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Top tips for Zurich platform users (Feb 2019)

21 February 2019

Our regular feature aiming to help all platform users get the most from their experience. This month: Junior portfolios; Failed payments; Pension one-off payments

Writing in journal

Junior portfolios

In January we launched our Junior Portfolio for under 18s which will include a Cash Account and a Junior ISA and Junior Retirement Account.

To set one up, click on the main portal menu and select ‘New junior portfolio’.

The registered contact must be the parent or guardian who has parental responsibility for the child, including any Share Foundation or local authority provision. They are the only individual who can make any changes to a Junior Portfolio.

The full investment range is available for both the Junior ISA and the Junior Retirement Account, but ETAs are excluded.

We have updated the Key Features Documents and Terms and Conditions to include Junior Portfolios. These can be accessed in ‘Zurich documents’ on the portal, or found alongside other related literature on the Zurich Intermediary Group website.

Failed payments

When we pre-fund a cheque or direct debit by purchasing units, we do so on the assumption that the required funds are immediately available in the client’s bank account.

If for any reason the payment fails, any shortfall we incur due to market fluctuations when the units are subsequently sold down will be deducted from other holdings, as per the Terms and Conditions:

Where we buy assets on your behalf and the cheque does not clear or a direct debit, BACS, CHAPS or other payment is not honoured, we will sell any assets we have bought on your behalf in expectation of that payment. We will hold you responsible for any investment loss we incur from transactions resulting from any payment that is not honoured, up to the value of the account. We will do this by deducting it from available cash and, if there is insufficient available cash, by selling assets in line with your divestment strategy which is described in section A15.

It may sound obvious ensuring that there are sufficient funds in the bank account, but it is important to make your clients aware of the potential implications if a single or regular contribution fails.

Pension one-off/annual payments

We have previously recommended that you do not key one off payments from the Retirement Account as an annual payment if the client will receive other income payments in the same tax year.

If they’ve already done this and the client is receiving a regular monthly pension income, expect the last regular in the tax year to be taxed more than the client is used to. If the annual payment is the only pension income the client will receive from the Portfolio, it should be fine.

However, we’ve found that some annual regulars aren’t being cancelled, so when the income pays out again the following tax year the client receives a payment they weren’t expecting. This payment can often be subject to a significant amount of tax if there’s been a change in income strategy since the original one off withdrawal was taken.

Unwinding an unwanted pension income payment within the strict HMRC guidelines is a complex process with no guarantee of success, so please check whether any of your clients still have annual regulars set up and, if no longer required, take appropriate action to avoid this scenario.

Limited company beneficial owners

When we receive monies in from a company, we require additional information such as where they are registered (e.g. Companies House), their registration number, the names of directors, and the names of principle beneficial owners (over 25%).

We’ve seen a few cases recently where a company is paying the contribution, but on the expectation it states that the beneficial owner is another limited company.

A ‘beneficiary’ is normally an individual, not a company, which is clearly defined within the regulations. In order to obtain the correct information, you will need to work your way up the chain to establish which individuals are sitting at the top of the beneficial ownership ladder.

As such, it is not permissible to put the name of a company as the beneficial owner of another company. Doing so will cause an unnecessary delay as the expectation will need to be rekeyed with the names of the individuals who are the ultimate beneficial owners.

Miss January's top tips?

Take a look at those here