(a) Every variable annuity contract shall be subject to the following provisions:

1. (1) Each variable annuity contract delivered or issued for delivery in this State shall provide that neither expenses actually incurred, other than taxes on the investment return, nor mortality actually experienced, shall adversely affect the dollar amount of variable annuity payments to any annuitant for whom variable annuity payments have commenced. Where a group variable annuity contract provides that the scale of charges to be made against the assets of a separate account may be changed without the consent of the participants for whom variable annuity payments have commenced, the contract shall provide that such changes may not adversely affect the dollar amount of variable annuity payments which have commenced. The method of computing the dollar amount of variable annuity payments shall be such that, if the annual rate of investment return of the separate account, as defined in section 50.1(a)(6) of this Part, were six and one-half percent at all times from the issue of the contract, such amounts would not decrease. The superintendent may authorize the use of other methods or rates in computing the dollar amount of variable annuity payments where such methods or rates are determined by the superintendent to be fair, equitable, reasonable and not less favorable to participants or annuitants.

2. (2) The reserve liability for variable annuities shall be established in compliance with the applicable provisions of section 4217 of the Insurance Law, as amended, and in accordance with actuarial procedures that recognize the variable nature of the benefits provided and their dependence on the net investment return of the separate account or accounts. With respect to individual variable annuities, the mortality table used in calculating the reserve liability shall be:

   1. (i) the annuity table for 1949 with projection scale B; or
   2. (ii) the progressive annuity table applicable to persons born in 1900, adjusted by a setback of one year of age for each complete 25 years by which the year of birth is later than 1900, and a set-forward of one year with respect to lives born before 1900; or

   3. (iii) any other table approved by the superintendent. With respect to group variable annuities, the mortality table used in calculating the reserve liability shall be:

      1. (a) the group annuity mortality table for 1951, projected to the year of retirement, using projection scale C; or
      2. (b) any other table approved by the superintendent. In determining the valuation factors for group variable annuities, a five-year grouping of calendar years of retirement may be used.
3. (3) Except as otherwise permitted by the superintendent, each authorized insurance company issuing variable annuity contracts shall accumulate an annuitant mortality fluctuation fund or funds over and above the required contract reserves and liabilities, pursuant to a plan for such accumulation which specifies reasonable maximum targets for such fund or funds and is approved by the superintendent as otherwise reasonable. Losses arising from mortality actually experienced shall first be charged against such mortality fluctuation fund or funds until such fund or funds are exhausted and shall then be charged against the special contingent reserve fund.

(b) Every individual variable annuity contract delivered or issued for delivery in this State, and every certificate or other writing furnished by the insurer to an employee in this State under a group variable annuity contract in connection with the election of a variable annuity shall contain on its first page, in addition to the required provisions of section 4240(a)(11) of the Insurance Law, a statement which:

1. (1) discloses the smallest annual rate of investment return which would have to be earned on the assets of the separate account so that the dollar amount of variable annuity payments will not decrease; or
2. (2) sets forth the conditions under which the dollar amount of variable annuity payments will not decrease, and a statement of any explicit charges against the assets of the separate account.