Explaining your Portfolio Bond fees and charges. For UK use only

Transcription

1 Explaining your Portfolio Bond fees and charges For UK use only

2 To help you understand how your investment with Old Mutual International works, this guide summarises the fees and charges that could apply to your bond. The bonds covered by this guide are: Old Mutual International Isle of Man International Portfolio Bond Life International Portfolio Bond Redemption International Select Bond Life International Select Bond Redemption Old Mutual International Ireland European Portfolio Bond Life European Wealth Bond Life European Select Bond Life If you are considering investing in one of our bonds, you should read this guide in conjunction with: the relevant key features document recommended by your financial adviser. This provides key information on the bond you are considering your personalised illustration the Policy Terms. Your financial adviser will be able to help you with any queries you might have on fees and charges and how these might affect your investment. We recommend that you keep this guide in case you need to refer to it in the future. All references to Old Mutual International in this guide refer to Old Mutual International Isle of Man Limited and Old Mutual International Ireland dac. Full details of the charges can be found in the Policy Terms applicable to your bond. You will also receive confirmation of the charges that apply in your personalised illustration and within your policy documents. What do the fees and charges pay for? Fees can be paid from your bond to pay on your behalf: your financial adviser for the advice and the ongoing service they provide you, reflecting the amount you have agreed with them a fund adviser that you ve appointed to manage your investments, reflecting the amount you have agreed with them. Charges are taken from your bond by Old Mutual International to cover costs such as: setting up and administering your bond charges applied by discretionary asset managers appointed by Old Mutual International at your request. There are also third-party charges on the funds you select to cover the costs of fund managers to run these funds. What types of fees and charges are there? Fees and charges may either be: a fixed monetary fee or charge a percentage of value fee or charge. This means the fee or charge is a percentage of a specific value, for example, the amount you ve invested or the value of your Portfolio Fund on a given date. Please note, if the fee or charge is a percentage of the value of your bond, we will calculate the amount payable using the value of your bond on the last working day of March, June, September and December each year. We could change these dates in the future but we would let you know in advance. The descriptions in this guide will tell you what each type of charge is. When are fees and charges deducted from my portfolio bond? Fees and charges will be deducted from your bond either: as a one off deduction at the time we are told to take that fee or charge as a quarterly deduction on what is called a deduction date. The deduction dates and the quarters to which they relate are: The quarter for which the fee or charge payable is calculated Quarter ending the last working day of March June September December The date on which fee and charges for the specified quarter are deducted from your bond Deduction date is the last working day of May August November February The descriptions in this guide will tell you when a charge is paid. 2

3 Financial adviser fees This section covers the fees that could be deducted from your bond. Financial adviser fees You will have agreed with your financial adviser the fees that you ll pay to cover the cost of the: initial advice given to you, including the recommendation to invest into an Old Mutual International Bond; and/or, any ongoing service they provide to you. The fees you ve agreed to pay are between you and your financial adviser. Old Mutual International is not involved in setting these fees. You can pay financial adviser fees directly or you can authorise us to pay these from your bond by facilitating payment of the financial adviser fee. Alternatively, you can choose a combination of these. You should discuss how best to pay these fees with your financial adviser. Initial fee There are two options for the payment of an initial fee. It can be paid before your premium is invested, in which case we will deduct the fee from the amount you send us before it is invested. Or it can be paid after your premium is invested and we deduct the fee as a withdrawal from your policy. Your financial adviser will be able to recommend the approach which is best for you, taking into account your personal circumstances and any tax implications including the impact on your 5% tax-deferred withdrawal allowance. You can find more information about your 5% tax-deferred withdrawal allowance on the next page. Ongoing service fee If you ve agreed to pay an ongoing fee to your adviser for the services they provide, Old Mutual International can pay this from your bond. We can arrange to pay an ongoing service fee where this is either: a fixed monetary amount, or; a percentage of the value of the portfolio fund. Whichever fee is payable, we calculate the amount payable quarterly and deduct at the next deduction date. Paying an ongoing service fee from your bond counts as part of the 5% tax-deferred withdrawal allowance. Ad-hoc FINANCIAL adviser fee You may instruct us to pay a one off fee to your adviser at any time. You ll need to tell us the monetary amount or percentage of the bond value you want us to pay and the asset from which this should be taken. We ll pay an ad-hoc adviser fee by taking a one off payment from your bond. This payment counts as part of the 5% tax-deferred withdrawal allowance. Authorising FINANCIAL adviser fees We will never deduct and pay a fee to your adviser without your instruction to do so. As part of the application, you ll be asked to state and authorise the adviser fees you want us to deduct and pay to your financial adviser. 3

