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PIMS Focused policyholders are able to invest into a defined range of approximately 1,000 investment funds.
Accordingly, PIMS Focused has a lower charging structure than PIMS Flexible which is fully open-architecture.
This could make PIMS Focused the ideal vehicle where you simply require access to conventional investment funds and recognised management houses.
But should you require access to an even broader range of investments in the future, you can simply convert your PIMS Focused policy to Flexible for a one-off fee.
The one-off fee is known as the ‘Conversion fee’ and is equal to 1.25% of the premiums paid.
You cannot change back to PIMS Focused from PIMS Flexible.
PIMS Flexible PIMS Flexible policyholders are able to choose from any investment acceptable to RL360.
No matter which version of PIMS is selected, the charging elements remain the same, although lower fees are applied to PIMS Focused policies.
There are 3 main elements to the charging structure that can be used separately or in combination:
• Allocation rate - this is the rate at which your premium is applied to the policy. This can be below, equal to or above 100% of your premium if other charging elements are chosen.
• Establishment fee - this is a fee that is taken over a set period of time – 5 years, 8 years, or 10 years – as a percentage of your premium.
An early surrender fee will apply during the same period.
• Percentage administration fee - this is a fee that is taken throughout the lifetime of your policy as a percentage of the higher of your premium or its current policy value.
An early surrender fee will apply and you can choose from 8 years or 10 years.
Allocation rate reduction
It is possible to reduce the allocation rate of a PIMS policy so that all fees relating to the initial premium are deducted on the policy start date.
If you invested a GBP300,000 premium into a PIMS policy at an example allocation rate of 91.50%, this would leave GBP274,500 (GBP300,000 x 91.50%) available to link to investments.
Alternatively, rather than reduce your premium at the start of the policy, you can pay fees over a period of time through the establishment or percentage administration fees.
By doing this you can enhance your allocation rate beyond 100%, but only up to a maximum of 112.25% for PIMS Flexible policies or 113.50% for PIMS Focused policies (this also depends on your premium amount).
An establishment fee can be paid over 5, 8 or 10 years.
If we continue using the previous example, if you would like to invest a premium of GBP300,000 into a PIMS policy, but at an allocation rate of 100%, then there is an establishment fee to be paid (100% - 91.5% = 8.5%).
5 year establishment fee period
If you choose to pay this fee over a 5 year establishment fee period RL360 would multiply it by 1.2.
The percentage is then divided by 5 (for the 5 year period) and this is the percentage of your GBP300,000 premium you would pay each year.
8 year establishment fee period
If you choose to pay this fee over an 8 year establishment fee period RL360 would multiply it by 1.25.
The percentage is then divided by 8 (for the 8 year period) and this is the percentage of your GBP300,000 premium you would pay each year.
10 year establishment fee period
If you choose to pay this fee over a 10 year establishment fee period RL360 would multiply it by 1.3.
The percentage is then divided by 10 (for the 10 year period) and this is the percentage of your GBP300,000 premium you would pay each year.
If you were to invest a GBP300,000 premium into a PIMS Flexible policy and choose an allocation rate of 100.00%, this would provide GBP300,000 (GBP300,000 x 100.00%) to link to investments.
Alternatively, rather than pay fees over a fixed period of time through an establishment fee, you can pay fees over the life of the policy through an ongoing percentage administration fee.
Percentage administration fee
A percentage administration fee can be taken over the lifetime of the policy with either an 8 or 10 year early surrender period.
Continuing the previous examples there will be a percentage fee involved in doing this (100% - 91.5% = 8.5%).
8 year early surrender period
If you choose to pay the percentage administration fee with an 8 year early surrender period RL360 would multiply the fee by 0.14375 and you would pay that percentage as the higher of your GBP300,000 premium or its current policy value each year.
