RL360 PIMS Plan Review:-
RL360 are based in the Isle of Man, conducting business in Asia, Africa, the Middle East and the UK and they offer the RL360 PIMS plan. RL360° is part of the RL360 Group. On 1 December 2015 the RL360 Group acquired CMI Insurance Company Limited (CMI) from Lloyds Banking Group. The addition of CMI creates a combined group with 60,000 policyholders, in excess of $10 billion assets under management and 300 staff located worldwide. It is no longer part of Royal London (the UK group) separating from it several years ago.
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RL360 PIMS Plan Review
If you are considering a RL360 PIMS Plan then ensure you fully understand the local taxation position and weigh any benefits against its lack of flexibility, access and charges which are often not explained. The RL360 PIMS offers a range of commission set-ups and it is vital to understand this as one adviser may charge far less than another adviser for what appears an identical product, but is not.
The RL360 PIMS can be an expensive option compared with a pure platform plan depending on the adviser you use and supposed tax benefits can be outweighed by charges. It is vital that a commission rebate is taken to offset high ongoing charges. It does not offer a full range of discounted funds, direct equities or trackers to invest in. We do not recommend it within any form of pension planning and not in the USA.
- Widely available and sold
- Offers some tax protection in certain jurisdictions
- With commission rebated it could be considered for a minimum of 5 years investment where no withdrawals required
- It offers time apportionment for those returning to UK
- No flexibility of full withdrawal or full access in the early years without penalty
- Many countries do not recognise any tax concessions
- With commission this is an extremely expensive option, and even part withdrawals can increase real costs
- Does not provide full access to lowest cost funds and passive trackers
- WARNING: Costs are largely dictated by the charging structure chosen by an adviser. Some advisers recommend a 1% regime and then, after the client has signed, change the charging structure to a more expensive regime to earn more commission
|Policy Currency: The RL360 PIMS Plan may be denominated in US dollar, GB pound, Hong Kong dollar, Japanese yen or Euro. Benefits will be paid in the plan currency.|
|Why choose the RL360 PIMS Plan: Leading Fund Houses offer a wide choice of investment funds. You choose from over 1060 funds covering all the major world markets and investment classes. The funds section contains performance statistics which are updated monthly, fund prices which are updated daily and Fund Fact Sheets on each fund. They will, after consideration, also accept other external funds. However, fund charges are higher than those on a custodian platform which marks them down in terms of our verdict.|
|RL360 PIMS Plan promotion: What does RL360 write about their own RL360 PIMS Plan? There is more than one option which clients should be aware of. 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.|
|Eligibility: RL360 PIMS Plan is a regular premium, whole of life, life assurance contract issued by RL360. You can 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)|
|Minimums: Min £50,000 with minimum £5,000 top ups|
|Charges: These will depend on the type of RL360 PIMS plan you are advised to take out by your adviser from RL360 as they offer different charging structures largely linked to the amount of commission or earnings being taken by the third party salesman or adviser.|
We think that different names should be given to the different RL360 plans as it is difficult to distinguish one from another that could lead to mis-understandings. It could also lead to a salesman suggesting one product and then selling a different charged product from the RL360 range, without clients recognising this. Clients have to be diligent about hidden commissions of salesmen. There are two options on charges:
Option 1 – Establishment charge: The establishment charge is taken either on the start date of the policy or on the first day of each calendar quarter during the establishment charge period. A further establishment charge is made on on each additional premium paid into the bond. The actual charge varies depending on the charging structure that is chosen, one option for example for investment amounts up £1,000,000 is 8.5% so this means that a charge of £85,000 will be charged against your RL360 PIMS portfolio bond. Alternatively if the option of paying the establishment charge over a 10 years is selected, then the charge is 1% per annum over the 10 year period i.e. £1,000,000 x 1% for 10 years = £100,000. If the policy is encashed early, then the whole amount of the establishment charge is deducted from the account.
