS
** EFFECTIVE DECEMBER 5, 2003, THE EVERGREEN CAPITAL GROWTH FUND WAS MERGED
INTO THE EVERGREEN GROWTH AND INCOME FUND.
*** EFFECTIVE DECEMBER 5, 2003, THE EVERGREEN VA GLOBAL LEADERS FUND WAS MERGED
INTO THE EVERGREEN VA INTERNATIONAL EQUITY FUND.
**** EFFECTIVE DECEMBER 5, 2003, THE EVERGREEN BLUE CHIP FUND AND THE EVERGREEN
VA MASTERS FUND WERE EACH MERGED INTO THE EVERGREEN VA FUND.
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
APPENDIX B
HYPOTHETICAL ILLUSTRATIONS
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The illustrations set out in the following tables depict hypothetical values
based on the following salient assumptions:
We assume that (i) the contract was issued to a male who was 60 years old
on the contract date, (ii) he made a single purchase payment of $100,000 on the
contract date, and (iii) he took no withdrawals during the time period
illustrated.
To calculate the contract values illustrated on the following pages, we
start with certain hypothetical rates of return (i.e., gross rates of return
equal to 0% and 10% annually). The hypothetical gross rates of return are first
reduced by the arithmetic average fees of the mutual funds underlying the
variable investment options. To compute the arithmetic average of the fees of
the underlying mutual funds, we added the investment management fees, other
expenses, and any 12b-1 fees of each underlying mutual fund and then divided
that sum by the number of mutual funds within the annuity product. In other
words, we assumed hypothetically that values are allocated equally among the
variable investment options. If you allocated the contract value unequally among
the variable investment options, that would affect the amount of mutual fund
fees that you bear indirectly, and thereby would influence the values under the
annuity contract. Based on the fees of the underlying mutual funds as of
December 31, 2003 (not giving effect to the expense reimbursements or expense
waivers that are described in the prospectus fee table), the arithmetic average
fund fees were equal to % annually. If we did take expense reimbursements and
waivers into account here, that would have lowered the arithmetic average, and
thereby increased the illustrated values. The hypothetical gross rates of return
are next reduced by the insurance and administrative charge associated with the
selected death benefit option. Finally, the contract value is reduced by the
annual charges for the optional benefits that are illustrated as well as by the
contract maintenance charge.
The hypothetical gross rates of return of 0% and 10% annually, when
reduced by the arithmetic average mutual fund fees and the insurance and
administrative charge, correspond to net annual rates of return of ( %) and
( %), respectively. These net rates of return do not reflect the contract
maintenance charge or the charges for optional benefits. If those charges were
reflected in the above-referenced net returns, then the net returns would be
lower.
An 'N/A' in these columns indicates that the benefit cannot be exercised
in that year.
A '0' in these columns indicates that the contract has terminated due to
insufficient account value and, consequently, the guaranteed benefit has no
value.
The values that you actually realize under a contract will be different
from what is depicted here if any of the assumptions we make here differ from
your circumstances. We will provide you with a personalized illustration upon
request.
Please see your prospectus for the meaning of the terms used here and for
a description of how the various illustrated features operate.
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
STRATEGIC PARTNERS PLUS
$100,000 SINGLE CONTRIBUTION AND NO WITHDRAWALS
MALE, ISSUE AGE 60
BENEFITS:
STEP-UP GUARANTEED MINIMUM DEATH BENEFIT
GUARANTEED MINIMUM INCOME BENEFIT
INCOME APPRECIATOR BENEFIT
10% ASSUMED GROSS RATE OF RETURN
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0% ASSUMED GROSS RATE OF RETURN
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The hypothetical investment results are illustrative only and should not be
deemed a representation of past or future investment results. Actual investment
results may be more or less than those shown and will depend on a number of
factors, including investment allocations made by the owner. The contract values
and guaranteed benefits for a contract would be different from the ones shown if
the actual gross rate of investment return averaged 0% or 10% over a period of
years, but also fluctuated above or below the average for individual contract
years. We can make no representation that these hypothetical investment results
can be achieved for any one year or continued over any period of time. In fact,
for any given period of time, the investment results could be negative.