4 Questions & Answers on financial adviser fees The following questions and answers will help you further understand how financial adviser fees work. If you would like any more information or have questions we haven t answered, please ask your financial adviser. Are there circumstances where you cannot facilitate the payment of fees to my financial adviser? Yes. If you are transferring existing assets in to your bond, we cannot pay your adviser an initial adviser fee. Also, if you start your bond by both paying cash and transferring in assets, we cannot pay an initial fee which is greater than the cash paid. What is the situation with adviser fees where a trust is involved? The payment of fees before or after a trust is set up can be a complex area and you should talk to your financial adviser about what is suitable for your situation. Can I change the level of any ongoing service fee? Yes. You can instruct us at any time to start, change or stop the payment of an ongoing service fee. We ll confirm to you that we ve made the change you ve asked us to make. Can my financial adviser instruct you to change the fees payable? No. We will not start, stop or change a fee unless we have your instruction to do so. What happens if I add a further investment into my bond? If you add a further investment into your bond then you can instruct us to pay an initial fee to your adviser. The choices open to you are as those described on page three under initial fee. If you previously told us to pay an ongoing service fee, this will stop and you will need to give us a new instruction. Do adviser fees paid from my bond include VAT? All fees paid from your bond are inclusive of VAT, but it is up to your adviser to determine whether VAT needs to be paid from that amount. If you want to know more about VAT and advice fees, please ask your financial adviser. What happens if I reconsider my decision to invest and, having done so, return the bond s cancellation notice within the 30 day period allowed? The amount we return to you will not include any fees that we ve paid on your instruction. You would need to discuss the refund of any fee with your financial adviser. How will I know what adviser fees are payable from my bond? Before you apply to invest with us, your personalised illustration will set out the adviser fees payable. We ll then re-confirm the initial fee and ongoing service fee that you ve instructed us to pay as part of the application process. Once your bond is set up, you ll be able to see the fees paid by looking at your Online Service Account on Wealth Interactive, our online wealth management service. If you do not have an Online Service Account, we ll detail these fees in the quarterly statement that we provide to you. 4

5 Fund adviser fees If you appoint a fund adviser to manage the investments within your bond, you may have agreed the fees that you ll pay for their service; this agreement is between you and your fund adviser. Old Mutual International is not involved in setting these fees. You can pay fund adviser fees directly or from your bond. You should discuss how best to pay these fees with your financial adviser. Fund adviser fee We can make a quarterly payment to a fund adviser. This can either be: a fixed monetary amount a percentage of the value of your investment. Whichever fee is payable, we calculate the amount payable quarterly and deduct at the next deduction date. Paying fund adviser fees from your bond counts as part of the 5% tax-deferred withdrawal allowance. Anything paid above the 5% allowance could be taxable. Ad-hoc fund adviser fee At any time, you may instruct us to pay a one off fee to your fund adviser. You ll need to tell us the monetary amount you want us to pay and the asset from which this should be taken. We ll pay this fee by taking a one off payment from your bond. As such, it will count as part of the 5% tax-deferred withdrawal allowance. Anything paid above the 5% allowance could be taxable. Authorising and confirmation of fund adviser fees We will never deduct and pay a fee to your fund adviser without your instruction to do so. If your fund adviser is also your financial adviser, as part of the application for a portfolio bond, you ll be able to state and authorise any fund adviser fees you want us to deduct and pay to your adviser. If your fund adviser is not your financial adviser, or if you want to set up a fee after your initial application, you will need to use a separate form to provide your instructions. We ll always re-confirm your instructions with you. Please note: Fund advisers are not available to the European Wealth Bond. 5