Option 2 – Administration charge: RL360 PIMS portfolio bond will incur an administration charge on the first day of each calendar quarter for the lifetime of the policy of 8.5% and is a fee that is taken throughout the lifetime of your policy as a percentage of the higher of the premium or its current policy value. An early surrender fee will apply and you can choose from 8 years or 10 years.
Other Charges: There are also fund management charges, usually 1% to 2.5% pa each year- depending on the funds chosen.
Additionally there may be an adviser charge to manage the portfolio, this typically can be between 1 to 1.5% per annum depending on the chosen advisers charging structure and service provided.
Pensions (QROPS and SIPP) – If the PIMS Bond is used within a QROPS or SIPP then there will be additional set up and ongoing fees for the life of the policy if it uses Option 2 administration charges. This cannot be recommended. Option 1 charges (Establishment charges) lock the individual in for a set period and the initial years become extremely expensive compared to other options. EME does not recommend this product for QROPS or SIPP investing.
|Are charges explicit: By explicit, it means that it is clear to see not only the charges for taking out the plan but also the cost of funds annually, any upfront fund costs, penalties on access, etc. Yes, in the main the RL360 PIMS Plan charges are clearly shown and any professional should be able to interpret them. We have had feedback from clients though that they find it extremely difficult to interpret charges such as how any early access penalties would be calculated.|
|Surrender of the RL360 PIMS Plan: A partial surrender on your RL360 PIMS Plan may be treated as a one-off withdrawal. Further details on how it is treated is available in the relevant brochure. A full encashment results in 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 may have quite high surrender charges imposed. It is important to be aware that the RL360 PIMS Plan is a long term plan, if you decided to cancel the plan early you could lose a considerable proportion of the money you have invested; we have heard that as much as 8% of the value of the plan value can be lost by surrendering the RL360 PIMS Plan early.|
Expat Money Expert Assessment of the RL360 PIMS Plan
Beware, make sure you are getting what you think you are being recommended!
The RL360 PIMS Plan is similar to many in the offshore market place. In the wrong hands, such as an inexperienced/poor salesman, the RL360 PIMS Plan could be an expensive option in comparison with a pure platform plan.
The standard RL360 PIMS Plan funds have high ongoing fees when directly compared to platform or direct offerings from fund houses via the UK or the USA. The RL360 PIMS Plan can have high charges on early access. You may not get back all of your savings with an RL360 PIMS Plan and there are no guarantees that the portfolio will give you the returns you are expecting, but any attempt to take proceeds early in the plans life, if the chargins structure is based on maximum commission earnings for your adviser will result in penalties. In fact the commission taken will have a negative impact for years as the charges are applied annually in arrears thus leading to reduced fund performance.
However, some people require help when making disciplined decisions and will welcome the fact that a plan cannot be accessed early without a surrender penalty; some people wish to deliberately lock-up their funds. Therefore, potential investors have to weigh up the benefits of locking up their investments and not having the flexibility to access their investment earlier without surrender charges applied.
NOTE: The RL360 PIMS Plan provides an option for the adviser not to charge the client commission, but instead charge a fee. If this option were chosen, it may be of considerable benefit to the performance of the overall investment, as the resultant lower charges will have a lower impact on the growth of the portfolio. Ask your adviser for further details, as it is not always offered.
Pensions (QROPS and SIPP) – If the PIMS Bond is used within a QROPS or SIPP then consider which charging structure you intend to use, long term (Option 2 charges) or medium term (Option 1 charges). With Option 2 charges there will be additional set up and ongoing fees for the life of the policy. Option 1 charges (Establishment charges) lock the individual in for a set period and the initial years become extremely expensive compared to other options. EME does not recommend this product for QROPS or SIPP investing.
WARNING: Costs and information is correct as of July 2016. Please refer to a brochure from the company for current up to date information and any changes on costs or information. You should not buy based purely on information contained within this article and EME do not accept liability for purchases. If you have any doubts then please speak with your financial adviser or a representative of the company for further advice.
If the provider improves or amends its terms then EME would like to hear from them to amend the review page accordingly, and providers are encouraged to comment on errors or omissions to ensure that readers have the latest and correct information.