Prestige Portfolio Bond

Portfolio bonds sometimes get called wrappers, because they effectively ‘wrap up’ all your investments in one place for ease of management. That is, portfolio bonds enable you to bring all your investments under one umbrella – and this is what makes them such a convenient investment choice.

Since you have all your investments in one place, this allows you to view the portfolio performance easily, and make quick and accurate decisions when necessary.

Portfolio bonds are very flexible and potentially advantageous if you’re working with a financial advisor towards the overall management of your financial position.

You can use a portfolio bond to grow your capital for a certain amount of time (e.g. a fixed term of between 5 to 10 years), for tax planning purposes, or if you are planning to take a regular income from your investment portfolio in the future.

Once established, portfolio bonds are entirely flexible as the underlying investments can be made in any asset as long it is freely tradeable and the value of that asset can be exactly determined.

This means that you can allocate your investment portfolio across various sectors, asset classes, and geographic diversification, all from the single simple structure of your portfolio bond.

Please note:

An investment into the Prestige Portfolio Bond is not guaranteed. Depending on the assets selected and the method of investment, the value of the Prestige Portfolio Bond and any income taken from it can go down as well as up.

Like any other investment, offshore portfolio bonds carry risks as well as advantages. If you’re an expatriate living, working, retired or just invested abroad, make sure you understand the offshore financial and taxation landscape before committing to any investment.

We recommend that you consult an experienced financial adviser and/or a tax specialist to give you guidance on the various options available relevant for your personal circumstances.

What are the benefits of Offshore Portfolio Bonds?

The main benefits of offshore portfolio bonds are investment freedom, personal and asset privacy and security, and taxation planning. Achieving either of them will depend entirely on your circumstances and position, and expert advice should always be sought.

Depending on your chosen jurisdiction, it can be possible to legally protect against creditors and bankruptcy when you designate a particular third party, (e.g., a spouse), or entity, (such as a trust), as your insurance policy beneficiary.

When it comes to inheritance tax planning an offshore portfolio bond combined with a trust structure may prove highly beneficial for optimising your IHT, which is another attractive feature of portfolio bonds for some people.

There will be a level of privacy protection which comes from the fact that the underlying bank account is held in the name of the insurance company. Also the insurance company issuing your PPB is prohibited from divulging any client information.

When it comes to the taxation benefits of establishing an offshore portfolio bond, the most prominent advantage is the fact that such a structure is usually 100% free of local taxation. Again, this depends on the jurisdiction in which the structure is established.

There are certain other income, gains, death or estate taxation benefits that can be accrued which depend entirely on your countries of residence and domicile.

At Prestige we understand that Investors have different financial and investment goals, and also different risk approaches depending on where in life they are. Therefore, we have designed the Prestige Portfolio Bond (PPB) to allow you to build a customized portfolio tailored after your needs. You can choose any investment as long as it is freely tradeable and it is acceptable to us.

The main advantage of fully open-architecture investing is that you can choose investments with varied geographic and sector focus. Your investment portfolio can include all types of traditional investments such as blue chip equities and government bonds.

But PPB also allows you to diversify your investments across different sectors. Such as financial markets, healthcare, telecommunications, energy sector, socially responsible, environmentally friendly and include alternative investments and structured products in your portfolio.

How is a Prestige Portfolio Bond (PPB) Set Up?

The process of setting up a Prestige Portfolio Bond (PPB) is fairly straightforward and simple.

Firstly, the investor completes an application to set up their PPB account. They will need to provide certain documents to verify their identity and residential status. Depending on the investment size and country of residence applicants may be asked to provide information regarding the source of the money they are investing.

The minimum amount reqired to open a PPB account in only US$ 30,000 or currency equivalent and additional investments can be added to the account from US$10,000 or currency equivalent. Once you have been accepted your account will be assigned a unique policy number and you are ready to get started.

Once the account has been set up you will become a policyholder of an insurance company, the insurance company becomes a client of the bank. Your investments are then held within your PPB with you being the policyholder, and the bank account is held in the name of the insurance company.

You can either take full control of investing your money, use the services of an investment or fund manager, or use the services or a financial adviser for the ongoing investment and management of your funds.

