Segregated Portfolio Service

Transcription

1 Premiere Europe Account Premiere Europe Discounted Trust Account International Portfolio Bond Segregated Portfolio Service Client Guide This is an important document. Please keep it safe for future reference.

2 Premiere Europe Account Premiere Europe Discounted Trust Account International Portfolio Bond Segregated Portfolio Service Aims The Premiere Europe Account, Premiere Europe Discounted Trust Account & International Portfolio Bond ( CLIAI Accounts ) have the potential to provide significant tax benefits and, as a consequence, HM Revenue & Customs (HMRC) limits the range of investments you can invest in to ensure that no abuse takes place. An example may be, for instance, investing in private company shares which could enable investors to manipulate valuations and gain artificial tax advantages. Provided, however, certain restrictions are placed on the management of the account, HMRC allows a wider range of investments to be available which can provide the potential for further benefits to policyholders, which your adviser can explain to you. Canada Life International Assurance (Ireland) DAC (CLIAI) offer an investment option called the Segregated Portfolio Service to give appropriate investors the opportunity to take advantage of these benefits. The Segregated Portfolio Service is only available through a Discretionary Fund Manager that has an agreement with CLIAI, who then has the ability to invest in a wider range of assets that are normally not available under HMRC Personal Portfolio Bond regulations. Whilst you may select the Discretionary Fund Manager, they will manage the investment in the Segregated Portfolio Service on behalf of CLIAI without any influence or direction from you. You should only select this service if you are willing to pass all investment decision-making over to your Discretionary Fund Manager. If you do not want to give up all investment decision-making to your Discretionary Fund Manager, this service is not appropriate for you. Risks Like any other investment, there are risks involved when investing in the CLIAI Accounts. There are some risks that apply to all investments into the account. Details of these are included in the Key Features document. Additional risks may arise from the fund selections your Discretionary Fund Manager makes when they create a portfolio to suit your investment needs and attitude to risk. The risks that apply to your portfolio will be identified by your Discretionary Fund Manager following a detailed assessment of the assets they offer. These risks will have a bearing on: your Discretionary Fund Manager s aim for your portfolio; the assets underlying your portfolio; and your Discretionary Fund Manager s own view of the risks that apply to the assets that make up your portfolio. You should be aware that these risks, together with the risks generally applying to your portfolio, mean that the value of your investment can go down as well as up. Specific risks for the Segregated Portfolio Service There are specific risks that apply to this service and you must be aware of these before you invest: if either you, your adviser or your chosen Discretionary Fund Manager fail to adhere to the terms of the agreement; and/or if HMRC or the Irish Revenue Commissioners change their view regarding the service or they change the tax regulations applying to bonds, you could face punitive tax charges if you choose to remain in the Segregated Portfolio Service. To avoid this, the policy includes the option to instruct the investment manager to sell the non-standard assets and use the standard investment options should these circumstances arise. 2 Segregated Portfolio Service Client Guide

3 Investor Obligations The Premiere Europe and Premiere Europe Discounted Trust Account Client Guide (reference CLIA4) and the International Portfolio Bond Product Guide (reference ID6829) allow you to select certain types of investment allowable under HMRC rules. However, as you have selected the Segregated Portfolio Service to get the benefit of a wider range of investment types, certain terms that apply to your CLIAI Account will not apply while you remain invested in the Segregated Portfolio Service. You cannot invest in any assets other than the Segregated Portfolio Service while this agreement remains in force. Your Discretionary Fund Manager will manage your account investments in accordance with your risk profile and investment objective for as long as the agreement stays in place. They will only change the asset mix in your portfolio if your risk profile and/or your investment objectives change. Neither you nor your adviser may instruct or seek to influence the decisions of your Discretionary Fund Manager when they purchase any asset on your behalf. Neither you nor your adviser has any discretion over the choice of investments your Discretionary Fund Manager makes. For instance, you cannot ask for a bespoke investment to be included in your portfolio. Should you or your adviser have any instructions in respect of your portfolio, you should give these to CLIAI rather than your Discretionary Fund Manager. This will ensure that you are able to comply with the investment agreement and the restrictions listed above, so that the bond will not be treated as a Highly Personalised Account for tax purposes. If your risk profile and/or your investment objectives change, please let us know. We will instruct your Discretionary Fund Manager to change the asset mix in your portfolio to ensure that they manage your investment accordingly. We will not pass on your instructions if they are likely to conflict with the terms of the investment agreement. If we feel that your instructions do not comply with the agreement, we will let you know. Your Discretionary Fund Manager knows that they cannot take instructions directly from you or your adviser. CLIAI has the authority to prevent the purchase of any particular asset or instruct the sale of an asset, should it become aware that you or your Discretionary Fund Manager overlooked the rules of the agreement. Bond Liquidity Your Discretionary Fund Manager will ensure that sufficient cash is available to maintain a positive balance in your account s transaction account. If you need to make a withdrawal from your account for any reason, please let us know and we will arrange for your Discretionary Fund Manager to sell sufficient assets to cover the withdrawal. Again, for the reasons given above, you cannot ask for specific assets to be sold to maintain the transaction account balance or to cover withdrawal requests. Cancelling the Agreement Although the opportunity to invest in a wider range of assets may seem to be more appealing than those limited by HMRC regulations, you may decide that not being able to influence investment decisions is too restrictive. You will need to decide whether you would prefer to make your own decisions, albeit within the limitations imposed by HMRC regulations, or let your Discretionary Fund Manager continue to manage it on your behalf. Should you decide that you want to make your own investment decisions or you want your adviser to take over the decision-making process, you will need to advise CLIAI in writing to cancel the agreement with the Discretionary Fund Manager. CLIAI will advise the Discretionary Fund Manager that the agreement has been cancelled and will instruct them to sell all non-permissible holdings at the earliest possible opportunity. Once all the Segregated Portfolio Service holdings have been sold, the cash value of the assets will be returned to CLIAI. Once CLIAI has paid the cash from the sale of the portfolio into your account s transaction account, you will be able to purchase other assets that better suit your needs and manage them yourself or appoint a new Discretionary Fund Manager. If your Discretionary Fund Manager is not able to sell assets for any reason, this will delay your ability to make your own investment choices. Segregated Portfolio Service Client Guide 3