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-9
EXPLANATION OF HEADINGS
CONTRACT VALUE -- The projected total value of the annuity at the beginning of
the period indicated, after all fees other than withdrawal charges have been
deducted.
SURRENDER VALUE -- The projected cash value of the annuity after any applicable
fees and withdrawal charges payable on surrender.
DEATH BENEFIT VALUE -- Value of base death benefit or GMDB, as indicated.
IAB VALUE -- Percentage of earnings in the contract upon IAB activation based on
the length of time the contract is in force: 7-9 years, 15%; 10-14 years, 20%;
15+ years, 25%. See prospectus for more complete information.
AMOUNT AVAILABLE TO ANNUITIZE -- The contract value plus the IAB value. See
prospectus for more complete information.
GMIB PROTECTED VALUE -- purchase payments (adjusted for withdrawals) compounded
at 5% annually up to the later of age 80 or 7 years from issue or last reset,
subject to a 200% cap. See prospectus for more complete information.
GMIB GUARANTEED ANNUAL PAYOUT FOR SINGLE LIFE WITH 10-YEAR PERIOD CERTAIN -- The
payout determined by applying the GMIB protected value (and IAB value if IAB is
elected) to the GMIB guaranteed annuity purchase rates contained in the
contract. The payout represents the minimum payout to be received when
annuitizing the contract based on the illustrated assumptions. See the
prospectus for more detail.
PROJECTED CONTRACT ANNUAL ANNUITY PAYOUT FOR SINGLE LIFE ANNUITY WITH 10-YEAR
PERIOD CERTAIN -- The hypothetical annuity payout based on the projected
contract value (and IAB value if IAB is elected) calculated using the minimum
payout rates guaranteed under the contract ("Guaranteed Minimum Payout Rates").
If the GMIB benefit is elected, the greater of the following would be paid at
annuitization:
(1) The GMIB Guaranteed Payout, or
(2) The annuity payout available under the contract that is calculated based
on the actual contract value at annuitization and the better of the
Guaranteed Minimum Annuity Payout Rates or the Current Annuity Payout
Rates in effect at the time of annuitization. To show how the GMIB rider
works relative to the annuity payout available under the contract we
included the Projected Contract Annuity Payout column which shows
hypothetical annuity payouts based on the projected contract values and
the Guaranteed Minimum Payout Rates. We did not illustrate any
hypothetical annuity payouts based on Current Annuity Payout Rates
because these rates are subject to change at any time; however,
historically the annuity payout provided under such Current Annuity
Payout Rates have been significantly higher than the annuity payout that
would be provided under Guaranteed Minimum Annuity Payout Rates.
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P2401NY
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Incorporated by reference to Part II, Item 2 or Part II, Item 5 of the
Registrant's most recently filed report on Form 10-Q or 10-K, respectively.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant, in connection with certain affiliates, maintains various
insurance coverages under which the underwriter and certain affiliated persons
may be insured against liability which may be incurred in such capacity, subject
to the terms, conditions and exclusions of the insurance policies.
New Jersey, being the state of organization of Pruco Life Insurance Company
of New Jersey ("PLNJ") permits entities organized under its jurisdiction to
indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 of the New Jersey Statutes Annotated. The text of PLNJ's By-Law Article
V, which relates to indemnification of officers and directors, is incorporated
by reference to Exhibit 3(ii) to its Form 10-Q filed August 15, 1997.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") 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 16. EXHIBITS
(a) Exhibits
(1) (a) Form of Distribution Agreement between Prudential Investment Management
Services LLC (Underwriter) and Pruco Life Insurance Company of New Jersey
(Depositor). (Note 5)
(3) (i) Articles of Incorporation of Pruco Life Insurance Company of New Jersey
as amended through February 12, 1998 (Note 8)
(ii) By-Laws of Pruco Life Insurance Company of New Jersey as amended August
4, 1999 (Note 9)
(4) (a) Strategic Partners Annuity One Variable Annuity Contract VBON 2000-NY
Ed. 10/2000 (Note 6)
(4) (b) Strategic Partners Annuity One Variable Annuity Contract VDCA
2000-NY Ed. 10/2000 (Note 6)
(4) (c) Strategic Partners Annuity One Endorsement (MVA) ORD 112805-NY
(Note 7)
(4) (d) Strategic Partners Application ORD 99730 NY-1 (Note 7)
(4) (e) Strategic Partners Annuity One Variable Annuity Contract VDCA-NY Ed
5-2003 (Note 10)
(4) (f) Strategic Partners Annuity One Endorsement (GMIB) ORD 112737-NY
(Note 10)
(4) (g) Strategic Partners Annuity One Endorsement (Transfers) ORD 112878
(Note 10)
(4) (h) Strategic Partners Annuity One Endorsement (IAB) ORD 112718-NY
(Note 10)
(4) (i) Application form for the Contract (Note 11)
(4) (j) Endorsement (GMIB) ORD 112963-NY (Note 11)
(5) Opinion of Counsel as to legality of the securities being registered.
