Old Mutual International Collective Redemption Bond

An independent review by our team of experts.

Review summary

Old Mutual International Collective Redemption Bond

Old Mutual International

Old Mutual International (formally known as Royal Skandia) is the international arm of Old Mutual Wealth, one of the leading retail investment business. Old Mutual Wealth oversees £123.5 billion in customer investments (as at 31 December 2016).

Old Mutual Wealth is part of Old Mutual plc, a FTSE 100 group that provides life assurance, asset management, banking and general insurance. Old Mutual is trusted by more than 19.4 million customers across the world and has a total of £394.9 billion assets under management (as at 31 December 2016).

The Old Mutual International Collective Redemption Bond (CIB)

The Old Mutual International Collective Redemption Bond is a capital redemption contract with a 99-year fixed term. This means the investment will continue to the end of the term (the maturity date), unless it is fully cashed in beforehand.

Overview

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.

The pros

  • Popular expat investment plan
  • Preferred choice of expat financial advisers
  • Strong brand of parent company

The cons

  • Risk of hidden commission
  • Potentially inflexible
  • Commonly mis-used
FAQs
How much can I pay in to my Collective Redemption Bond?

• Make one initial investment of at least £25,000/Us$37,500/37 500, or the equivalent in another currency.

Add in extra amounts whenever you want, of at least £2,500/Us$3,750/3 750 (or currency equivalent).

• No fixed term.

These minimum amounts may increase in the future, so please check the latest figures with your 
financial adviser.

How do I access my money?

You can make one-off or regular withdrawals (depending on charging structure, an early withdrawal charge may apply above a certain charge-free allowance).

What happens on the death of an OMI Collective Redemption Bond policy holder?

The treatment of your policy when a death occurs depends on whether there are surviving policyholders.

If a policyholder has died and at least one policyholder is still alive, the bond will continue and will automatically transfer to the surviving policyholder(s).

If the last policyholder has died, the bond will continue until the end of the 99-year term.

Ownership of the bond will pass to one of the following parties:

If there is a nominated beneficiary, ownership will be transferred to them.
If the bond is subject to a trust, then the bond is still owned by the trust and a trustee must be appointed as a policyholder.

In all other cases, ownership will be transferred to the legal personal representatives of the deceased policyholder’s estate. They can then choose whether to:-

– keep the bond and appoint a beneficiary to become the policyholder by executing a deed of assignment,

or

– encash the bond to pay the proceeds to your estate’s beneficiaries.

Customer reviews
Not satisfied

Yes the product is good, yes to brand name is strong - but what i am really unhappy about is the fact my adviser clearly took a cut..a big cut I'd reckon as well. Waiting for the results of my X-Ray from AES then I'll be sure...but I don't think Old Mutual should allow this sort of practice if they want to be respected.

Expert verdict
Expert Assessment of Old Mutual International's Collective Redemption Bond

The Old Mutual International (formerly known as Royal Skandia) Collective Redemption Bond is an excellent investment product which stands up very well against the competition. 

However, it is also easily mis-used and is normally available at a much lower cost than you may have been made aware at the point of sale.

When we have compared the charges that fee-based clients would pay, for making use of an Old Mutual International Collective Redemption Bond or CRB, against commission based advisers – it is clear to see that recipients of commission based advice may pay anywhere from 100-500% more in charges.

These hidden costs also cause a lock-in period of up to 8 years which substantially reduced the flexibility which clients would otherwise benefit from. 

When used correctly the OMI Collective Redemption Bond is a market leading product.

Our advice is to only incept such a plan after receiving advice from a fully regulated financial adviser and to opt for a cleanly priced option without any form of establishment charge or lock-in period (zero-exit penalties).

If you already have a Collective Redemption Bond from Old Mutual International we recommend you have a free, no obligation X-Ray Review™ conducted to give you the information you need to make a decision on the best way forward.

“Thank you AES International for helping me and my family with your low cost no-nonsense approach. It is refreshing!”

Kristian Petersson

“With this sort of service you also expect to be paying very high fees, but it’s just not the case. I would definitely recommend AES.”

Jake van den Dries

“In the short time that I’ve been using AES I’ve made nearly ten thousand pounds and couldn’t be happier!”

Jackie Pym

    Additional resources

    View all Reviews

    Request your X-Ray Review™ today!

    Because you deserve better results - nothing less.