As the bond is held offshore, in the politically stable and tax-efficient Isle of Man, your funds will not be liable to any form of income or capital gains tax. It also provides estate planning options that enable you to pass on as much of your wealth as possible to your family and future generations.
TheCollective Redemption Bond does not permit the holding of highly personalised assets, which is good for returning UK residents.
This is largely because as a UK expat returns to the UK, it is essential to “endorse” the offshore investment bond so that you can continue to benefit from tax deferred gains.
If you fail to endorse the offshore bond you could find yourself paying income tax on annual deemed gains of 15% of the original sum invested, regardless of whether the investment bond produced any gains.
By instructing the offshore investment bond provider to endorse the policy if you return to the UK, you restrict the invested assets to those which are permitted to those investments within a product such as the CRB.
TheCollective Redemption Bond is issued in the form of a single policy or a number of separate polices known as a “cluster of polices”. This may give easy, tax efficient access.
The initial charging term is fixed (based upon the commission and charging structure agreed) at the time of the policy activation and this cannot be varied or waived; therefore, early encashment of the policy results in a “surrender charge” or “early withdrawal charge”.
Old Mutual Collective Investment Bond (CIB) Key Features
The Collective Redemption Bond is a capital redemption contract with a 99-year fixed term. It continues until the end of the term unless cashed in earlier. At the end of the term the bond has a guaranteed value of at least twice the premium amount you have paid (less any withdrawals or surrenders).
Funds - Extensive choice of Old Mutual International and external collective investment funds and unit trusts, eurobonds and currency deposits.
Minimums - Lump sum minimum of £25,000. You can make additional lump-sum payments into your policy at any time with a minimum of £2,500. However your will pay any initial fund charges on all contributions.
Currency - The Old Mutual International Collective Investment Bond can be set up a policy in 1 of 3 currencies including Pound sterling (GBP), Euro (EUR), United States dollar (USD).
Eligibility - The Old Mutual International Collective Redemption Bond is a regular premium, whole of life, life assurance contract issued by Old Mutual International (OMI). It is available to most international investors outside of the main regulated territories such as the UK, the USA and Australia.
Choose an external custodian - The structure of a bond means that you need a custodian to hold, on Old Mutual international’s behalf, the assets that you decide to link to your bond.
You can choose your own custodian, which is likely to be the financial institution you currently have a relationship and which is advising you.
If you don’t have your own custodian, then Old Mutual international will use its own appointed custodian to play this important role for you.
Charges - these will depend on the type of plan you take out from Old Mutual International as they offer different charging structures largely linked to the amount of commission or earnings being taken by the third party salesman or adviser.
They should, but may not always be the case provide you with a charges schedule, which will detail:
- The costs Old Mutual international levy for setting up and managing your bond
- The administrative costs of the fund managers
- Fees charged by your financial adviser.
For more information on fees and charges see the FAQ.
Early surrender - a full encashment will result in exit penalties being applied in the early years through surrender charges linked to the term of the policy.
The amount of this charge reflects the cost of Old Mutual Internationals set up fee, including any payments (such as commission) made by Old Mutual International to your financial adviser.
Old Mutual International has a great reputation but, in the pursuit of offering flexibility of charging structure to all types of advisers they have created a product that has the same name but completely different costs.
Those costs are dictated by the adviser and we have seen evidence to suggest that some advisers and adviser companies take the maximum commissions.