The functionality provides greater flexibility for clients, advisers and investors as demand for bonds grows in inheritance tax and pensions planning. According to the latest HMRC figures, 24,500 estates breached the inheritance tax threshold in 2015/16, up 50% in five years[1], while 2,120 reached the pensions lifetime allowance in 2016/17, up 380% in five years[2]. 

The new capability allows Composer® to provide the administration for onshore bonds, offshore bonds, capital redemption bonds and non-qualifying regular savings plans, alongside GBST’s existing range of tax-wrappers which include GIAs, ISAs, Lifetime ISAs, Junior ISAs, SIPPs and Annuities. It supports trust planning and caters for the bond to be held under many different trust types and accommodates pre- and post-RDR bonds for life company customers who want to move their back books of business onto a modern platform. 

Key new functionality includes the ability to withdraw up to 5% of the initial investment each year, tax deferred, and invest premiums as a series of individual policy segments to provide maximum flexibility over assignments, maturities and withdrawals. In addition, Composer® will calculate chargeable events as part of the standard processing of deaths, maturities and withdrawals as well as at policy year end and record the ongoing cumulative annual allowance available for each customer to establish how much money can be taken in a policy year without creating a chargeable event. While Composer® has always had the ability to hold bonds, currently third-party product providers perform the underlying policy administration. 

David Simpson, Head of EMEA at GBST, comments, “We’ve seen renewed interest in bonds following pension freedoms, with sales increasing over 20% since 2014 according to FCA figures[3]. Rising numbers reaching the inheritance tax and lifetime pension allowance thresholds and the possible introduction of Investment Pathways should encourage continued demand for bonds as advisers seek to diversify client portfolios whilst benefitting from the income producing, capital preservation and tax efficient qualities of bonds. With this new capability, we can provide full administrative support for bonds, reducing the need for separate systems while offering advisers and investors a wider range of long-term financial planning options. 

“The new bond facility will also enable life companies to move back books onto Composer®, enjoying a high level of automation and advanced investment and portfolio capabilities and providing online access for policyholders to view portfolios and valuations. Composer’s® modern technology also offers the flexibility to add products and integrate with other GBST tools and third-party systems, as well as the peace of mind of ongoing regulatory updates as part of our ongoing licence fee. This additional functionality is further evidence of GBST’s long-term commitment to continual investment in our systems to support the evolving needs of our clients.” 

The bond capability, which will be rolled out throughout 2020, will also accommodate: 

Adviser model portfolios
Full and part assignments
Different trust types, including bare and discretionary gift, gift and loan, and discounted gift trusts
Multiple maturity dates and deferment
A large range of ad hoc withdrawal methods and a calculation tool for back office users to assist advisers and policyholders
Chargeable events calculations including automated HMRC reporting
Automated Foreign Account Tax Compliance Act (FATCA) and Automatic Exchange of Information (AEOI) reporting
Commission, adviser charges and fund adviser fees
GDPR requirements including Data Subject Access Requests