Please Note:

An investment into the Prestige Portfolio Bond is not guaranteed. Depending on the assets selected and the method of investment, the value of the Prestige Portfolio Bond and any income taken from it can go down as well as up.

Like any other investment, offshore portfolio bonds carry risks as well as advantages. If you’re an expatriate living, working, retired or just invested abroad, make sure you understand the offshore financial and taxation landscape before committing to any investment.

We recommend that you consult an experienced financial adviser and/or a tax specialist to give you guidance on the various options available relevant for your personal circumstances.

Online Web Portal

Online access is available with a log in account to the PPB Client manager, some of the benefits for which are as follows:

• Accessible 24 hours a day, every day
• Available on your laptop, tablet and phone
• Will let you see all pending tasks on your policy
• Will let you see and download valuation statements
• Will let you access all of your uploaded documents
• Will let you see all transactions on your policy and much more

We believe that technology and innovative solutions will help facilitate your financial journey.

PrestigeTrader

Prestige is able to offer our investors an online trading platform within our PPB. PrestigeTrader allows you to build and manage your own portfolio consisting of all products available in the platform’s multi-product offering. With the combination of other investments in the PPB and in a tax efficient environment, we have created a powerful investment tool that is dedicated to meet the needs of active traders.

PrestigeTrader combines a secure environment with competitive real-time execution and real time pricing. Easily downloadable, enables trading across multiple asset classes, all from one single account. PrestigeTrader offers access via Mobile App, Stationary Platform and Web based platform. Just to mention some of the products available via the CustodianTrader platform: Stocks, ETF’s, FX, Futures, Bonds, Hedge Funds, Options, Metals and Crypto products.

In Summary

The Prestige Portfolio Bond (PPB) provides a flexible method of investing with the potential for growth over medium to long term. It is designed to allow capital to grow tax efficiently and offers the option for the Policyholder to set up regular withdrawals.

Since the PPB is structured as a life assurance policy it may offer the opportunity to take advantage of tax planning benefits, including arrangements that can help to reduce any tax liability on the death of the life assured. A life insurance policy has one or more “lives assured”, which means that the policy will come to an end when the person(s) whose life is covered by the policy dies.

With the PPB the Policyholder has a choice of having one or more lives assured (up to six lives assured), to ensure the continuity of the bond. Where there is more than one life assured, the bond will end when the last person whose life is assured dies. Custodian Life will pay a death benefit of 101 % of the encashment value after notification and documentation of the death of the last life assured.

The PPB the Policyholder can enjoy significant investment freedom by spreading and varying investments across a wide range of mutual funds, structured notes, stocks & shares, and/or alternative investments, according to the Policyholder’s wishes, financial goals and attitude to risk.

How are offshore portfolio bonds taxed?

One of the strong advantages of using an offshore portfolio bond is that it gives you control over when and how much you pay tax.

As mentioned above, within an offshore bond your investment growth is in most cases free of tax. It is called gross roll-up. It’s a particularly significant advantage, because without being taxed within an offshore bond, your investment can potentially grow much faster.

Potential tax benefits of an offshore portfolio bond for UK expats

Gross roll-up

As mentioned above the advantage of gross roll-up means that any underlying investment gains within your portfolio bond are not subject to tax at source, apart usually from withholding tax if and where it applies.

Gross roll-up can mean that an offshore investment has the potential to grow faster than one in a taxed fund where you may be taxed tax on investment income or capital gains.

Tax deferral

If you’re a UK taxpayer, you may be able to benefit from tax deferral. An income tax charge will not arise until your bond is partly or wholly cashed in. You can withdraw 5% of the original premium from the bond for 20 years cumulatively without being subject to tax, because it will be treated as a return of capital.

Time apportioned relief

This means that a chargeable gain on an offshore bond can be reduced in proportion to any time you’ve been resident outside the UK for tax purposes.

So, for example, if you’re a non-UK resident and non-UK taxpayer for half the time you hold the bond, your taxable gain would be reduced by half.