6 Questions & Answers on fund adviser FEES The following questions and answers will help you further understand how the fund adviser fees work. If you would like any more information or have questions that we haven t answered, please ask your financial adviser or fund adviser. Can I change the fees payable? Yes. You can instruct us at any time to start, change or stop the payment of fees to your fund adviser. This will take effect from the next date that the fee is due to be paid. We ll always confirm to you that we ve made the change you ve asked us to make. Can my fund adviser instruct you to change the fees payable? No. Your fund adviser can never change the fees that you ve instructed us to pay. What is the situation with fees where the bond is in trust? All the trustees must agree to the payment of fees to a fund adviser. If the bond is put into trust after it is set up, no future fees will be paid until authorised by all trustees. Do fees paid from my bond include VAT? It is not possible for us to know whether or not VAT is payable on the fees that you ve instructed us to pay your fund adviser. We will only ever pay the amount that you ve told us to pay. It is up to your adviser to determine whether VAT needs to be paid from that amount. If you want to know more about VAT and advice fees, please ask your financial adviser or fund adviser. What happens if I reconsider my decision to invest and, having done so, return the bond s cancellation notice within the 30 day period allowed? The amount we return to you will not include any fees that we ve paid on your instruction to your fund adviser. You would need to discuss the refund of any fee with your fund adviser. How will I know what fees have been paid from my bond? We ll re-confirm to you the fund adviser fees that you ve instructed us to pay as part of the application process. Once your bond is set up, you ll be able to see the fees paid by looking at your Online Service Account on Wealth Interactive, our online wealth management service. If you do not have an Online Service Account, we ll detail these fees in the quarterly statement that we provide to you. Do the fees paid towards my fund adviser count towards my 5% taxdeferred annual allowance? When you appoint a fund adviser, any fees are treated as a part surrender and count towards your 5% tax-deferred annual allowance. 6

7 QUESTIONS AND ANSWERS ON FINANCIAL ADVISER AND FUND ADVISER FEES How ARE fees deducted from a bond? How is money taken from a bond to meet the fees payable? Apart from initial fees that are paid before investment in a bond, all financial adviser and fund adviser fees are paid out as withdrawals from the bond. How is an initial fee paid after money is invested in the bond? The initial fee is taken as a part surrender from your Transaction Account before it is used to buy assets or it is transferred to one or more authorised custodians. Please note: authorised custodians are not applicable to the International Select Bond or the European Select Bond. What is the process for calculating a percentage-based ongoing fee? If the ongoing fee is an ongoing service fee, then it is defined as an annual percentage of the value of the assets in the portfolio fund. Therefore, a quarter of the annual percentage is applied to the value of the assets at the quarterly date. It is payable in arrears. If the ongoing fee is a fund adviser fee, then it is calculated as an annual percentage of the value of the assets in the portfolio fund held by each custodian that the fund adviser is appointed to act on behalf of. Therefore, a quarter of the annual percentage is applied to the value of the relevant assets at the quarterly date. It is payable in arrears. For a dealing advice fee, the fee is calculated using an agreed percentage of the value of all assets purchased on the date of purchase. The sums calculated are then retained and paid out on the following quarter. How is an ad-hoc fee paid? Ad-hoc fees need your instruction each time such a fee is to be paid. That instruction needs to contain a dealing instruction for the sale of assets to meet this fee. When are fees deducted? Initial fees after the premium is invested and ad-hoc fees are deducted as a oneoff withdrawal. Initial fees are taken on commencement of the policy and ad-hoc fees are taken at the time we are told to deduct that fee. All other fees (ongoing fees) are deducted quarterly. Where the assets are held by us, any charge deduction asset selected will also be used as the asset to fund ongoing fees. What currencies are fees deducted in? If the initial fee is requested as a percentage then this will be paid in the currency of the premium. However, if a monetary amount is requested, then the currency selected must match the premium currency, and the premium for that currency must be sufficient to cover the fee. All ongoing fees will be deducted in the bond currency. Ad-hoc fees can be deducted in any of the available bond currencies, provided sufficient cash is available in that currency. Your 5% taxdeferred withdrawal allowance It s important to understand how paying fees from your bond works with the 5% tax-deferred withdrawal allowance that is allowed under the UK tax legislation that applies to portfolio bonds, including those available from Old Mutual International. In summary, when investing into an Old Mutual International bond, you can take a part surrender of up to 5% of the amount invested each year without any immediate tax liability. This 5% allowance runs for 20 years. For example, a 100,000 investment into a bond means a yearly 5% tax-deferred withdrawal allowance of 5,000 for 20 years. If you take more than the allowance in any one policy year, you may be liable to income tax at your highest rate on the amount over the allowance. Conversely, if you take less than 5% from the bond each year, the allowance will be carried forward to future years. For example, if you took only 4%, this would last for 25 years. Fees deducted from your bond count toward the 5% tax-deferred withdrawal allowance as they are a payment that you request we make from your bond to cover the cost of advice or services you have agreed to pay to an adviser as part of a legal agreement you have with them. Charges do not count towards the 5% taxdeferred withdrawal allowance as these relate to the costs incurred as part of the contract you have with us to provide you with the benefits of your portfolio bond. The tax-deferred withdrawal allowance applies to all withdrawals you take from the bond as well as any fees, so by paying fees from your bond you reduce the amount of withdrawal you can take for yourself without incurring an income tax liability. Your financial adviser will be able to explain the 5% tax-deferred withdrawal allowance in more detail and relate it to your personal circumstances. Please note: This is based on our current understanding of current tax law for the tax year 2017/

