- Knowledge Centre
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 Executive Investment Bond (EIB)
The Old Mutual International Executive Investment Bond (EIB) is an offshore, single premium, whole of life assurance policy providing benefits on death of the relevant life assured (or ‘bond’).
The Old Mutual International Executive Investment Bond is issued in either a single policy or a “cluster of polices” to enable tax planning benefits.
The initial charging term is fixed (based upon the commission and charging structure agreed) at the time of the policy activation.
This cannot be varied or waived; therefore, early encashment of the policy results in a “surrender charge” or “early withdrawal charge” unless you ensure you have a zero commission/cleanly priced version.
The Old Mutual Executive Investment Bond (EIB) Key Features
Unlimited Choice of Funds – via an approved list and the option of open architecture.
However, funds must be approved by OMI, including in-house and external funds and some funds are “mirror funds” which means you are buying a replication of a fund manager’s fund, not the underlying fund, which does lead to price discrepancies and significant underperformance (of the mirror fund) over time.
We note too, that some funds on the platform are unregulated and very high risk.
Minimums - Lump sum minimum of £50,000/$75,000/€75,000
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.
Payments can be made in a choice of 13 currencies.
Currency - The Old Mutual International (OMI) Executive Bond can be set up a policy in 1 of 7 currencies including Pound sterling (GBP), Euro (EUR), United States dollar (USD) Swiss franc (CHF), Australian dollar (AUD), Hong Kong dollar (HKD) and Japanese yen (JPY).
Eligibility - The Old Mutual International (OMI) Executive 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.
Charges - 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.
See the FAQ for more details on fees and charges.
Pensions (QROPS and SIPP): If the OMI Executive Bond is used within a QROPS or SIPP then there will be additional set up and ongoing fees for the life of the policy.
It makes no sense to embed the bond within a QROPS or SIPP, other than to generate additional fees for the adviser of salesman.
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. In effect this means that on polices the first 5, or more typically 8 – 10, years high surrender charges will be imposed.
These can be eye watering.
Annual Policy Charges:
The annual policy charge is a fixed fee and this can be upped at any time.
There may also be a percentage charge on the value of your fund to cover management costs in the early years which typically is between 1%-1.5% per annum and will last for 7 years sometimes through lifetime.
Other Charges: Fund management charges are typically between 1 – 2.5% per year depending on the funds selected.
Alternatively, if you use the open architecture option, there will be stockbrokers fees when you buy and sell certain assets, and can range from 0.5% to 2% typically.
Additionally there may be an adviser charge to manage the portfolio, this is also typically can be between 0.5% to 1.5% per annum depending on the chosen advisers service provided.
The treatment of your policy when a death occurs depends on whether there are surviving policyholders and/or lives assured.
Note that policyholders are the owners of the policy whereas lives assured are the people whose lives are covered in the insurance contract.
Therefore, the insurance contract will end when the last life assured dies.
Different scenarios are explained below:
A policyholder has died and at least one policyholder is still alive
If at least one life assured is still alive, the bond will continue and will automatically transfer to the surviving policyholder(s).
If all lives assured have died, the bond will come to an end. The surrender value is paid when the policy is surrendered. The death bene t is paid when the last life assured dies.
If the bond was subject to a trust, then the bond continues to be owned by the trustees of the trust.
The last policyholder has died
If at least one life assured is still alive, the bond will continue and ownership will be transferred to the legal personal representatives of the deceased policyholder’s estate or nominated beneficiary where the nomination takes effect on the death of the last policyholder.
If all lives assured have died, the bond will come to an end and the death benefit will be payable to the deceased policyholder’s legal personal representatives. If the bond is subject to a trust or nomination, the death benefit will be payable to the trustees of the trust* or beneficiaries of the nomination.
* the legal personal representative of the last trustee would appoint replacement trustees when the last trustee dies.
Placing your Executive Bond in trust can help ensure that your wealth is used as you intend during your lifetime and after you die.
It may also offer some advantages in the future, for example if you are self-employed or get divorced, or if you have an estranged family.
And it can benefit your family or beneficiaries after your death as a trust can remove the requirements of probate.
Seek qualified advice from a fiduciary.
I read a review of Old Mutual - I should of read review of Royal Skandia. The former get a good deal - the latter are well-reamed on forums by stitched up screwed over expats.
Anyway, I didn't - and so I bought in - thinking I was doing the right thing for long-term - my EIB is in my QROPS and I now know I've been totally stitched up in fees and charges.
I've got something like a tax wrapper in a tax wrapper - I think that's how it was later explained to me. Really 100% useless.
All the benefits wiped away - and the fact that Old Mutual wash their hands of this mis-selling tells me all I need to know about THEM.
AES - you say it's a good product if properly used - maybe - but if Old Mutual didn't allow advisers to mis-use the bond in the first place that would be better wouldn't it . But they enable it - so...
Gets a massive thumbs down from me...
The Old Mutual International Executive Investment Bond is an excellent investment product that stands up very well against its direct competition.
It potentially reduces some of the administrative burden associated with international investment and can be used for sophisticated tax planning purposes.
Old Mutual International has recently invested in excellent technology and as a large player within this marketplace has strong administrative, technical and adviser support services. The OMI Executive Investment Bond is one of their most popular investment vehicles.
However, it is also easily mis-used and is normally available at a much lower cost than many international clients are aware.
Unlike many life insurance companies, OMI still allow unregulated distribution of their products which means no recourse in the event of a complaint, very high hidden charges and a high degree of risk that the investments within this product are unsuitable for you.
Even regulated distributors are often held to different standards overseas and a high number of clients have received unsatisfactory outcomes through the use of this product.
You should be particularly wary if you have been moved a pension into this product via a QROP or SIPP transfer and make entirely sure you fully understand (and double check) any purported tax benefits which are listed as reasons to incept an Executive Income Bond and the exact charging structure you have agreed to.
When we have compared the charges that fee-based clients would pay, for making use of an Old Mutual International Executive Investment Bond / EIB, against commission based advisers – it is clear to see that recipients of commission based advice may pay anywhere from 100-1000% more in charges!
These hidden costs also cause a lock-in period of up to 8 years that substantially reduces the flexibility and liquidity which clients would otherwise benefit from with other forms of offshore investment.
When used correctly this offshore investment bond is a market leading-product.
Our advice is to incept such a plan only 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 an EIB 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 on the best way forward.