Aegon has been forced to suspend sales of one of its offshore bonds after the Government announced a clamp down on certain segmented products.
Documents published alongside the Budget seek to restrict the use of offshore bonds which are structured so that any gain made across the whole bond arises in only one segment or policy.
Currently these bonds allow withdrawals from all the other segments, where the gains do not arise, without fear of a chargeable event arising.
The change will ensure that all policies are treated as one policy in the event of a chargeable withdrawal. This effectively attributes a share of the gain to all the segments.
Aegon and Canada Life both have offshore bond products which allow clients to split their money into different ‘segments’.
Aegon manager of investment products, tax and regulation Margaret Jago says: “We have looked at the Budget amendments and we believe one of our bonds is potentially affected by the legislation.
“We have taken down our quote system as a result because we do not want people entering into the wrong contract.”
Canada Life has also suspended sales of its accelerated access account following the announcement.
Standard Life head of pensions policy John Lawson says: “This change will have big impact on providers which have offered this specific type of bond product.”
The Budget documents also contain a clamp down on gains arising in offshore bonds for non-domiciled individuals being used to offset gains when they become a chargeable event in the UK.