8 DISCRETIONARY ASSET MANAGER charges If you request for Old Mutual International to appoint a discretionary asset manager to manage the investments within your bond, you will agree the charges which will be paid from the policy for the discretionary asset manager services. The charge is an annual percentage of the value of the portfolio fund to be taken quarterly or a monetary amount to be deducted from the value of your portfolio fund to be paid quarterly. DISCRETIONARY ASSET MANAGER CHARGE We can make a quarterly payment to a discretionary asset manager. This can either be: a fixed monetary amount; or a percentage of the value of your investment. Whichever charge is payable, we calculate the amount payable quarterly and deduct at the next deduction date. Paying discretionary asset manager charges from your bond does not count as part of the 5% tax-deferred withdrawal allowance. AUTHORISING AND CONFIRMATION OF DISCRETIONARY ASSET MANAGER CHARGES We will never deduct and pay a charge to your discretionary asset manager without your instruction to do so. If your discretionary asset manager is also your financial adviser, as part of the application for a bond, you ll be able to state and authorise any discretionary asset manager charges you want us to deduct and pay to your adviser. If your discretionary asset manager is not your financial adviser, or if you want to set up a fee after your initial application, you will need to complete a separate form to provide your instructions. 8

9 Questions & Answers on DISCRETIONARY ASSET MANAGER CHARGES The following questions and answers will help you further understand how the discretionary asset manager charges work. If you would like any more information or have questions we haven t answered, please ask your financial adviser or discretionary asset manager. Can the discretionary asset manager charge be changed? Yes, the discretionary asset manager charge can be changed. This will take effect at the next date that the charge is due to be paid and is calculated on a pro-rata basis. Any changes to the charge will be confirmed to you. Is the discretionary asset manager charge subject to VAT? If you have an Isle of Man policy (International Portfolio Bond/International Select Bond), the charge is subject to VAT and therefore the amount of discretionary asset manager charge shown on your charges schedule is inclusive of VAT. If you have an Ireland policy (European Portfolio Bond/European Select Bond/ European Wealth Bond), any charge is not subject to VAT. How will I know what charges have been paid from my bond? The discretionary asset manager charge will be detailed in the quarterly statement that we provide to you. How are charges to the discretionary asset manager treated? Paying discretionary asset manager charges from your bond does not count as part of the 5% tax-deferred withdrawal allowance. 9

