The Portfolio Plus Trustee Investment Plan is aimed at high-net-worth individuals with Sipps and trustees of occupational pension schemes. Up to 10 funds can be selected at the same time.
The plan has a minimum term of five years and a minimum single premium level of £25,000, allowing for additional contributions of at least £10,000.
There is no initial charge or plan charge, but there is an annual management charge. The annual management charge depends on the amount invested A 1% temporary annual management is charged for the first five years after each contribution is made. Thereafter It is 0.6 per cent a year for fund values of less than £25,000 and 0.1 per cent for fund values of more than £25,000.
Fund management charges are also made and these range from 0.2 per cent to 2.4 per cent a year depending on the funds chosen. The annual charge for L&G’s passive tracker funds are 0.2-0.25 per cent a year while 0.25 per cent is charged for L&G’s actively managed funds. Externally managed funds are more expensive at up to 2.4 per cent.
Investors can make withdrawals of at least £1,000 but at least £10,000 must remain invested. Withdrawals of more than 10 per cent of the plan’s value during the first five years will incur a surrender charge. This starts at 5 per cent in year one, falling by 1 per cent each year, so 1 per cent is payable in year five.
The advantage of trustee investment plans is that they provide access to a wide range of funds at a relatively low cost, so investors do not have to stay within a single fund or management group. Switching between funds is also easy to do. With Legal & General, the first 12 switches a year are free and any further switches cost £12.
In comparison, Winterthur Life’s trustee investment plans offers unlimited free switching and accepts regular contributions. However, unlike the L&G plan it has an initial charge of £200 but this is waived for fund values above £100,000 or if it is accessed through Winterthur’s Sipp.