Old Mutual International Managed Capital Account

An independent review by our team of experts.

Review summary

Old Mutual International Managed Capital Account

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). 

Old Mutual International Managed Capital Account

The Old Mutual International Managed Capital Account is an offshore, unit-linked, non-qualifying whole of life assurance policy (or ‘bond’) that accepts single or regular premiums.

Overview

Offshore investment contracts grow tax-efficiently, as offshore based life assurance companies are not currently liable to any form of income or capital gains tax on policyholders’ funds (although certain investment income may be subject to a non-refundable tax deduction at source in its country of origin – ‘withholding tax’.)

Many investors find managing a portfolio of funds an administrative burden.  With the Managed Capital Account, Old Mutual International takes care of this by establishing a portfolio of Old Mutual International funds within the account, and managing any paperwork on your behalf.

Normally if a particular investment is underperforming, changing strategy or fund manager may mean you suffer not only exit penalties and new initial charges on a new investment, but also a possible tax liability as well.

By choosing an Old Mutual International Managed Capital Account, you avoid this problem and can also enjoy the following benefits:

  • A choice of currencies in which premiums can be paid and the account denominated (currently Sterling, US Dollar, Euro and HK Dollar);
  • Flexible premium payment facilities;
  • An unlimited number of switches and re-direction of funds at any time, free of Skandia administration charge;
  • Easy access to your account by linking it with an offshore Lloyds TSB or Singer & Friedlander bank account;
  • Availability of partial or full encashment at any time (an Early Encashment Charge may apply); and
  • A loan facility, whereby you can borrow up to 50% of the bid value of your account.
  • A partial surrender on your savings plan may be treated as a one-off withdrawal but you may not surrender more than the encashment (surrender) value of the plan.

Note, encashment penalties may apply for some years.

Old Mutual International Managed Capital Account Key Features

The Managed Capital Account is a redemption account which will continue for 99 years unless encashed earlier. at the end of the term the account will pay the higher of US$150 (€150/£100) or the value of the account. 

Choice of Investments -

  • Access to more than 40 of the world’s leading fund managers.
  • Choose from around 370 international investment funds.

Minimums - Lump sum minimum of £10,000 / EURO 10,000 / $10,000

Currency – Choice of 3 currencies including Pound sterling (GBP), Euro (EUR), United States dollar (USD).

Charges -

  • 6% establishment charge on each investment for five years.
  • 1% annual management charge.
  • 1% monthly service charge on credit card payments.
  • A maintenance charge of US$9.25 (€9.25/£6.15) will be taken unless either:

− the amount of the contributions paid to the account; or

− the value of the allocated units at their bid price are equal to or exceed US$15,000(€15 000/£10,000) at the transaction date.

Early encashment -

8% in the first year of each investment, reducing by 1.6% each year to 1.6% in year five and 0% thereafter.

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
  • VERY expensive if you access it in the early years
FAQs
What is the Managed Capital Account used for?

Providing for children's education: 

You can build up a substantial fund and then arrange regular withdrawals to pay school fees...

But early encashment charges may apply!

Saving for retirement:

You can tailor your investments to create the kind of retirement fund you want, and then take withdrawals as and when it suits you.

The MCA can be used as an investment vehicle for an approved pension, such as a Self Invested Personal Pension (SIPP), or a Qualifying Recognised Overseas Pension Scheme (QROPS).

Generation/estate planning:

You can place your Managed Capital Account in trust and make sure your money is used as you wanted, both before and after your death.

Note: different versions of the MCA are available (Life assurance or Capital Redemption) depending on your country of residence and your investment needs.

The Capital Redemption version is subject to a maximum term of 99 years.

The Life assurance version ends on the death of the last life assured.

How easy is it to access money from an OMI Managed Capital Account?

Well, Old Mutual International say it's easy...but we beg to differ.

OMI's brochure states: 

  • you can withdraw lump sums at any time. The minimum withdrawal is US$750 (€750/£500).

  • Each year you can withdraw an amount up to 10% of the value of the premiums paid, without penalty. 

  • As long as you’re only paying lump sum premiums, you can also use your MCA to provide an income (which can be annual, half yearly, quarterly or monthly) now or in the future if you need it. This gives you more flexibility and also an alternative source of funding.

We say:

Taking money out of your account before five years have passed will dramatically reduce the potential for your investments to perform – because of the effect of the charges made when you set up your account.

So, if you take money out of your account within five years of the last policy year in which you paid a contribution, you will be subject to an 8% charge in the first year of any investment, reducing to nil after five complete years have passed...

Customer reviews
"Clear, competitive charges" NOT!

I've still got the brochure my FA left me with for the Managed Capital Account...so here you go...

It says "we make sure the effect of our charges on your investment is consistently comparable to our competitors’ charges."  In other words, they are all as bad as each other.

This is an expensive product - and I think the charging structure is designed to trip people up.

If you ARE thinking about one of these - don't even THINK about touching your money for AT LEAST 5 years - if you do, you can kiss most of it goodbye.

Happy to have encashed!

It was made really clear to me not to touch my capital for at least 5 years - and I just wanted a place to park it for a rainy day.  So all in, the Managed Capital Account seemed ideal.

I had to get out after 7 years though, and glad I did, because performance after all the fees was poor.

Expert verdict
Expert Assessment of Old Mutual International Managed Capital Account

“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.