CIS / Royal London Platinum Bond Plus

Matt002

A relative of mine is 75 and has 70k (after MVR etc) in CIS / Royal London Platinum Bond Plus. Other than this they have 9k of savings in cash ISA etc.

Their pension covers day to day living costs and they dip in to the cash ISA etc for holidays etc.

They are still fit and healthy but feel a bit lost with the platinum bonds as they aren't really sure if they should be moving money out of them etc. I think a sales man from CIS used to come and talk to them from time to time about these investments but that no longer happens.

What would you guys do in their situation? Would you cash in the bonds and put the whole lot in cash or SS ISAs over the next couple of years or keep the bonds running?

Flobberchops

From an initial glance it looks like an *ok* FCA-authorised company who have delivered *ok* returns so far. It goes without saying they don't have FSCS protection and therefore you could lose everything. Also the management fee is very high at 0.75%.

I'd recommend pulling out and investing in something more diversified and less volatile, especially at 75 - that's the kind of age where you value security over whiz-bang returns (and after fees the returns aren't so great anyway). At the very least I'd suggest moving £20,000 a year out of this scheme and into SS and/or cash ISAs.

dunstonh

They are still fit and healthy but feel a bit lost with the platinum bonds as they aren't really sure if they should be moving money out of them etc.

How have they lost a bit? Are they drawing a regular income from it?

I think a sales man from CIS used to come and talk to them from time to time about these investments but that no longer happens.

CIS closed down and sold their book to Royal London. Nowadays, its really only IFAs that do home service. A few tied salesforces still exist but you want to avoid them.

Would you cash in the bonds and put the whole lot in cash or SS ISAs over the next couple of years or keep the bonds running?

Phasing surrender to feed an ISA is one possible option. It may not be the best option but it is an option.

It goes without saying they don't have FSCS protection and therefore you could lose everything. Also the management fee is very high at 0.75%.

Investment bonds get 100% FSCS protection with no upper limit. So, are well protected on that front.
0.75% all in is actually quite cheap. It is possible nowadays to get a bit cheaper. However, the loss of the life funds wrapper may not be a good idea. The investment bond is not included in means testing for care benefits. Whereas S&S ISAs are. For someone who is 75, that may be an important consideration.

The WP fund with RL is not the best available but with 100% FSCS protection, capital security (if being held for life then it cant go down in value as no MVR on death), exempt from means testing and a cautious investment spread, then its not a bad option. Certainly likely to be a lot better than cash ISAs as the OP hinted at.

Matt002

Thanks dunston. I think you missread what I wrote in your first quote.

I meant they feel a bit lost as in they don't really understand what they are, what the pros and cons of keeping them are etc rather than they have lost money.

Thanks for your other points they certainly seem to be worth reading around a bit more. Especially re care home fees means testing, is this in the bond documents somewhere?

They were also signed up to a CIS / RL SS ISA which has £186 in it (the most its ever had) any advantages to keeping that?

I think there is also a life assurance policy which is £30 a month and has a death benefit of £3300 or a cash in value of £1800. I guess thats a personal choice if its a good thing to keep?

Flobberchops

dunstonh wrote: »

Investment bonds get 100% FSCS protection with no upper limit.

Didn't realise that! Certainly FSCS status was conspicuous by its absence on the pages I flicked through, which is usually a bad sign...

dunstonh

Flobberchops wrote: »

Didn't realise that! Certainly FSCS status was conspicuous by its absence on the pages I flicked through, which is usually a bad sign...

As it is no longer available for new business and it's an old product issued by an old insurance book, the information available will be light. However, FSCS with onshore bonds is a generic thing.

They were also signed up to a CIS / RL SS ISA which has £186 in it (the most its ever had) any advantages to keeping that?

More hassle than its worth.

I think there is also a life assurance policy which is £30 a month and has a death benefit of £3300 or a cash in value of £1800. I guess thats a personal choice if its a good thing to keep?

Doesnt sound like it is needed (70k bond, so why £3k life assurance?). However, some of these old plans had a maximum age you paid premiums to and then you stop but continue to get the benefit as if you were paying. So, I would check for something like that on the plan before deciding anything.