10 Old Mutual International s charges This section covers the charges that could be deducted from your bond. Old Mutual International s charges The charges we take from your bond contribute to the costs of setting up and administering it. The types of charges that may apply to your bond are described below. Your adviser will be able to tell you which of these charges will apply to your bond and the amount charged and details will be provided in your personal illustration and again once your bond application has been accepted. Once your bond has been accepted, we will send your charges schedule confirming the portfolio fund charges to you by post or to your Online Service Account if you have one. None of Old Mutual International s portfolio fund charges count towards your 5% taxdeferred withdrawal allowance. Initial charge Depending on the charge structure you choose, there may be an Old Mutual International charge taken from each premium and this initial charge will be taken by way of a reduced allocation. For example, if your premium is 100,000, and your initial charge is 1%, we will reflect the 1% initial charge by an allocation rate of 99% meaning 99,000 is invested. If we are asked to facilitate a fee to your adviser before investment, we will proceed as follows: Investment: 100,000; Fee: 3%; Old Mutual International initial charge of 1% resulting in an allocation rate of 99%. Of the 100,000 payment, we will deduct 3,000 to facilitate the initial fee before investing the remaining 97,000 at a premium allocation rate of 99% equaling 96,030. If we are asked to deduct an initial charge after investment, we will proceed as follows: Investment: From the 100,000 premium, an initial fee of 3,000 is paid to your adviser and an initial charge of 1,000 is deducted (based on 1% of the 100,000 premium) equaling 96,000. Administration charge There may be a fixed monetary charge which is calculated quarterly and deducted at the next deduction date. Management charge Your financial adviser will be able to give you details of the management charge applicable to your bond if this charge applies. It will be calculated quarterly and deducted at the next deduction date. The management charge may be either a single amount or a tiered charge that reduces as the value of your bond increases. Asset dealing charge Depending on the bond you choose, there may be an asset dealing charge. This charge is a fixed monetary amount which is incurred each time we complete an instruction to sell or buy an asset. For example, an instruction to sell one asset and buy another when completed would incur two dealing charges as both a sell and buy instruction are involved. Please note that an asset dealing charge applies to each buy or sell transaction. This means it applies when selling assets to clear an overdrawn Transaction Account. Paper valuation charge We will issue a quarterly statement and valuation free of charge to you but we may charge if you ask us to send you additional paper valuation statements. Authorised custodian amendment charge This charge will apply as a fixed monetary amount to cover our administration costs of making an amendment to the appointment of an authorised custodian. The charge will apply on each transfer of assets from Old Mutual International s default custodian to an authorised custodian, between authorised custodians and from an authorised custodian to Old Mutual International s default custodian, other than the initial appointment of an authorised custodian. This charge is currently 250. Please note: authorised custodians are not applicable to the International Select Bond or the European Select Bond. 10

11 Questions & Answers on Old Mutual International s charges The following questions and answers will help you further understand how Old Mutual International s charges work. If you would like any more information or have questions we haven t answered, please ask your financial adviser. How can I find out what charges I ll pay Old Mutual International? Your financial adviser will be able to tell you the charges that apply to your bond and details will be shown in your personal illustration and again once your bond application has been accepted. Can Old Mutual International change its charges? Yes. We review our monetary charges such as the administration, asset dealing and paper valuation charges each year and we may change them to reflect an increase in Isle of Man or Irish inflation (depending on whether your bond is provided by Old Mutual International Isle of Man or Old Mutual International Ireland) and our administration costs associated with your bond, which are reasonable in amount and reasonably incurred. Any such change will be proportionate to the increase in inflation or administration costs. We will provide you with at least one month s notice of any change. These changes will normally take effect from 1 January of each year. The management charge or initial charge applicable to your bond will remain the same whilst the bond is in existence. Is VAT payable on Old Mutual International charges? Old Mutual International s charges are not subject to VAT. However, if we appoint a discretionary asset manager, their charges are subject to VAT and therefore the amount of discretionary asset manager charge shown on your charges schedule is inclusive of VAT. If you have an Ireland policy (European Portfolio Bond/European Select Bond/ European Wealth Bond), no charges are liable to VAT. What happens if I reconsider my decision to invest and, having done so, return the bond s cancellation notice within the 30 days cancellation period allowed? The amount we return to you will reflect any market loss and will include a refund of any charges that we have taken. The amount we return to you will not include any fees that we ve paid on your instruction to your financial adviser or fund adviser. You would need to discuss the refund of any fee with your financial adviser or fund adviser. How will I know what Old Mutual International charges have been paid from my bond? You ll be able to see the charges paid by looking at your Online Service Account on Wealth Interactive, our online wealth management service. If you do not have an Online Service Account, we ll detail these charges in the quarterly statement that we provide to you. 11