(Note 1)
(23) Consent of PricewaterhouseCoopers LLP (Note 11)
II-1
(24) Powers of Attorney.
(a) James J. Avery, Jr. (Note 3)
(b) David R. Odenath, Jr. and William J. Eckert, IV (Note 2)
(c) Ronald P. Joelson (Note 4)
(d) Vivian L. Banta, Richard J. Carbone, and Helen M. Galt (Note 5)
(e) Andrew J. Mako (Note 7)
- -------------------
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Form S-6, Registration No. 333-49334,
filed February 8, 2001 on behalf of the Pruco Life of New Jersey
Variable Appreciable Account.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 10 to Form
S-1, Registration No. 33-20018, filed April 9, 1998 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 14 to Form
S-1, Registration Statement No. 33-20018, filed April 10, 2001 on
behalf of the Pruco Life of New Jersey Variable Contract Real Property
Account.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 5 to Form
S-6, Registration No. 333-85117 filed June 28, 2001 on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 4 to Form
N-4, Registration No. 333-49230 filed December 10, 2002 on behalf of
the Pruco Life of New Jersey Flexible Premium Variable Annuity
Account.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 1 to Form
N-4, Registration No. 333-99275, filed June 27, 2003, on behalf of the
Pruco Life of New Jersey Flexible Premium Variable Annuity Account.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 12 to Form
S-1, Registration No. 33-20018 filed April 16, 1999, on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 9) Incorporated by reference to Form S-6, Registration No. 333-85117
filed August 13, 1999 on behalf of the Pruco Life of New Jersey
Variable Appreciable Account.
(Note 10) Incorporated by reference to Post-Effective Amendment No. 9 to Form
N-4, Registration No. 333-49230, filed September 26, 2003, on behalf
of the Pruco Life of New Jersey Flexible Premium Variable Annuity
Account.
(Note 11) To be filed by Post-Effective Amendment.
II-2
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) Insofar as indemnification for liabilities 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.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Newark, State of New Jersey, on the 26th day of
February, 2004.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Registrant)
By: /s/ ANDREW J. MAKO
-----------------------
ANDREW J. MAKO
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE AND TITLE
-------------------
*
-----------------------------------------
VIVIAN L. BANTA Date February 26, 2004
CHAIRMAN AND DIRECTOR
*
-----------------------------------------
WILLIAM J. ECKERT, IV
VICE PRESIDENT AND CHIEF
ACCOUNTING OFFICER
*By: CLIFFORD E. KIRSCH
-------------------------
* CLIFFORD E. KIRSCH
------------------------------------------ (ATTORNEY-IN-FACT)
JAMES J. AVERY JR.
VICE CHAIRMAN AND DIRECTOR
*
------------------------------------------
RONALD P. JOELSON
DIRECTOR
*
-----------------------------------------
RICHARD J. CARBONE
DIRECTOR
*
----------------------------------------
HELEN M. GALT
DIRECTOR
*
----------------------------------------
DAVID R. ODENATH, JR.
DIRECTOR
*
----------------------------------------
ANDREW J. MAKO
PRESIDENT AND DIRECTOR
II-4
EXHIBIT INDEX
EXHIBITS
(5) Opinion of Counsel