4 Investment Restrictions Assets that are permissible under HMRC Personal Portfolio Bond regulations are limited to the following: Authorised unit trusts Authorised investment trusts Open-Ended Investment Companies Linked life funds Cash/Deposits. The assets that may be held under the Segregated Portfolio Service are not restricted by the HMRC Personal Portfolio Bond regulations. They are, however, subject to regulations set out by the Central Bank of Ireland, which regulates CLIAI. The permitted assets, in addition to those normally allowed for an international bond, include: UK and Global equities (listed on a regulated exchange); UK gilts; Government, municipal and corporate bonds; Eurobonds; Structured products. Moving to the Segregated Portfolio Service from an existing discretionary fund management agreement (within an existing Premiere Europe Account or International Portfolio Bond) If you decide to move from an existing arrangement with a Discretionary Fund Manager to the Segregated Portfolio Service, you will need to understand that the relationship with your chosen Discretionary Fund Manager will change significantly. Where you were previously able to influence investment decisions, you will find that this flexibility disappears under the new terms to which you will be subject. You will not be able to hold assets other than the Segregated Portfolio Service investments within your account. You should consider very carefully whether this service is suitable for your needs. The Central Bank of Ireland guidelines may allow other types of investment to be held, but we believe the above would cover most requirements. However, CLIAI will provide support in assessing other types of investment should your Discretionary Fund Manager want to use them. CLIAI will monitor the assets held within portfolios from time to time. If we identify any non-compliant assets, we will advise the Discretionary Fund Manager, who must dispose of the assets immediately. 4 Segregated Portfolio Service Client Guide

5 Transferring assets from an existing discretionary portfolio (to a new or existing Premiere Europe Account or an existing International Portfolio Bond) You can choose to transfer assets you already hold in a portfolio that is being managed by a qualifying Discretionary Fund Manager. Such a transfer can be instead of or in addition to a cash payment. Assets can be transferred in-specie which means your Discretionary Fund Manager need not physically sell the assets. If assets are already held, transferring them to CLIAI in specie can save costs and eliminates time spent out of the market, which may lessen risk. However, in-specie transfers of permitted assets are only allowable subject to the following conditions. Any assets you want to transfer into your bond must be held by your Discretionary Fund Manager on your behalf and cannot be held directly by you. If you want to transfer any assets you hold directly, you must first transfer them to your Discretionary Fund Manager. Points to consider Wrapping a discretionary portfolio in an offshore bond that has been transferred in-specie is a disposal for capital gains tax purposes. This will create a tax liability if the gain on your discretionary portfolio, plus any other gains, exceeds your annual capital gains tax allowance. Holdover relief is not available, even when the bond is held in a trust, as the tax wrapper has changed. The transferred funds become the property of CLIAI and it is then the bond that represents the trust property, not the underlying assets in the transferred portfolio. The in-specie process is dependent on the time taken by your Discretionary Fund Manager to register Canada Life International Assurance (Ireland) DAC as the owner of the assets. In-specie transfers can take some time to complete and you should factor this into any plans you have for your bond for instance, using the bond to provide income. Your Discretionary Fund Manager has complete discretion over the nature and management of the assets it will accept into your portfolio, including the choice of any wrapper in which they are held. They are not obliged to accept any assets you hold directly. Your Discretionary Fund Manager has complete discretion over the assets that can be transferred into your bond. You must not influence the selection of assets, but you may indicate your desired level of risk and your broad investment objectives. This also applies to your investment adviser or any other person acting on your behalf. No individual asset can represent more than 33% of the total value of the assets you want to transfer to CLIAI. You can have no influence on when individual assets are sold and no influence over any assets that are subsequently purchased. Any assets held by you, or on your behalf by your Discretionary Fund Manager, must have been held for more than six months. Your Discretionary Fund Manager must ensure that all investments held within your bond comply with the European Communities (Life Assurance) Framework Regulations 1994 ( Irish Investment Regulations ). The value of your first transfer of assets must be at least 100,000 ( 150,000 or US$200,000) whenever this occurs. Segregated Portfolio Service Client Guide 5

6 For further information about Canada Life International Assurance (Ireland) DAC, please visit or call us on +44 (0) Canada Life International Assurance (Ireland) DAC, registered in Ireland no Registered office: Irish Life Centre, Lower Abbey Street, Dublin 1, Ireland Telephone: +44 (0) Fax: +44 (0) Member of the Association of International Life Offices. Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland. This paper is made from recycled materials ID R