Horizon Portfolio Bond by Providence Life Review

Lisa Smith, BA (Hons), CeFA
By

The Horizon Portfolio Bond is all about versatility, whether saving for a special reason, just looking for somewhere to make extra cash work harder or setting aside money for a financially comfortable retirement.

Choosing how to save is easy – pay in a single lump sum or top up savings with regular payments.

Taking money out is just as simple. Treat the bond as a single policy or set up cluster policies that leave financial options open along the way to retirement.

The Horizon Portfolio Bond is ideal for expats on the move who want somewhere stable and easy to access to keep their money.

While expats are posted from country to country, savings or investments in the bond remain safe and secure in one place.

Review of the Horizon Portfolio Bond

Providence Life, the company behind the Horizon Portfolio Bond, puts choice in front of expats from the start of saving.

The firm’s slogan is planning for life on your terms.

The bond is a place to keep a lump sum, which can be topped up whenever the saver wishes. With around 300 funds to choose from, there’s plenty of opportunity to pick a diverse range of assets to invest in.

Busy expats can check how their money is growing and deal with account administration from an online dashboard available 24/7 from anywhere in the world with an internet connection.

A knowledge hub with regularly updated factsheets, charts and graphs within the dashboard gives technical data for fund comparison.

Fund prices are updated daily to allow expats to track performance.

Hands-on managers can also switch funds with the app.

About Providence Life

Providence Life is a fast-growing offshore life company offering  saving and investment solutions designed with expats in mind.

The company’s fund managers bring big names to the expat market, like Jupiter, Invesco and Fidelity.

Based in the thriving economic centre of Mauritius and fully regulated by the government’s financial watchdog, Providence Life’s administration is run from Dubai in the United Arab Emirates.

Providence Life is expat-centric, developing financial products and services to help professionals on the move. The anytime, anywhere business model is based on a significant technology investment offering real-time account information accessible 24/7 from the internet.

Benefits for expats

  • Attractive minimum investment
  • Select one of five major currency denominations
  • Take your cash through regular drawdowns, part surrender or full surrender of the policy
  • Take your pick of more than 300 investment funds
  • Choice of top-tier global fund managers
  • 24/7 real-time access from anywhere with an internet connection
  • Fund assets securely held by Euroclear
  • 101% death benefit

Currency options

Expats make their savings by picking one of five major currencies –

  • US dollar (USD)
  • Euro (EUR)
  • GB Pounds (GBP)
  • Swiss franc (CHF)
  • Japanese yen (JPY)

Each currency comes with different minimum investment to start the bond, but the maximum is open-ended. 

Making an investment

CurrencyMinimum initial investmentMinimum top-up(10% 0f initial investment)
US Dollar60,0006,000
British Pound40,0004,000
Euro40,0004,000
Swiss Franc56,0005,600
Japanese Yen8 million800,000
Source: Providence Life

Flexible funds

The Horizon Portfolio Bond offers a huge choice of around 300 funds from globally recognised fund managers.

Investors can self-manage their funds or appoint an adviser to do the job for them.

Understanding the charges

Like all bonds, the Horizon Portfolio Bond comes with a range of charges.

All bondholders pay annual management and marketing fee, while some may pay extra depending on how their bond is structured.

Here’s a list of current charges, but each saver will have a personalised schedule detailing the fees that apply to their accounts.

All savers pay:

  • Annual management fee – 1% of initial investment
  • Annual marketing fee – 1% of initial investment for eight years from the date the policy starts

Other fees that may apply include:

  • Quarterly administration fee of £100 every three months for accounts started with an initial investment of £100,000 (GBP or currency equivalent)
  • Subscription fee/dealing charges relating to buying funds
  • Dealing charge – £25 (GBP or currency equivalent) for buying or selling a unit-linked fund
  • Custody fee – £35 (GBP or currency equivalent) for buying or selling a structured note

Who can start a Horizon Portfolio Bond?

The Horizon Portfolio Bond is open to a wide range of investors.

Some simple rules apply to holding an account.

Savers must be aged 18 years old and younger than 70 years old.

Accounts can be owned as:

  • Single life
  • Joint life
  • Trustees
  • Companies

With a life status of:

  • Own life
  • Life/Lives of another
  • Joint lives, first or second death

Tax

Tax due on any withdrawals from the policy depend on where the saver is tax resident and domicile.

Savers should take professional tax advice before starting a policy and if moving  countries during the life of the policy.

Accessing savings

The Horizon Portfolio Bond is a flexible way to save that lets expats withdraw cash as needed.

Although some financial products, like pensions and trusts, may have some limits on the withdrawals that can be made.

The investment is meant for the medium to long term – that’s typically at least 10 years or longer, so taking money out earlier comes with an early encashment charge.

Part withdrawals must follow the 80:20 rule, which means savers can take 80% of their original investment without paying any early encashment charges.

If the bond balance falls below 20% of the original investment, the policy is considered fully surrendered and a tapered early encashment charge is applied according to the length of time the bond has been open.

Here’s an example:

An expat invests £40,000 in a Horizon Portfolio Bond on January 1, 2020.

If a withdrawal is made before January 1, 2029, no early encashment charges are due if no more than £32,000 (80% of £40,000) is withdrawn.

If the total withdrawals exceed £32,000 before January 1, 2029, early encashment charges are due as the bond is considered fully surrendered.

Early encashment charges

YearEarly encashment charge
18%
27%
36%
45%
54%
63%
72%
81%
9 onwards0%
Source: Providence Life

Note: The early encashment charge is a percentage of the cash withdrawal, while the years start from the date the bond commenced.

Death benefit

The Horizon Portfolio Bond pays a 1% of total fund standard death benefit, with a 101% value of fund pay out if a saver should die during the term of the policy.

Linking to a QROPS

Many of the world’s leading QROPS (Qualifying Recognised Overseas Pension Scheme) providers offer these offshore pensions for expats linked to the Horizon Portfolio Bond.

If you are moving money into a QROPS or already have one, discuss the benefits of investing the pension fund through a bond.

Summary

The Horizon Portfolio Bon is a flexible savings plan that gives expats options when making decisions about how to manage their money. The bond can sit alongside other investments as a stand-alone savings plan or power QROPS or SIPP pension savings for expats. A major benefit for expats moving on assignment is they do not have to bear the cost and red-tape involved with opening and closing savings accounts to comply with financial rules in different countries.

Get Financial Advice

We can put you in contact with a qualified specialist expat financial advisor based in your location. Click the button below to get the expert advice you need to make the best financial decisions.

Related Information

Below is a list of related articles you may find of interest.

Leave a Comment