premier portfolio bond updates fee structure to remain competitive
Norwich Union International is to revamp the charging structure on its Premier Portfolio bond in a bid to become more transparent and competitive.
Effective from 31 October, a portion of the annual management charges on the underlying external funds will be rebated.
Amanda Wilson, senior marketing manager at Norwich Union International, said the rebate would accrue daily and would be credited quarterly to the client's cash account. The extent of the AMC rebate varies according to the individual funds.
For instance, the Aberdeen Global Opportunities fund has an AMC of 1.5% and TER of 1.85%. The rebate is 0.75% so the net TER is 1.1%. Framlington UK Smaller Companies has both an AMC and TER of 1.5% and rebate of 0.75% so the net TER is 0.75%. The Barings High Yield Bond charges 1% AMC and 1.55% TER. With the 0.25% rebate the net TER is 1.3%. The Premier Portfolio bond currently has links to over 2,800 funds.
Another change is that there would be 20 free deals among external funds per policy year. Under the current system, Norwich Union International charges £20 (E30) per deal (buy and sell). Initial purchases will remain free of charge, as per the current system.
Additionally, the administration charge across all three structures will increase from £90 to £100 each quarter.
The charge for the wrapper will also change through the three options of establishment, initial charge and higher allocation (see table on this page for sample of wrapper changes).
Although the RIY will vary according to different portfolios and charging options taken, under the new structure the wrapper and underlying fund charge (assuming a fund with a TER of 1.5% and AMC rebate of 0.5%) would be 2% on a £250,000 portfolio and 1.9% on a £500,000 portfolio over 10 years. This compares to 2.6% and 2.5% respectively under the current structure.
Wilson said the annual management charge rebates would apply for both existing and new customers. For existing customers, the rebates on AMCs apply from 31 October, and will not be backdated. She added: "The objective of these changes is to maintain a strong competitive position and offer better value at the end of the day. The new structure means the charging structure on the bond is also more transparent."
The level of commission paid to intermediaries does not change and may be based on initial, explicit trail commission or a combination of both.
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