Top slicing relief

When you sell your offshore bond, and the gain pushes you into a higher tax bracket, it is possible to reduce your income tax liability using top slicing relief. The relief won’t have any effect on your taxes if, when added to your other incomes, the profit from the bond won’t move you beyond 20% tax band or if you are already a higher rate tax payer.

If, however, the income from the bond pushes you into the next tax band, you will have a situation where a part of the profit is within the basic rate and a part is within the higher rate.

In this case top slicing allows the gains to be spread across the number of years the bond has been hold. The chargeable gain is divided by the number of full years that the bond has been in force before being added to the taxable income.

The actual calculations of the tax due are pretty complicated and best left to your accountant to complete. The result of the top slicing relief is a noticeable reduction of higher rate tax on a chargeable event gain.

Other tax benefits of offshore portfolio bonds may exist, and these will depend on your own personal circumstances.

Inheritance tax planning through portfolio bonds

If you wish to structure your assets with inheritance tax planning in mind, offshore portfolio bonds might be a perfect tool for it. Usually a bond established with this in mind will be placed in trust. In so doing this can take it outside of your estate.

A trust can help to reduce or even eliminate any inheritance tax liability your family may face. However, depending on the way you write your bond in trust and the type of trust chosen, it is possible you will lose certain access rights to your investment, and/or any growth it may generate during your own lifetime.

Please Note:

An investment into the Prestige Portfolio Bond is not guaranteed. Depending on the assets selected and the method of investment, the value of the Prestige Portfolio Bond and any income taken from it can go down as well as up.

Like any other investment, offshore portfolio bonds carry risks as well as advantages. If you’re an expatriate living, working, retired or just invested abroad, make sure you understand the offshore financial and taxation landscape before committing to any investment.

We recommend that you consult an experienced financial adviser and/or a tax specialist to give you guidance on the various options available relevant for your personal circumstances.

Charges

Establishment period – this is the period you chose over which your initial set-up charges are collected. Additional premiums can be set up with different establishment periods in comparison to the initial premium.

Allocation rate – this is the rate at which your premium is applied to the policy. This could be below or equal to 100%. It is possible to set an allocation rate of your PPB policy so that the whole establishment fee relating to the premium is deducted on the policy start date. Alternatively, you could set an allocation rate up to 100% and pay the establishment fee over a set period of time, the chosen contract period.

Depending on your PPB policy setup, different charges will apply:

Establishment fee – An establishment fee can be paid upfront or over a set period of time (the contract period), or in combination. If you chose an allocation rate higher than 92.25%, the establishment fee will be paid in part or zero upfront and in part or in whole over the contract period. The establishment fee you pay over the contract period will include an interest and will be amortized over the contract period. An early surrender fee may apply during the same period.

Annual management charge – this is a charge that is taken throughout the lifetime of your policy.  The annual management charge is calculated as a percentage of the policy value.

Policy fee – The PPB does not charge a Policy Fee

Transaction charge – a transaction charge of USD 45 (or currency equivalent) will apply to each transaction in your PPB policy.

Investment fees – the investment fees applied will depend on the investments to which your PPB 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. Where a discretionary manager has been appointed to your policy, our institutional discounts will not apply. You should ask your discretionary manager about expected investment fees.

Custodian fees – these are charged to cover the costs of safekeeping records relating to linked investments. Custodian fees can vary in cost depending on the type of investments, however, to keep charges clear under PPB we charge a flat fee of USD 45 (or currency equivalent) per each purchase or sale of an investment. Where a discretionary manager has been appointed to your policy, our custodian fee will not apply. You should ask your discretionary manager about their custodian’s fees.

Stockbroker 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 EIB cash account. The current stockbroker fees are available from us on request. Where a discretionary manager has been appointed to your policy our stockbroker fees will not apply. You should ask your discretionary manager about their stockbroker’s fees.

Advice fee – if you choose to appoint an investment adviser, their fees can be paid directly from the PPB cash account. An investment adviser fee up to 1.5% 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 PPB policy their fees will be deducted at source. Discretionary managers may also have to pay custodian and stockbroker fees for some investments.

Foreign exchange- where we are required to perform a foreign exchange (FX) transaction, this will be done at a rate determined by us, based on those commercially available in the market.