10 year early surrender period
If you choose to pay the percentage administration fee with a 10 year early surrender period RL360 would multiply the fee by 0.11 and you would pay that percentage as the higher of your GBP300,000 premium or its current policy value each year
Most will find that choosing just one charging element suits their needs; however, PIMS can be tailored using a combination of all three charging elements if required - isn't that nice!
In effect this would result in the fees being split between the various charging elements.
Flat administration fee
In addition to the 3 main flexible elements there is also a flat administration fee. This is a fixed amount that increases each year with inflation.
It is taken from the cash account on the quarterly anniversary of the policy start date. The fee continues to be taken until the policy comes to an end.
RL360 measure inflation based on the Isle of Man Retail Price Index.
Further information can be found at www.gov.im/ treasury. This may change in the future.
The flat administration fee is applicable to the following charging elements and is £100 or currency equivalent:
• Reduced Allocation
• 5 year establishment fee
• 8 year establishment fee
• 10 year establishment fee
• Percentage administration fee with an 8 year surrender period
If the percentage administration fee with a 10 year early surrender period is chosen, as part of any combination, then a higher flat administration fee will be applied (£125 or currency equivalent).
The flat administration fee is applicable to the following charging elements:
• Percentage administration fee with a 10 year surrender period
• Any combination of charging elements that includes the percentage administration fee with a 10 year early surrender period
PIMS additional fees
(You didn't think we'd finished did you!)
A dealing fee of GBP20 (or currency equivalent) is deducted for each purchase, sale, transfer or exchange of an investment linked to a PIMS policy.
The first 10 transactions (1 buy and 1 sell = 2 transactions) are free from dealing fees.
For cash deposit accounts (only available under PIMS Flexible) there is a GBP20 (or currency equivalent) fee for each deposit placed or each withdrawal taken from an account.
Where a discretionary manager has been appointed to your policy, RL360's dealing fees will not apply.
But ask your discretionary manager about their dealing fees!
The investment fees applied will depend on the investments to which your PIMS policy is linked.
Fees can include, but are not limited to, initial and annual management charges, performance fees and exit fees.
Fees are determined by the investment manager.
In some cases RL360 will receive institutional discounts not available to individual investors, meaning that the initial charges that you have to pay will be lower than via direct investment.
Where a discretionary manager has been appointed to your policy, RL360's institutional discounts will not apply.
You should ask your discretionary manager about expected investment fees.
It is your responsibility to ensure you are happy with the level of charges being deducted by the investment provider.
These are charged to cover the costs of safekeeping records relating to linked investments.
Custodian fees can vary depending on the type of investment, however, to keep charges clear under PIMS (!!!) RL360 charges a flat fee of GBP40 (or currency equivalent) per each purchase, sale, transfer or exchange of an investment.
Where a discretionary manager has been appointed to your policy, RL360's custodian fee will not apply.
You should ask your discretionary manager about their custodian’s fees.
Where a chosen linked investment requires, it may be necessary to buy or sell the investment through a stockbroker, any fees will be deducted from the PIMS cash account.
The current stockbroker fees are available from RL360 on request.
Where a discretionary manager has been appointed to your policy RL360's stockbroker fees will not apply.
You should ask your discretionary manager about their stockbroker’s fees.
If you choose to appoint an investment adviser, their fees can be paid directly from the PIMS cash account.
An investment adviser fee up to 1.50% of the policy value, payable quarterly, can be requested.
The amount available may be lower than this depending on other charges taken.
Discretionary manager fees
If you choose to appoint a discretionary manager to manage the investments linked to your PIMS policy, their fees will be deducted at source.
Discretionary managers may also have to pay custodian and stockbroker fees for some investments.
Where RL360 is required to perform a foreign exchange (FX) transaction, this will be done at a rate determined by RL360, based on those commercially available in the market.
Confused? Yes, we would be too - have an X-Ray Review™ on us and it will list - in plain English - and in numerical form - how much you're being charged and have been charged. Turning opacity into transparency!