12 THIRD PARTY fees This section sets out the third party charges that you might incur. Not all bonds will incur all of these charges. Your financial adviser will be able to tell you which charges would apply to you. Your personal illustration will confirm the initial fund charge and fund management charges that apply. None of the third party charges count towards your 5% tax-deferred allowance. ASSET charges Assets (also known as funds) offered by external fund managers will have charges to cover the costs of fund management and administration. The charges that may apply are shown below. Your financial adviser will be able to tell you which charges apply to the funds you are invested in. Initial charge Some funds may have an initial charge, this applies each time you invest money into one of these funds. However, across the fund range we offer, we have been able to negotiate the removal of this charge with some fund managers. Annual management charge This charge is normally a percentage of the value of the investment fund itself. It is taken by the fund manager and is part of the fund price calculation. It is possible for a fund to have a performance related charge which will apply should that fund achieve a return greater than the return set for the fund by the fund manager. If this applies to a fund you have chosen, your financial adviser will be able to give you specific details. Annual expenses Also included in the fund price calculation are charges taken by the fund manager for service charges not otherwise taken into account. These can include custody services, excess dealing costs (for example, stamp duty) and the cost of services such as legal and audit services. OTHER THIRD PARTY CHARGEs There are various other third party charges related to the portfolio bond that may apply to certain transactions. For example, safe custody charges imposed by custodians or a bank may impose a charge for certain transactions, such as a telegraphic transfer. Full details are provided in the Policy Terms. 12

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14 This document was last reviewed in November Please confirm with your financial adviser that this is the most up-to-date document for your product or servicing needs. This document is based on Old Mutual International s interpretation of the law and HM Revenue and Customs practice as at May We believe this interpretation is correct, but cannot guarantee it. Tax relief and the tax treatment of investment funds may change. The value of any tax relief will depend on the investor s individual circumstances. Full details of the relevant products can be obtained from the product literature, key features document, and product Terms which are available from Old Mutual International or your financial adviser. The value of investments can fall as well as rise and you may not get back what you put in. Calls may be monitored and recorded for training purposes and to avoid misunderstandings. Old Mutual International Isle of Man Limited is registered in the Isle of Man under number 24916C. Registered and Head Office: King Edward Bay House, King Edward Road, Onchan, Isle of Man, IM99 1NU, British Isles. Phone: +44 (0) Fax: +44 (0) Licensed by the Isle of Man Financial Services Authority. All promotional material is approved by Old Mutual Wealth Limited. Old Mutual Wealth Limited is authorised and regulated by the Financial Conduct Authority. Financial Services register number The rules made under the Financial Services and Markets Act 2000 (as amended) for the protection of retail clients in the UK do not apply. Old Mutual International Isle of Man Limited is a member of the Association of International Life Offices. Old Mutual International is registered in the Isle of Man as a business name of Old Mutual International Isle of Man Limited. Old Mutual International Ireland dac is regulated by the Central Bank of Ireland. Registered No Administration Centre for correspondence: King Edward Bay House, King Edward Road, Onchan, Isle of Man, IM99 1NU. Tel: +353(0) Fax: +353(0) Registered and Head Office Address: Hambleden House, Lower Pembroke Street, Dublin 2, Ireland. VAT number for Old Mutual International Ireland dac is S Old Mutual International is registered in Ireland as a business name of Old Mutual International Ireland dac. When printed by Old Mutual, this item is produced on a mixed-grade material, which uses a combination of recycled wood or paper fibre from controlled sources, and virgin fibre sourced from well-managed, sustainable forests. PDF8834/INT /November 2017