Please Note:

An investment into the Prestige Portfolio Bond is not guaranteed. Depending on the assets selected and the method of investment, the value of the Prestige Portfolio Bond and any income taken from it can go down as well as up.

Like any other investment, offshore portfolio bonds carry risks as well as advantages. If you’re an expatriate living, working, retired or just invested abroad, make sure you understand the offshore financial and taxation landscape before committing to any investment.

We recommend that you consult an experienced financial adviser and/or a tax specialist to give you guidance on the various options available relevant for your personal circumstances.

Facts

PPB is available to individuals, companies and trustees, who are not resident in the USA. Some restrictions will also apply to other countries, please contact us if you are in any doubt. Individuals need to be 18 years of age or older to apply for PPB. If the youngest life assured is 85 years of age or older, we cannot accept the application.

The PPB policy type is set up as a life assurance policy (meaning that the policy continues until the death of the last life assured), it can be written on the following bases:

Single life – There is only one life assured and when they die the PPB policy comes to an end.

Joint life last death – There can be up to six lives assured and the PPB policy comes to an end when the last life assured dies.

There are five PPB policy currencies to choose from: US Dollar (USD), Pounds sterling (GBP), Euro (EUR), Norwegian krona (NOK) and Swedish krona (SEK). Other currencies can be made available subject to investor demand. Fees and charges will be charged in your chosen PPB currency. Initial and additional premiums paid into PPB can be made in any of the mentioned currencies above, provided that they can be easily exchanged for your PPB policy currency (we will do this automatically) and are subject to the minimum premium levels for your policy currency.

PPB gives you the opportunity to invest a cash sum and/or any existing acceptable investments you may hold with the aim of increasing the value.

PPB allows you to link to a wide range of different investments, with the flexibility to switch between those investments at any time.

The PPB policy allows you to take withdrawals at any time.

Commitment

The minimum premium is USD 30,000 (or currency equivalent) into your PPB policy.

The minimum amount to be allocated to underlying investments is USD 3,000 (or currency equivalent).

PPB should be considered as a medium to long-term investment (five years or more).

Requires a minimum opening balance of 3% of your current policy value to the cash account.

We must be informed of any changes to the Policyholder’s address, country of residence, citizenship or domicile as soon as possible after any change. This is also required for the lives assured.

Additional premiums can be paid into PPB at any time. Additional premiums can be set up with different charging structure using different contract periods and allocation rates in comparison to the initial premium.

Investment transfers can be deposited (subject to them being acceptable to us) directly into a PPB policy. To do this we require your power of attorney. When we possess all of the necessary documentation, we will transfer in the investments as required. An administration fee of USD 45 is charged per each investment transferred, plus any custodian charges.

Cash account exists on each PPB policy, and an PPB policy may have several cash accounts for different currencies. Any initial premium and investment exchange value is paid into the cash account before being linked to your chosen investments. Fees and charges associated with PPB are taken from the cash account and it is also used for taking withdrawals. If investments linked to a PPB policy are sold, the cash proceeds will be paid into the cash account. In the same way, when linking an PPB policy to a new investment, the amount available in the cash account will be used to do this. It is recommended that a positive cash balance is maintained in the cash account to cover any fees and withdrawals. If the cash account has a negative balance we may, at any time, clear the balance by selling investments to which the policy is linked. Credit interest may be paid on positive balances and debit interest will be charged on negative balances. For current credit and debit rates on the PPB cash account, please contact us.

Valuations are accessible online at the PPB Client Manager web portal at any time and can be downloaded as valuation statements.

A Discretionary manager can be appointed to your PPB policy. A discretionary manager, where appointed, is responsible for buying and selling investments linked to your PPB policy. They will charge their own fees for doing so.

If you would like an illustration of charges and fees for prospective clients and do not have login coordinates to the PPB online web portal, please contact your Prestige relationship manager who will provide an illustration for you.

If you do not have a Prestige relationship manager please send an email to info@prestige-ims.com.

The following policy set-up information will be required:

• Plan Currency
• Investment Amount
• Establishment Period
• Any Commission Rebate
• Any Investment Advisor Fee